Hurricane Harvey - Now What?
Ali DawoodPro Member
Rental Property Investor · Frisco, TX · Member since 2014 · 25 posts · 9 votesHurricane Harvey - Now What?
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Developer · Saraland, AL · Member since 2013 · 93 posts · 52 votes
9yThere are a lot of variables. There is going to be huge demand for apartments. Not only are tons of people displaced, you will have an influx of FEMA employees, insurance adjusters and contractors.
I was building a property in Pensacola when Ivan struck. We were just turning our 1st few buildings. Building inspectors became FEMA agents, but we were fortunate enough the housing demand was so high, they came out and performed our inspections. I quickly finished construction on the 240 units. They were 100% leased, with a waiting list, and people moved in as quick as I could get temporary CO's. The company I worked for sold the property within a few months, and walked away with a huge profit.
When Isaac hit New Orleans, the demand wasn't as high. At that time I was able to negotiate claims on several large properties. The hurricane deductible on (1) property was $1M. The initial offer from the insurance company was $1.9M. After negotiations we settled at $2.9M.
You need somebody that knows what they are doing, or you will leave money on the table. Lots of it. You also need to get an adjuster out there quickly, and remediation under way. You need to be smart. You can get a lot of deferred maintenance covered and reposition your property. You also want to get units back on the market early, as this is peak demand.
Feel free to PM me if you have other questions about strategy.
63 Replies
- Developer · Saraland, AL · Member since 2013 · 93 posts · 52 votes9y
There are a lot of variables. There is going to be huge demand for apartments. Not only are tons of people displaced, you will have an influx of FEMA employees, insurance adjusters and contractors.
I was building a property in Pensacola when Ivan struck. We were just turning our 1st few buildings. Building inspectors became FEMA agents, but we were fortunate enough the housing demand was so high, they came out and performed our inspections. I quickly finished construction on the 240 units. They were 100% leased, with a waiting list, and people moved in as quick as I could get temporary CO's. The company I worked for sold the property within a few months, and walked away with a huge profit.
When Isaac hit New Orleans, the demand wasn't as high. At that time I was able to negotiate claims on several large properties. The hurricane deductible on (1) property was $1M. The initial offer from the insurance company was $1.9M. After negotiations we settled at $2.9M.
You need somebody that knows what they are doing, or you will leave money on the table. Lots of it. You also need to get an adjuster out there quickly, and remediation under way. You need to be smart. You can get a lot of deferred maintenance covered and reposition your property. You also want to get units back on the market early, as this is peak demand.
Feel free to PM me if you have other questions about strategy.
- Investor · Mesa, AZ · Member since 2017 · 109 posts · 57 votes9yYes, I'd like to here more about those in Houston. I posted something earlier and did not hear much. My family is out there and it is not going well.
- Investor · Galveston, TX · Member since 2015 · 92 posts · 41 votes9yI have to agree that there are so many variables right now. I'm in galveston and flooded in. We are dry here. All evacuation routes out on land are inaccessible currently. It's supposed to rain more. Both the San Bernard And the Brazos Rivers are overflowing now. I worked the FEMA mission in Baton Rouge,La for floods. They don't bring non-essential and civilian workers into a mission until it's safe. Emergency personnel are working and have additional assistance coming from LA! I also went through IKE. Conditions were so bad that it was 3 weeks before they let us back onto the island. That means a lot of loss by that time with flooding. About 10 or more of my friends off the island and just north of me are currently headed to their second level or attic. This is too widespread to tell. Usace Galveston District will post on Facebook and provide up to date information on the mission. The Corps of engineers supports FEMA. They are handling the emergency operations from galveston. I'm still praying for my friends and family on the mainland! Rockport looks much like IKE did for us in galveston, in 2008.
- Real Estate Professional · Clearwater, FL · Member since 2015 · 72 posts · 14 votes9yI was wondering the same thing
- Real Estate Investor · Wallisville, TX · Member since 2017 · 17 posts · 15 votes9y
Hi, I live east of Houston, (Chambers County). We have two Commercial buildings on I-10 in Baytown. Found a inch of water in both buildings this morning. One just rented August 1st. Just spent $10,000 doing repairs after the last renter. The other building is the one we do business out of. The main thing I keep telling my partner is, "Let's worry about something we have control of. Not how much water in the buildings."
I thing the biggest thing people should be careful of is contractors that migrate to disaster areas. You always hear of the scams.
Keep dry, and stay safe.
