Posted almost 9 years ago

Real Estate Investors: Essential Tips For Navigating Hurricanes

What essential steps should real estate investors make to navigate hurricanes and major storms?

Hurricane Harvey and the several following major storms have been a big wake up call to real estate investors to have a plan for weather and natural disasters like these. Here are some of the most important moves you can make to minimize risk and maintain great performance from your property portfolio.

Diversify

Diversification is critical. It is far better to have more units, and have them in diversified geographic locations. This way if you take substantial damage to an asset or performance in Houston, you may have others in, say New Jersey, which will offset the loss.

Finances

Having financial reserves is vital for surviving and thriving in the wake of major storms. You may need cash for repairs, for insurance deductibles, for covering income gaps, and additional expenses. One way to achieve this is with using financing on your properties, or at least having a line of credit available. This is also a great way to have a partner to share in your risk. Just make sure you secure and close on this financing before a storm gets in ‘the box’.

Insurances

Insurance is critical in these moments. Make sure you have all the appropriate coverages. Note that only around fifteen percent of Houston homes in the Harvey hit area had flood insurance. So, just because it isn’t mandatory does not mean that it isn’t wise to have. Basic homeowners’ insurance won’t cover flood or storm damage. See our recent blog on the key types of insurance you need to make sure you are covered. Also take a minute to check your level of coverage, the amount of your deductible, and that you have a solid insurer with a good track record of paying out.

Prep Properties in Advance

It’s essential to prep properties in advance so that nothing on the property can be used as a projectile by the storm to damage your property, or neighboring properties. You’ll want to trim landscaping, clear up the yard and any construction materials and equipment, and board windows or put up shutters.

Contractors & Management

Having good contractors and property managers ready will make a ton of difference. A good property and asset manager will do much of this for you. They will also have relationships with great contractors and will be able to get them out fast to secure properties, protect them, and assess and record any damage afterwards. Solo investors may not have this ability, and may find it hard to contact for these items at any price. That can lead to small repair items becoming structure threatening issues quickly.

So make sure you are prepared, and stay safe out there.