Hurricane Harvey - Now What?
Ali DawoodPro Member
Rental Property Investor · Frisco, TX · Member since 2014 · 25 posts · 9 votesThere 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.
@Rhiannon Then, Very grateful your Mom is safe. To briefly address the insurance issue, we have had virtually no wind from Harvey in Houston - this is all going to be water damage. Very few people have flood insurance in Houston that are outside the 100 year flood plain. Much of the flooded areas (and potentially more to come) are outside the 100 year plain. It is going to be financial disaster for many, and as @Jay Hinrichs pointed out, many of the flooded homes are very large, nice homes. As someone still in the midst of it, with much more rain and additional flooding projected through Friday, I really appreciate the thoughts and prayers for all in this area, and for all the first responders working tirelessly.
I feel so bad for all the people in this terrible natural disaster. i hope for nothing but the best from all the people going through this, i cannot imagine how hard it is.
There will be some major ripple effects from this storm, effects that might finally be taken more seriously, as Katrina and Sandy were other warning signs.
Coastal Areas are getting riskier, and insurance companies will start to feel the heat and something will need to change. How much more of the nations money should be spent on "rebuilding" in areas that are at such enormous risk for further future destruction?
its understood that people want to live near the coast and water etc, but its going to increasingly become uninsurable. already we are seeing way more flooding in coastal areas in Southeast US, and the sea level is ONLY going to rise further.
I've debated in my mind many times about taking some coastal regions entirely off my investable markets criteria due to massive problems with the insurance markets in the coming 10-20 years.
Houston... We have a problem.
The government will end up having to step in to "bail" people out, with no flood insurance, as there will be such an outcry of people's financial lives being destroyed by this natural disaster.
Its sad and I feel very bad for all the people still weathering this storm and hope everyone is okay.
But this event will spur some very serious ramifications for all property owners with exposure in some of the lower lying coastal regions.
@ Jay Hinrichs To put a little perspective on a 500 year event.. There is a math equation to figure out what it is. It comes out to be a %.02 of being hit by a similar event. In the past everything was compared to a 100 year event. So you can see the magnitude of the flooding. And its still raining as of 4 PM local time. I don't look for there to be a mass movement to San Antonio or Dallas. Most will stay in Houston and may just move to another area. The kicker is that they are letting a lot of water out of the Addicks Dam. They gave the residents below the dam 6 hrs notice. So you can understand the worry of the levy giving way and having a uncontrolled release. Just waiting for the horror insurance stories that will come out of this.
@Adam Robinson I live, as the crow flies, about 25 miles across the East Galveston Bay from the Bolivar Peninsular. I rode out Hurricane Ike in 2008. There were only a few structures left standing on the Peninsular. There was talk about what the government should do about building back in these areas. What came about was that to get Windstorm and Flood insurance in these areas, building codes were increased which in turn made the new builds stronger, safer and more expensive. This in the long run takes less out of the Insurance Kitty. Now the government did come in and they bought out the first row of homes back from the beach and created a Wetlands. I will add that for the people that live on "The Peninsular", will continue to live there at all cost. Its a way of life for them. It took about 5 years before building to start back up. There is a building boom on the Peninsular now.
It would be interesting to know what kind of impact that Tornado Alley in the Midwest, or the Earthquake area in California had on the Insurance Kitty as compared to the coastal areas.
The rain can stop anytime it wants to. I'm ready to start the cleanup.
You don't wanna try to head out there yet. On NPR they said lots of areas were inaccessible and even non-emergency personnel can't get in. Going there doesn't solve any problems. Hope you have insurance that covers rental loss on your properties as it will take some time to find contractors to do repairs in this crazy environment. If you did have skills yourself to fix things, maybe it would be a different story. You'd be competing for scarce housing if you show up now against people who truly need it. Best to come up with a strategy to help the situation rather than react and show up without being able to do anything.
Damn that's crazy. Prayers for all of you down there. Hope it gets better and thanks for sharing the update.
Contractors will be in demand and they will be getting top dollar . From what I see on the news there are thousands of damaged homes . Contractors both good and bad will be converging on Texas . Sadly lots of people dont have insurance coverage for floods .