- Real Estate Investor · Houston, TX · Member since 2014 · 173 posts · 128 votes9y
@Rhiannon Then, I am not surprised you are not getting a lot of response. Unlike past hurricanes, this one is unprecedented in the length of its impact as well as the breadth. As for me, no flooding yet, but more rain tonight and releasing water from Addicks and Barker Reservoirs has the potential to flood hundreds of thousands. Tonight could be worse than last night. So everyone is scrambling and trying to figure out where, if anywhere, they can go, or trying to help others. Sorry to hear about your relatives.
- Investor · Mesa, AZ · Member since 2017 · 109 posts · 57 votes9yTom Cooper yes, I guess BP is last thing on people's minds. My mom was rescued by boat and buses to the convention center. Hope you stay safe.
- Joplin, MO · Member since 2017 · 20 posts · 10 votes9yI live in Missouri but have couple properties in Houston. Do you suggest I get out there immediately? They were both rented but I'm sure they are both under water now. What's the best strategy to bring it back to locals conditions? Bring my own contractors? As previously said there's going to be influx of disaster relief related workers, I'm assuming building materials too?
- Lender · Sunnyvale, CA · Member since 2017 · 22 posts · 17 votes9y
All the prayers for people in Houston and the surrounding areas impacted by Hurricane Harvey. I hope they will be safe and pass this difficult week.
Does anyone in here has opinion what will be the impact of the housing market and its prices after the Hurricane is over?
How is also for the property owner? Will the insurer cover enough?
I read the previous similar impacts by Hurricane Katrina in New Orleans, seems that people moved out to the dry areas and the housing demand on the non flooded areas goes up, and the houses in flooded areas are down in prices due to either inhabitable or needs lots of repairs. I heard the insurance cost also goes up to $4000/year instead of regular between $500 - $1000 due to not that many insurers wants to take the insurance.
- Joplin, MO · Member since 2017 · 20 posts · 10 votes9y@Agus Hartono I imagine you are right. The rebuilding will be slow and insurance will surely go up. Families may choose to move away from the area. But for the most part, any living space will be in high demand and I expect to see rent increase in any inhabitable space, both commercial and residential. Apartments will be in high demands, I imagine more of those will get built to replace the SFHs. I expect to see an decrease in market, then an increase after the residents have regain normal lives, maybe 5 years timeframe. I'm judging from my local market after a the 2011 tornado.
- San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes9y
@Ali Dawood Glad you addressed it. Heard its pretty bad. Been through a flood myself so I know what it's like. Regarding damage, it depends on the insurance company in terms of coverage. During national catastrophes like these, it can be a battle in terms of reimbursement. Insurance companies have departments and special insurance adjusters who assess these types of situations. Different from the local folks, if you've dealt with them before. Regarding fix up, it depends on the extent of the damage. Best to get several opinions from contractors about the areas needing repair. Hope this helps!
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes9y
@Ali Dawood getting insurance money depends on if you have flood insurance, unless the structure was destroyed by wind. The harder part is finding someone to do the repair work at a reasonable price or in a timely manner. This is sure to drive up rents on any properties not damaged. It will also drive up rents in surrounding cities that were not damaged. Some people will just move out of the area all together.
Flooding is the worst type of damage. The floods bring in contaminated water, so you have to deal with clean up. Then you have to deal with mold from the property soaking in water. It is basically a total gut and rehab.
It could be a huge opportunity for flix and flip. As sad as it is, disasters like this bring huge revenue through construction.
I have confidence in the spirit of the people of Texas and their ability to recover. Hopefully the storms die soon and people stay safe.
- Developer · Bellefontaine Ohio · Member since 2016 · 371 posts · 219 votes9y
Sitting here in NW Houston / cypress area (290 and Huffmiester, west of hwy 6 / 290) under tropical storm Harvey now, were higher and drier than a lot of folks, thank god for that. Please pray for those not a well off as us.
Our rain gauge shows over 12 inches so far, and we have been in sort of a weird hole in the storm a lot.
Maybe it's my engineering background, but this problem is reoccurring, and therefore, at least in theory could be mitigated simply by raising the homes. FYI, for those unfamiliar, most homes here are slab on grade and the streets are cut in to catch the water. So I'm wanting ideas and / or better options, and which is better and why ?
Plus this is a huge opportunity for the problem solvers.
Add to which I think something like 100,000 people move here each year.
