How to Protect Your Investment from Natural Disasters

It is readily apparent that natural
disasters are striking with greater frequency and these events can leave
devastating consequences in their wake. There are steps homeowners can take to protect
themselves and you may collect insurance
payments under certain circumstances.

However, while most of the news
coverage focuses on the human toll, which is understandable, we would like to
turn our attention to what investors can do in the event a natural disaster
affects one of your investment properties.

Understand your coverage

Renters’ insurance typically covers
your tenants lost, stolen, or damaged personal goods. This does not cover
losses incurred to your property, such as any physical damage done to the
apartment.

A landlord’s policy is more
extensive than a renter’s or a typical homeowner’s policy. But, you need to
check the policy and understand what it covers, and, perhaps more importantly,
what is your responsibility. You should know your deductible and what events trigger
a claim. For instance, most policies do not cover flood damage. It is
particularly important to know if your policy covers lost rental income due to
inhabitability and potential injury.

If you do not understand anything,
you should ask your insurance agent prior to disaster striking.

Keep orderly records

You
should have your property and insurance records in a safe place. Then, once
disaster hits, make sure your estimates and receipts are in order to keep track
of the required costs to fix your property.

This
takes on an added level of complexity for real estate investors, who may have
multiple properties.

Tenants

Many
leases include a clause allowing landlords to exit the agreement should
disaster hit, providing it is not a rent-stabilized building. Assuming tenants can safely habitat the
unit, a typical tenant’s clause is one that allows him or her to break the
lease if the problem is not fixed within 30 days.

You may also find you can continue
to charge rent. However, you should prepare for a backlash. Aside from the bad
publicity, under New York State’s Warranty of
Habitability, owners generally have to provide a property where the
tenant has a living condition and does not present a danger to their life,
health, and safety (this warranty does not extend to a tenant that caused the
damage).

Have a reliable contractor

As
a property owner, hopefully, you have established strong connections with
general contractors and repair personnel such as electricians and plumbers.
Remember, a lot of people are likely trying to reach them in the aftermath of a
disaster. As a property owner, one way to catapult to the top of the list is to
do a lot of business and refer others to him or her.

Co-ops and condos

Investors
tend to shy away from buying co-op units since there are usually rules designed
to limit a shareholder’s ability to sublet.

Therefore,
New York City investors typically turn to condos due to the less restrictive
rules the board imposes. The building’s policy is likely to cover external
damage, such as to the roof, façade, and landscaping. While this means you do
not have to concern yourself with these aspects, you still need a policy to
cover damage to the unit, though.

The post How to Protect Your Investment from Natural Disasters appeared first on ELIKA Real Estate.