I feel so bad for all the people in this terrible natural disaster. i hope for nothing but the best from all the people going through this, i cannot imagine how hard it is.
There will be some major ripple effects from this storm, effects that might finally be taken more seriously, as Katrina and Sandy were other warning signs.
Coastal Areas are getting riskier, and insurance companies will start to feel the heat and something will need to change. How much more of the nations money should be spent on "rebuilding" in areas that are at such enormous risk for further future destruction?
its understood that people want to live near the coast and water etc, but its going to increasingly become uninsurable. already we are seeing way more flooding in coastal areas in Southeast US, and the sea level is ONLY going to rise further.
I've debated in my mind many times about taking some coastal regions entirely off my investable markets criteria due to massive problems with the insurance markets in the coming 10-20 years.
Houston... We have a problem.
The government will end up having to step in to "bail" people out, with no flood insurance, as there will be such an outcry of people's financial lives being destroyed by this natural disaster.
Its sad and I feel very bad for all the people still weathering this storm and hope everyone is okay.
But this event will spur some very serious ramifications for all property owners with exposure in some of the lower lying coastal regions.
We just got our first category 4 hurricane to hit the Texas cost in almost 2 decades.
Sandy was the first hurricane to hit the North east in decades. Yet there were something like 10 or 20 of them in the 50's.
Now maybe more people live closer to the ocean, so there is a bigger risk. But the facts don't really substantiate the idea that insurance risk is really changing. Warren Buffet about a year or two ago said Berkshire had not made any actuarial adjustments for changing weather patterns.
@Adam Robinson I live, as the crow flies, about 25 miles across the East Galveston Bay from the Bolivar Peninsular. I rode out Hurricane Ike in 2008. There were only a few structures left standing on the Peninsular. There was talk about what the government should do about building back in these areas. What came about was that to get Windstorm and Flood insurance in these areas, building codes were increased which in turn made the new builds stronger, safer and more expensive. This in the long run takes less out of the Insurance Kitty. Now the government did come in and they bought out the first row of homes back from the beach and created a Wetlands. I will add that for the people that live on "The Peninsular", will continue to live there at all cost. Its a way of life for them. It took about 5 years before building to start back up. There is a building boom on the Peninsular now.
It would be interesting to know what kind of impact that Tornado Alley in the Midwest, or the Earthquake area in California had on the Insurance Kitty as compared to the coastal areas.
The rain can stop anytime it wants to. I'm ready to start the cleanup.
If a Remington 1100 washed up at your house in 2008 its mine.
Its crazy down there right now with the codes. Thats a good thing but what they need more is an inspector that has a clue.
I hope he is not a BPer.
No. The storm isn't even over. There is tons of flooding and you can't fly into the area and you can't drive into Houston from any direction due to flooding of the highways. If you have a property manager here, tell them to go out and get you an assessment after the storm is over but it will likely be days. If you don't have a PM, call your tenants yourself and ask them how they are and how the property is. My friends from Houston got out today and are staying with us and had no flooding where they were but there is more rain to come. This will not be "over" for many days. The water will take a while to succeed and some streets literally fell apart.
What a coincidence! I was also actually wondering about it.
First of all, I hope everyone is well and will get to safety as people cannot be replaced.
Here is a play by play by play of how the 2016 Baton Rouge flood (and New Orleans 2005) went down for homeowners/investors:
1. You cannot access the flooded neighborhoods until local authorities deem it safe. Folks who really want to get in will bring or borrow a boat.
2. If you have flood insurance and you know you have flooded, call NOW to declare your claim. If you wait a few days, you will be added to the queue and may have to wait weeks more than everyone else to get an adjuster. I called on a Sunday night. Most investors I talked to thought they were closed so waited until a weekday.
3. Homeowners (not landlords, only owner occupants) and renters can file with FEMA for grant assistance that is independent of income. You can get money for property damage and contents.
4. Property owners (all) can file with FEMA for an SBA loan.
5. If you start gutting the property before the adjuster comes, take pictures before and save the materials. They need to see what came out.
