#59: Landlords and Natural Disasters

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Nowhere in the country is safe from natural disasters, and property owners should be aware of what calamities might strike in their area. But what should landlords in particular know about natural disasters? In this episode of Night School, we’ll discuss things that landlords should do before, during and after a catastrophe.

Transcription of Landlords and Natural Disasters

Jeff: Welcome to Landlord University Night School. I’m Jeff Pearson and this is my co-host…
Stephen: Stephen White.
Jeff: Hello Stephen, how are you this evening?
Stephen: Pretty good Jeff. So the topic we’re gonna cover today is pretty good timing. Right before we jumped on the recording here we were just talking… I was asking if you felt the earthquake that happened in California a couple of days ago and you said you didn’t feel it from where you were, right?
Jeff: That’s correct, yeah. Although there are people around me who did feel it, I just didn’t happen to wake up but it happened north of me up in Napa which is about an hour and a half, two hours away. Certainly far enough away that it didn’t cause any damage around me but certainly there was a lot of damage in Napa and Vallejo, in those areas in that part of the state.
Stephen: Right, well you know in sort of a weird twist or very early here we had posted a blog article on our website called, “Landlords and Natural Disasters” and the article was already written at the time that the earthquake happened. It’s just weird, really weird timing on that but sort of seems fitting obviously to discuss it and find out, “Okay, so what if you’re a landlord and now you have to deal with a natural disaster?” Certainly, it happens.
Jeff: Yes, and you know certainly in California we have earthquakes but there are a lot of other types of natural disasters that people have to be aware of depending on where they live.
Stephen: Yeah, so earthquakes California I definitely think of…I’m sure I’ve seen a video or two of landslides you have in your area is that an issue?
Jeff: There are places around here that have some landslide issues, and certainly within Californian there are a lot of different places that have landslides out on the coast. People who have houses on the bluffs, there are some houses that from time to time get threatened or go down the hill.
Stephen: What about, let me see we got here, drought? That’s probably something that you guys are dealing with pretty often, right?
Jeff: We’re in the middle of a drought right now. It’s kind of a big deal at this point and actually something that we probably need to talk about more in depth in a future episode.
Stephen: Yeah, definitely. Definitely. I know that that’s something that’s on the news quite often. I just saw recently there’s an app that somebody built to blow in your neighbors and taking pictures of them watering their lawns and things like that, right?
Jeff: Right.
Stephen: So yeah.
Jeff: But yeah, you’re talking potential for hurricanes, tornadoes, floods, wildfires, there are just so many different things and as a landlord, you have to be prepared for that. In California, I think they said less than 10% of the structures that were damaged by the earthquake had earthquake insurance which means these people lost everything.
Stephen: Yeah, which is crazy to think that if you’re in a place that has earthquakes you got to have the right insurance. I mean that’s first and foremost before we even dive into this anymore that would be the first thing to cover, is get the right insurance. If you live in a flood zone, get the correct insurance.
I don’t know about your area, but here in New York, you’re required to carry that insurance if you’re within certain so many feet of water or what they consider to be a flood zone. I think at most places they do mandate that require it but…
Jeff: I think in the last 10 or 15 years, California has mandated flood insurance if you’re in a flood zone and everything is documented. You know when you buy a property, it’s part of the disclosure process as to what level of flood zone you’re in and thus what level of insurance you have to get.
Stephen: And for me being especially so close to Buffalo, New York we’re pretty lucky. We don’t have to deal with hurricanes or earthquakes very often. I think we had one over the past 10 years it was really minor. But the biggest thing around here is blizzards which we had a handful last year and the snow damage that that can do. We saw trees taken down because of the weight of the snow, roofs caving in, you know the roofs that just literally can’t take that much weight on them. You know when you get five, six feet of snow it’s a ton of weight especially if it’s a heavy wet snow.
Jeff: Exactly. So when a landlord faces something like this, I think even stepping back. If you have a property, it’s incumbent upon you to talk to your insurance agent to find out what types of coverage you have and what are the threats that you’re most exposed to. And make sure that if there is insurance for it you’re covered for it so that you don’t come across a situation like these people in Napa that they don’t have the income from the property, and they have the expense of having to repair the property without having insurance to cover it.
Stephen: Yeah, one of the things too is, that I’ve actually never seen, one of the things that we talked about in the article here and Jennifer who wrote the article did a really good job of researching. One of the things that she talks about too is having something in your lease that mentions you know if the property becomes uninhabitable, which is potential.
I mean that could happen for sure and just thinking you know in any of the lease agreements that we have heard that I’ve seen I can’t say that I’ve ever seen anything in there to cover a natural disaster and in the event that your property becomes uninhabitable what you would do.