1. Clear the lot and build higher. (Slow, not enough laborers and high cost problems.)
2. Jack up and repair existing homes / businesses. (This is my opinion as the best choice, please shoot as many holes as you can in this one, as I'm thinking this is where I want to head into. Slab construction is the biggest issue).
3. Clear and bring in modular homes and set them above flood plain. (fast once every thing is in motion, but many will not want cookie cutter homes, and resale sucks).
4. or????
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Joe Splitrock going to be tough one.. when you have a 500 or 1000 year event like this untold thousands will NOT have insurance.. and if you get a foot of water in your house its a total gut rehab as you stated.. And when you look at pictures these are not the small little houses that are being affected you see big high end homes..
were I see this going is anyone who is in the fix and flip business is going to have a hard time finding labor.. most contractors are going to go after insurance jobs first..
also I see a lot of foundations shifting so on top of it all.. there will be a ton of crooked houses to add to it..
I guess we could see a repeat of Katrina with a ton of fema trailers to house those who have no other options.
Keep in mind thousands left New Orleans for Houston .. now they are going through the same thing.
I know this created a lot of influx in other cities that were close to New Orleans like over flow to Jackson MS>. so maybe you will see a bunch of movement to san anton.. and Dallas..
Of course we are only seeing media pictures which show the worse of the worse.. but it looks bad..
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Steven Westlake I have dealt with the slab on grade in Texas and I will not longer invest there as the hosues move all the time even in the best of conditions..
not knowing that much about Houston do you think a lot of the folks have flood insurance ? or just those that maybe back up to a creek or water way. ?
I build in Charleston SC and flood maps are updated all the time.. and all the houses are first surveyed for height then built up high enough to allow water under them depending on location. in downtown Charleston that means 7 to 10 feet above grade before you have the first living space and everything is built on cinder block footers..
its looks like storm drainage as you described was designed to flow into the cored out streets and exit.. instead of underground.. Like when I built a subdivision here in Oregon we have to contain storm surge either on site with big holding ponds or in the storm sewer system.. nothing goes down the street.. rain drains from house into storm pipes below grade
its one reason our cost to develop are 3X to 5X more than you have to in Texas.. we will spend 10k alone per HOUSE just over sizing our underground storm drains.. its kind of like a HUGE septic system the pipe fills up.. then is metered out so that runoff is no more than if there was nothing built there. .
the pros of building Texas ( very cheap compared to other areas) I guess lead to this problem in a 500 year event. Although we are just seeing media which I am sure is just showing the worst of the worst .. but it looks bad..
- Developer · Saraland, AL · Member since 2013 · 93 posts · 52 votes9y
I have dealt with large claims on both floods and hurricanes. If you have a wind claim, you are facing high deductibles. If you have flood insurance, and are dealing with a flood claim there are very low deductibles.
If you have flood damage you need to take pictures, and quickly remove the saturated contents, carpet, drywall, insulation, etc... The adjusters are going to balk at mold, because of exclusions in the policy. If you let it sit mold will start growing within days.
You need fans and dehumidifiers going. If there is no power, the insurance companies cover the cost of generators.
I recommend having a representative review and negotiate your claim, and your contracts with contractors. Take the number the insurance offers, and you lose. Let the contractor handle all of the negotiations, and you will likely lose. Be smart and savvy, on both sides, and you can come out ahead.
Insurance wants the minimum payout. Contractors want the maximum profit. You want to maximize your claim and negotiate a contract that will include some extras. Also, don't let the contractor get ahead on money, you need to make sure you pay for work completed.
Make sure you retain leverage in all scenarios.
- Developer · Bellefontaine Ohio · Member since 2016 · 371 posts · 219 votes9y
FYI , we do have the storm drains and retention ponds (massive ones, addicks and barker reservoirs, near me will hold
510,000,000 cubic meters combined), etc. the cost here is likely lower because of the shear number of "undocumented" workers, and no snow loads to speak of. The issue is we have seen 30 inches of rain in 3 days in some places. Here at the house we're just under 14" so far, plus we're at the start of White Oak Bayou, down steam is not a good place to be now.
- Dallas, TX · Member since 2016 · 1k+ posts · 745 votes9y
Originally posted by @Jay Hinrichs:
@Steven Westlake I have dealt with the slab on grade in Texas and I will not longer invest there as the hosues move all the time even in the best of conditions..
not knowing that much about Houston do you think a lot of the folks have flood insurance ? or just those that maybe back up to a creek or water way. ?