6. Contractors will attempt to gut you. Initial prices were 500% higher than market rates. Everybody and their brothers are now contractors. For a long time, there were daily arrests in Baton Rouge of contractors who ripped off homeowners. As hard as they pressure you, stay ahead of the money. What I mean is no advance money. When 10 percent is complete, they get 10%, 20% for 20%, etc. Shoddy work is prevalent. I caught contractors not putting insulation in the walls and made them tear out all the sheetrock they put up where they missed is just one of many examples. They will do poor quality work and unfinished work and want to get paid in full! I know what some of you are thinking…These are licensed/bonded/insured folks doing this. They are just putting bodies on jobsites. Some of them are just going to Home Depot with a pickup and shuttling them to jobsites. I drive a pickup and when I slowed down in the parking lot, a couple them just jumped in the back, thinking I was a contractor. You will have people coming from every state to be contractors to state their claim. One fellow came from China to hang sheetrock! Proper remediation is a must. Gutted, DRYED, and treated chemically for mold before any work is done. If you are not on the jobsite DAILY, something may get skipped.
7. You can’t get any contractors either! They are all tied up….
8. Depending on the adjuster, you may get a low ball offer. Be ready to prove your case.
9. There will be bottlenecks along the way. No doors in town. We had people driving to other states to get doors. People waiting months for cabinets…
10. If you have a Fannie Mae backed mortgage, you are screwed. They will let you have the small start-up check, but the mortgage company will do everything it can to hang on to the insurance money. That is, certain ones. I had one that was great to work with. Another one refused to release funds even though the repairs were 100% complete. I am still trying to figure that one out. Contractors will not want to wait months to get paid, which may be how long you will have to wait for that next “draw” from the mortgage company. That leaves your jobsite at a standstill unless you have access to funds.
11. If your house is “substantially damaged,” you sustained more than 50% damage. This is determined by your local building department. You can appeal this with a contractor’s estimate. Why is this important? If you have a “substantially damaged” property, you will have to raise the entire structure to above the flood plain (or the new one coming out) or demolish and rebuild higher. This may not be worth the costs.
12. Permits-hopefully your town will fast track this.
13. Rents will go through the roof. There will be wait lists.
14. Prices of intact houses will go up substantially.
15. There will be doubling up with family for months or years due to the reconstruction.
Harvey sucks! I have been pretty busy recently and haven't been active on here. The creek by my primary house is .7 feet from being at the 500 year mark as far as the elevation. Last I heard the house isn't flooded, but water was getting close so if it keeps rising we are screwed (we evacuated to Dallas due to flooding concerns). No flood insurance since we aren't in any sort of flood plain and it's never come even remotely close to flooding (per our neighbors who been there 40+ years).
So far all my family is safe which is the most important part, although my parents are being stubborn and not wanting to leave their house with 18 inches of water in it (they do have a 2-story house). I at least talked them into getting rescued tomorrow, so been trying to send them information/find them help.
What part of spring are you at? I have a rental at 77389 to the west of the woodlands, right next to tomball that I don't know the status of.
Live in 77388, just North of Cypress Creek off of Kuykendahl. What's the neighborhood called?
What part of spring are you at? I have a rental at 77389 to the west of the woodlands, right next to tomball that I don't know the status of.
Live in 77388, just North of Cypress Creek off of Kuykendahl. What's the neighborhood called?
https://www.google.com/maps/place/Londonderry,+TX+...
Subdivison called Londonberry. Further up north. Good luck to us!
What part of spring are you at? I have a rental at 77389 to the west of the woodlands, right next to tomball that I don't know the status of.
Live in 77388, just North of Cypress Creek off of Kuykendahl. What's the neighborhood called?
https://www.google.com/maps/place/Londonderry,+TX+...
Subdivison called Londonberry. Further up north
How close is the house to Willow Creek? The creek is out of the banks, which caused at least some flooding in Preserves at North Hampton (South of Londonberry). Haven't heard anything specific to Londonberry so I don't really have better information.
What part of spring are you at? I have a rental at 77389 to the west of the woodlands, right next to tomball that I don't know the status of.
Live in 77388, just North of Cypress Creek off of Kuykendahl. What's the neighborhood called?
https://www.google.com/maps/place/Londonderry,+TX+...
