Disaster Planning For Real Estate Investors
No one likes to anticipate disaster. But the failure to prepare for a hurricane, tornado, earthquake, flood, or other catastrophe won't stop it from happening. That's why real estate investors need a written plan to protect both people and property if a disaster occurs. A good plan can reduce the loss of rental income and the cost of repairs, alleviate stress and anxiety, and even save lives.
The most important component of a disaster plan is a list of telephone numbers, e-mail addresses, and street addresses of tenants, contractors, insurance companies, and local emergency services. The list should include both local and emergency contact information because contractors, suppliers, and tenants may be scattered far and wide after a disaster.
Contractors are always in high demand after a disaster. As quickly as the repairs can be identified, the faster tenants can move back into their home after repairs. To meet those these needs, a disaster plan should include contact information for specialty contractors who are equipped to make disaster-related repairs, as well as the usual crew.
Communication with tenants after a disaster is important regardless of the severity of damage to the property. The tenants might want to salvage any personal possessions or furniture, and they will also want to know the status of their rent obligation and security deposit.
A disaster plan should include copies of insurance policies, or at least the policy numbers and the declarations pages. The insurance broker and carrier should be contacted promptly, and preferably before repairs are made. Some property owners may also hire a private insurance adjuster to estimate the cost of repairs.
Insurance policies don't make for enjoyable reading, but property owners need to read them carefully so they can understand the provisions and exclusions of their coverage. To their dismay, many owners only learn after a disaster that more comprehensive coverage at a marginal additional cost would have been a wise investment.
A disaster plan should include interior and exterior photographs of the property before the disaster. Immediately following the disaster, photos should be taken again, especially if repairs will be made before an insurance adjuster visits the property. Keep copies of invoices, receipts, and other documentation of repairs.
Injury and death aren't welcome thoughts. Yet both can occur in a disaster. That's why a disaster plan should be very detailed, yet simple enough that a spouse, parent, adult child, neighbor, attorney, or other associate can enact the plan if need be necessary.
A plan that exists only on a computer might be inaccessible after a disaster, so it's important to have a hard copy as well. Be sure to tell whoever might become responsible for the property where the plan is and what it contains.
Copyright 2007. Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.
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