So it’s definitely worth, again, if you’re in an area that has a lot higher likelihood of something like this to happen I would put it higher on the priority list for sure but definitely worth having an attorney take a look at it and getting an addendum in there or something to make sure that you’re covered in case that does happen. Obviously, you don’t want to and you certainly wouldn’t wish for it but you’ve got to be prepared in case it does.
Jeff: Exactly, you know one of the other things that she mentioned in that article is records and when we’re talking about this we’re thinking about the property. The property that tenants are paying you money to live in but for that property, you have to have records and most people keep those records at their house.
So even if you’re taking care of your rental property and you got everything set there, you’ve got your insurance and everything taken care of, if your records are in your house and your house is destroyed, then you’ve lost your records. So she makes a really good point. It’s time to digitize these things and get them up into the cloud so that you’ve got some form of backup of these documents.
So that if something does happen you know you who to contact for insurance, you’ve got your insurance records, you’ve got all of your lease documents, you have everything available to you and it’s a pretty simple process to scan that stuff. You can even do it with your phone these days and then upload it to an account. You know, Google account is a simple way to do it.
Stephen: I was just gonna say Google is fantastic for that. You know, you and I Jeff, we use a lot of different Chrome extensions and Google Drive and it’s a great way to store things. Essentially you can share with who you want. That’s a great way for landlords to have a way to store documents, communicate with tenants. Again, you can you can share certain items with certain people and you know choose what you want to share what you don’t want to share and you know everything to get wiped out and stuff still exist.
So that’s such a great, great tip there and for anybody who’s ever used something like Dropbox or Carbonite, I know has a product that does the same thing, anything that backs up your data and puts it in the cloud. Anybody’s ever worked on a huge project and had their computer crash or a power go out and haven’t been saved can attest to how important a service like that is that does store things in the clouds and keeps them secure and keeps them safe because you never know.
Jeff: That’s right.
Stephen: You never know. A flood can easily take out your computer and then what? So just keeping it digitally on your own computer I would say it’s not even enough. Store it in the clouds, get it out of your possession and make it available so that if you had to, you know in a worst-case scenario you can get it from somewhere else.
And we deal with a lot of times with landlords that have to send in documentation for us. You know they’re traveling there on the road or they’re at their office or whatever don’t have access to the documents sitting in their office. But I’ll tell you that when we talk to a landlord that uses something like Dropbox or Carbonite or any of those things, it’s so easy for them to say, “Oh you know what? Let me just log into my account and I’ll grab anything that you need out of there.”
Jeff: Yes. So it really does make good sense and I have referred to the phone. One of the apps that I use now is called Scanbot and it’s a really simple app that lets you scan a document and it saves it as a PDF file. There are a number of different ones. The thing I like about this is it’s automatic. If you put a white paper on a dark background and you put your phone above it will determine that there’s a document there and at the right moment take a picture of it. You don’t even have to press the button to take the picture. It’s really simple.
Stephen: Oh wow, like it’ll automatically focus on what it needs to?
Jeff: Mm-hmm, it’ll draw a green line around the outline of the document and when you have it in the right position, it will take the pictures. You don’t have to move your finger or your thumb to take the picture. It will do it automatically. I found that it does a really good job of getting me good quality pictures. I don’t have to redo them once or twice because I moved the phone when I press the button.
And then it gives you the option to upload those things. You can email it you can upload it to Dropbox or Box or Google Drive, any or all of those, and once you’ve done that then it’s in the cloud and you’re gonna be in much better shape. I mean if you have a physical copy, you have a copy that you took on your phone and then you upload it to one of the cloud services then you’re in pretty good shape for having a backup. And like you said to be able to just send those, “Oh let me sign in and send that from my Dropbox account or my Google Drive account.”
Stephen: Yeah and let me give you one other real-world scenario here. We got a call a couple weeks ago from a property management company that requested a background check that we ran almost six years ago and were required by law to hold these and archive them for five years. Luckily, we still had these old archived background checks that they were requesting, but it was before we started storing everything digitally.
And so we have literally one cabinet full in the first year that we were in operation where everything was you know hard copy and print it out and we kept those records as we had to. And just digging through those, I couldn’t tell you how many times, and we had a couple of people doing it. I couldn’t tell you how many times we said, “Thank God that we put everything digitally now and we could just search by a name.”
I mean how crazy is this that, you know we’re digging through these files and files trying to find the right one. We know it’s there, it’s a matter of finding it. So you know getting it digitally it also helps you easily pull this stuff up on demand into a search for some sort of a keyword that you may have saved it under or anything like that. So it’s just another great way to organize.