Subdivison called Londonberry. Further up north
How close is the house to Willow Creek? The creek is out of the banks, which caused at least some flooding in Preserves at North Hampton (South of Londonberry). Haven't heard anything specific to Londonberry so I don't really have better information.
It seems to be a ~1.5 mile north of Willow Creek. Thank you for the info.
Good luck to us!
Thoughts and prayers to anyone effected by Harvey.
My parents are in Pecan Grove, near Richmond, TX (just SW of Houston). They had retention levies begin to fail, but unlike Katrina, the on-spot repairs by divers held, and right now they're ok. The Brazos River has flooded the roads, but the houses are mostly in good shape down there (knock on wood).
Many have posted solid advice about how to proceed with flooded property.
@David S. posted a great list of points to consider. Here are a few more.
Your most immediate need is to file your claim if you have insurance and then to get to work gutting and drying the structure. Do not cut corners on this especially if you had flood insurance. It is recommended to gut to at least 1' above the water line and remove any wet material. You don't need to pay a high priced contractor to do this work, but you at least need one supervisor or yourself who can oversee the work and make sure big mistakes aren't made.
Do not think you can get away with keeping base cabinets and saving existing tub surrounds if the water got that high. That will only trap mold and cause problems for you in the future. I had to overcome this thinking too and decide to do full gut outs and replace everything that was affected.
Housekeeping goes a long way, so keep everything really clean and swept for the most efficient drying and decontamination.
HIRE A PROFESSIONAL to decontaminate or treat for mold and get a certificate. You will be glad you did this especially if there is a chance you will go to sell this previously flooded home. Also get a building permit. It is tempting to bypass this step especially if you are dealing with multiple units and don't normally pull permits, but there are too many risks to not getting a permit.
Hire a 3rd Party Insurance Adjuster who works for you and NOT the insurance company. In most cases they do not get paid until you get paid. Hire this person prior to re-construction and you will be glad you did because in almost all cases they will get you paid substantially more than the insurance adjuster says your claim is worth. PM me for a recommendation on a great 3rd party adjuster if you need one.
Private Market Flood quit writing new policies in Baton Rouge and flood insurance was more expensive here for the first 12 months after the flood. A year later, private market has reopened and rates are still affordable. If you buy flooded homes and private market flood is not available, get a flood elevation certificate from the seller and make sure the property is not 1' or more below base flood elevation. The lower you are in relationship to the base flood elevation, the more expensive your flood policy will be. Of course being above base flood elevation is ideal if you are buying flooded homes.
Do not pay a contractor in advance of any work. EVER!!!! I made this mistake a couple times and will not do it again.
Houston area residents will witness an outpouring of support and help from neighbors showing up to lend a hand. People will be cooking giant pots of jambalaya and passing plates out to neighbors working to restore damage. Church groups and volunteers will show up to help folks who don't have help to get their properties gutted out. Friends will house friends as well as strangers in need of a roof and a bed. People are generally resilient in these situations.
If you are looking to expand your business, do not be fearful of what is to come. Take advantage of this opportunity to pick up some really great deals and make intelligent decisions about what and where to buy. There are usually several silver linings to be found in an event like this. While many homeowners will be devastated and not have the means to rebuild, many others will, after some hard work and sacrifice, be able to move back into the newly remodeled home they only wished they had before the flood. Look for the silver lining and try to figure out why this happened for you rather than to you. Prayers from Louisiana going out to all of you who are impacted.
See you at the top!
update -
we're still good,
rainfall for the year is 50.76, prior to Harvey 33.94, I'm 1 mile north west from 290 and hwy 6 in nw Houston.
FYI, Cypress Creek 2 to 3 miles north of me is a mess
update -
we're still good,
rainfall for the year is 50.76, prior to Harvey 33.94, I'm 1 mile north west from 290 and hwy 6 in nw Houston.
FYI, Cypress Creek 2 to 3 miles north of me is a mess
I guess 'good' is relative. The news says thousands of homes were destroyed, over 48 inches of rain and tens of thousands of people in shelters. Stay safe.
My prayers are with the families affected by this storm. I know how hard it is being displaced, as my family were displaced by a hurricane in GA.
The needs for apartments will be great in the area, once things dry out and settle.