Spot Hurricane Damage to Investment Properties
As a real estate investor, hurricanes can cause some potentially serious damage that may not be immediately apparent. You must learn to spot hurricane damage to investment properties. This can be especially problematic for scenarios where the investor is unable to thoroughly inspect the property prior to making the purchase, as is commonly the case for tax deed auctions and foreclosure auctions. So how can you spot the signs of a problem and minimize your chances of finding unexpected damage that threatens your profit margin? Especially in cases where you’re unable to inspect the property in advance?
Discuss Local Hurricane Damage With Neighbors
The neighbors should be your first (and perhaps best) source of information concerning the local impact of recent storms. Storm damage and intensity can vary dramatically from neighborhood to neighborhood. What’s more, the quality and age of the home’s construction and building materials has a very significant impact on how much damage a property sustains.
Knock on a few doors and ask the neighbors if they’re aware of any serious damage to the neighboring property. You’ll be surprised by how great of a resource they are to helping you spot hurricane damage on properties they live near.
“We were considering a foreclosure property and took the time to chat with the neighbors across the street. This was about seven years after Hurricane Charley and the neighbors recalled how the wind got under the porch roof and actually caused the roof to lift slightly during the most intense winds. I did ultimately buy the property and when we took possession, I checked the roof and attic over the porch and sure enough, there was damage in that area. It was never repaired but the damage actually wasn’t all that obvious. I’d never have spotted it if I wasn’t looking closely. We actually kept that property for my daughter, so we dodged a bullet because that portion of roof would’ve certainly peeled off during Hurricane Irma,” recalled Florida investor Dan Henley.
In addition to sharing information on how the house fared in the storm, neighbors can also offer lots of insight about flooding, since that’s a problem that tends to impact entire neighborhoods. While flooding often pulls in lots of sludge and debris, this isn’t always the case. Hurricane-related flooding often invades and recedes very quickly, leaving only moisture behind. But wet flooring, wood, insulation, and drywall provides the perfect environment for mold formation, particularly if it’s not remedied quickly or properly. If you’re acquiring a property that was vacant when the storm hit, you should generally expect to find a fairly extensive mold problem and water damage. This is because contractors virtually always give priority to occupied homes in the weeks and months following a hurricane. So a vacant property may sit for an extended period of time before it’s repaired, dramatically increasing the chances that you’ll see a more widespread mold problem and even collateral damage.
If the windows provide some visibility inside the home, you can also look for signs of a high water mark on the walls, along with any obvious mold formation. In cases of extreme or prolonged flooding, there may be a high water mark on the home’s exterior too which is a great way to spot hurricane damage.
Lastly, neighbors can also offer insight as to whether the property you’re considering has storm shutters. Generally, this is an item that remains with the property, just like the appliances. This is a particularly relevant question if you’re acquiring an investment property that you’ll own during hurricane season (which, in Florida, extends from June 1 to November 30 of each year). If it turns out that the property does not have hurricane shutters, you may wish to acquire a set because if a storm is imminent, shutter prices will rise dramatically and availability becomes extremely limited. Shutters can be purchased for a very affordable rate at second-hand shops like Habitat for Humanity thrift stores. Some real estate investors will even keep a few extra sets on-hand for an emergency. Storm shutters are essential for protecting your investment, as debris can easily break glass and once the wind gets inside the home, chances of a catastrophic structural failure skyrocket.
Looking for Other Signs of Hurricane Damage
Roof damage is perhaps the most common form of hurricane damage to houses. Three-tab shingles tend do perform quite poorly, whereas storm-rated architectural shingles can remain intact in winds approaching 130 miles per hour in many cases. Notably (and rather inexplicably), Florida building codes do not require newly-constructed homes to be equipped with hurricane-rated shingles. So widespread shingle loss can be observed even on newer homes.
Older shingles tend to get brittle over time, so it’s common to see large quantities of shingles fracturing and flying off during a storm. You’ll probably find shingles or shingle fragments in the yard surrounding the home. To determine if the shingles are old and brittle or newer and non-hurricane rated, simply bend the shingle. If the shingle cleanly snaps fairly early into the bend, then it’s an older, brittle shingle. A newer shingle won’t snap at all, though it may begin to crack as you fold it completely in half. These newer shingles break off due to intense winds combined with changing wind directions. It may be possible to repair the roof if the shingles are newer, whereas an entirely new roof will likely be required if the roofing materials are old and brittle.
Roofing tiles don’t have any give or flexibility, but they do tend to fly off when winds reach extreme speeds. Fortunately, roofing tiles can remain in place for decades, so spot repairs are typically all that’s required. Some homes may even have metal roofing, which is applied in large sheets. This type of roofing is extremely damage-resistant, albeit pricey.
If roofing damage is observed, you should generally assume that there will be some degree of mold and water damage inside the property. The risk of damage is higher with an older roof, as there is a much greater chance that the water barrier underlying the shingles will be compromised. A newer roof may remain watertight even if shingles are missing, although the risk of interior mold and water damage rises as time passes.
If the storm was recent, you’ll also want to consider the weather patterns that followed the storm. Let’s say that the storm hit in late September or October-the tail end of Florida’s rainy season. There are some years where the daily rains cease in mid-October and don’t resume until the following spring. If this occurs following a storm that causes roof damage, then you may have a minimal risk of mold and water damage. Of course, Florida rain showers are very localized, so this is yet another point that you can discuss with neighbors. There are also many websites that document historical weather data, such as Weather Underground and Weather.gov.
As a real estate investor, you will also be faced with the decision of whether to insure the property (and how much insurance you’ll acquire.) Many investors will choose to insure the property during hurricane season as a precaution, particularly for the most vulnerable real estate, such as homes in a flood zone and coastal waterfront properties. Remember, you won’t be able to insure the property once a storm is imminent, so this is a decision you’ll need to make in advance.
With these tips to spot hurricane damage, you’ll be well-positioned to acquire a profitable piece of real estate, despite any recent hurricanes. Purchasing a home via a tax deed auction or a county foreclosure auction can result in some significant savings that can maximize your profit margin, but the inability to fully inspect the home prior to sealing the deal leaves many investors nervous. But with the right strategy, you can effectively spot hurricane damage in houses by simply chatting with the neighbors and performing an exterior evaluation. This will allow you to factor in the cost of probable repairs, so you can determine a maximum bid that still allows for a healthy profit margin. This informed yet strategic approach to real estate investing will minimize your risk, while maximizing your chances of turning healthy profit.