Jeff: Yes, so in addition to all of these other things, one of the things that landlords need to pay attention to is preparation in advance. If you live in a wildfire zone you need to be sure that you have the proper clear zone around your property and very often if you don’t you’re gonna get fined or if there is a fire and you haven’t cleared your property, your property drops to the bottom of the list for the properties that the firefighters are going to try to save because they’re going to take care of the ones that they have the best chance of saving rather than people who let the growth get too close to the house.
So make sure that your landscaping this is set up properly. And I’m sure for people in earthquake zones, make sure that your foundations are solid and I would…if you haven’t in recent years get a good inspection of the house, make sure that all of the proper ties you know the framing has to be tied to the foundation, is that properly done? Is the structure solid enough to withstand a moderate earthquake and if not what changes can you make to make sure that you bring it up to code?
And in the ice zones, I’m sure there are things that people need to take care of there. Although I’ve never lived in a place like that, I’m sure there are things you can and should do to make sure that you’re properly prepared for that type of a situation?
Stephen: Yeah just don’t park under branches. That’s about the only thing you can do as you know a couple years ago we had a really, really heavy ice storm and like I said it just weighs everything down and things break, branches break and that was by far the most damage that was caused by overhanging limbs that were hanging over a house which could easily be trimmed. Same thing with overhanging on a driveway or something again could be trimmed to eliminate that risk and that possibility.
So you know definitely just some general maintenance that the landlord can do. Make sure that there’s no overhanging limbs that are gonna cause problems. I think that’s good advice whether you’re on ice zone or not. You know you got wind that can take limbs down things like that so it’s always good to just sort of look around, take a take a good assessment, look at the worst-case scenario and obviously fit it into your geographic location, “What could possibly happen and what are the potential disasters that could happen?”
Jeff: Yes, and it’s the type of thing that you need to add to your annual checklist. When you’re doing an inspection of your house, so many times I think landlords think of the inspection as being something for them to go in and see how the tenant is taking care of their property as opposed to really thinking, “What do I need to pay attention to, to make sure that this property is at the highest level and at the level that I want it to be for the people who are living in that property as well as taking care of it for the future?”
You wanna be thinking about those preventive maintenance type of things that need to be done to the roof and all those kinds of things. And again, I think that’s something that we can talk about in a future episode, what should be included in an annual inspection and it goes well beyond just making sure that they haven’t put any stains on the carpet or holes in wall.
So if a natural disaster occurs, a landlord…I don’t think they have a legal responsibility to reach out to the tenant but if you have a property in an area that is hit by some type of a natural disaster, first and foremost take care of yourself your family and your home. Make sure everything’s taken care of but also make sure you reach out to your tenant.
If you can get over to the property. Check on the property, make sure that they’re safe and once you know that they’re safe make sure that the property is in good shape and if any repairs need to be made make sure that you get on it right away. If you want to take care of the property, you want to take care of the tenants that you have. They’re important to you and providing them with a safe place to live is important as well.
Stephen: Yeah and I would say that one thing that I would bring up that’s extremely important for the landlord’s, you know not every state requires you to have renter’s insurance but never ever a bad idea for landlords to require it in their properties and this would be a great example of why. You know if a renter is displaced or who know? I mean there’s a million reasons what could cause them to potentially be late on the rent or you know and then it starts to impact you as a landlord as well. Having renter’s insurance in place could prevent a lot of that.
And so if you’re in an area that it doesn’t… you know they’re not mandated they’re not required to carry renter’s insurance you as the landlord could make that part of the lease agreement and say, “Well I do require that if you’re gonna live here, you have to carry renter’s insurance.” It’s extremely inexpensive and there’s really no reason that every renter shouldn’t have it and it’s gonna cover you against things that the landlord’s insurance policy won’t cover.
You know a lot of the personal items and a lot of those types of things that are not gonna get covered for the tenant will be on their own insurance policy. So as a landlord it’s never a bad idea to make you know to require that your renters carry a renter’s insurance policy.
Jeff: Yes. Well, Stephen, I think that brings us to the end of this topic. It’s a really good topic and I would love to hear if anybody listening has any other thoughts or ideas about preparing for natural disaster. We’d love to have them reach out to us at rentprep.com.
Stephen: Yeah or experience.
Jeff: Yes.
Stephen: If you’re a landlord and you’ve had this experience you know, “What happened? What did you do?” We’d definitely love to get some feedback on that.
Jeff: Without question. Great. Thank you very much, Steven. I look forward to talking with you tomorrow.
Stephen: Thanks, Jeff.