I build in Charleston SC and flood maps are updated all the time.. and all the houses are first surveyed for height then built up high enough to allow water under them depending on location. in downtown Charleston that means 7 to 10 feet above grade before you have the first living space and everything is built on cinder block footers..
its looks like storm drainage as you described was designed to flow into the cored out streets and exit.. instead of underground.. Like when I built a subdivision here in Oregon we have to contain storm surge either on site with big holding ponds or in the storm sewer system.. nothing goes down the street.. rain drains from house into storm pipes below grade
its one reason our cost to develop are 3X to 5X more than you have to in Texas.. we will spend 10k alone per HOUSE just over sizing our underground storm drains.. its kind of like a HUGE septic system the pipe fills up.. then is metered out so that runoff is no more than if there was nothing built there. .
the pros of building Texas ( very cheap compared to other areas) I guess lead to this problem in a 500 year event. Although we are just seeing media which I am sure is just showing the worst of the worst .. but it looks bad..
Houston basically sits at or below sea level, so there isnt a ton of places they can put the water until its made its way back into the ocean. And the reports I have heard is that they are measuring the rainfall by the foot not inch. They have had some pretty bad floods even 15-20 years ago with a lot less rain.
I have a few friends in the area, they seem to be ok, but by all accounts they are pretty much stranded in place, and the flooding is bad.
Prayers are out there for everyone in the area. I am wondering if this isnt a good time to pick up another property in Dallas
- Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes9y
Houston is not at or below sea level but we are not very far above it - generally 40-150 ft above only. But we're very flat and when it rains there is not much flow from one area to the other so the water sits.
- Investor · Bronx, NY · Member since 2014 · 115 posts · 37 votes9y
My heart goes out to all those affected by Hurricane Harvey, as I am still rebuilding in Fayetteville, N.C. after Hurricane Mathew last October. I had 3 feet of water enter 2 of my quad-plexes and no flood insurance. I felt helpful when the area was declared a federal disaster and FEMA came in. Sad to say they helped my tenants but nothing for me since I didn't reside at the property.
Once the waters recede it is extremely important to start gutting everything down to the studs to prevent mold from developing. It will be a long road to recovery but you will get there as I have. The loss of 8 incomes overnight was not easy for me. I have one building up and running and will start on the other one next month.
One thing I can say is that the government programs will eventually come thru but don't hold your breath waiting on them. As a housing provider, you must be proactive in getting the needed help and staying engaged with your City Council is essential. Almost a year later grant programs are just now rolling in. They will match my repairs dollar for dollar, which will be a tremendous help in rebuilding my units.
Wishing all the best during this trying time. Just remember that the difficulties we encounter are here to make us better, not bitter............and I must say that my ordeal has forced me to be a better investor and has provided a great learning opportunity.
- Wholesaler · Katy, TX · Member since 2013 · 213 posts · 109 votes9y
What??? That "Houston basically sits at or below sea level".... Sorry but this isn't true. Houston is very flat and that makes drainage very, very difficult (and slow) but saying we are below sea level is misleading.
We rely on a very complicated and extensive system of Bayous, Reservoirs and channels to divert water from inland to the Gulf Coast. Being a civil engineer I've sat at many, many conferences where Houston's drainage systems has been discussed in detail by the Harris County Flood Control District and the US Army Corps of Engineers. The complete drainage system is constantly being studied, analyzed and upgraded but this rain event far exceeds any design levels or estimates.
Our drainage experts are doing the best they can with all this rain and moving water from the lakes/reservoirs trying to make the least damage possible but it is just too much water.
- Developer · Bellefontaine Ohio · Member since 2016 · 371 posts · 219 votes9y
FYI, update - the news is now saying 35 to 40 inches in some places, such as Waller where I work.
FYI, we're about 115 ft above sea level here at our personal house, another property we have is in Ravensway (Cypress, TX), which is just raw land at this point, but based on videos people have posted is 5 to 7 feet deep right now. So I'm thinking that one will now need to be up 10-12 ft.
- Dallas, TX · Member since 2016 · 1k+ posts · 745 votes9y
I seem to have upset some people by saying you guys were at sea level its 40 feet, getting down to 20 or so on the east side.
Miami as an example is at the same 40 feet as Houston.San Diego is at 60 feet., Boston 40 feet.
New Orleans is in the negative.
Having said all of that, Houston is well known as being low lying and having had serious downtown flooding in the past.
Sorry if my comments were too much of an approximation for others on this thread.
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