One of the most severe losses investment properties could sustain is a fire. The average fire costs an investor at least $30,000, with many fires resulting in total losses. Fires are also in the top three most frequent loss types for investment properties right behind theft/vandalism and weather. Fires not only devour property, they can also result in severe or fatal injuries. However, if investors are proactive, they may save themselves from a painful fire loss. Let’s look at five key ways to “tame the flame” so your investor clients and their tenants don’t get burned – financially or physically.
#1 Tenants Tips
Encourage your clients to choose their tenants wisely and take time to educate them.
Out of all the ways a fire can start, the most common denominator is typically a tenant. If a tenant doesn’t feel a sense of responsibility for being safe in their home, an property’s risk for fire will increase exponentially.
To keep cashflow going and profitability up, investors should employ a thorough tenant screening process, build a good working relationship, and educate their tenant on living safely in the home. A fire loss can cost much more than just a few months’ rent: potentially an entire investment and possibly, a life.
Some real-life examples of fires traced back to tenants involve:
#2 Property Maintenance Tips
Investors should always make timely repairs and practice proactive maintenance. Though it takes some effort for the investor or their property manager, timely repairs and proactive maintenance are one of the simplest ways to avoid a fire at a property.
Fire prevention begins as soon as an investor is evaluating a purchase. They should understand what immediate repairs, if any, need to be made to bring the property to a safe, livable condition. Regular inspections should be scheduled throughout the year, making sure to get ahead of any seasonal changes, and investors should check on their properties as soon as possible after any severe weather. Occupied properties will need to be monitored to make sure tenants are doing their part to keep the property ship shape, while vacant properties will need even more frequent visits so they stay secured.
Here are a few key areas investors will want to make sure are in good working order at all times:
#3 Intruder Tips
Keeping a property fire-free while it is vacant takes planning and action. Properties that look abandoned (unkempt yards, mail flowing out of the mailbox, no lights on at any time, etc.) are more likely to become targets for theft, vandalism, drug activity and squatters. As previously mentioned, vacant properties will need more frequent monitoring. Weekly visits by the owner or property manager should be the status quo. The should do a lap around the property to make sure the exterior and interior of the property looks safe and secure. If damage is discovered, they should contact any appropriate authorities immediately and make you, their insurance agent, aware too.
In addition to monitoring, encourage them to add an additional layers of security by setting up lighting and an alarm, securing windows and doors, and boarding up the property if required by city code or if it will be vacant for an extended period and isn’t on the market for sale. Additional items to be mindful of:
#4 Contractor Tips
Investors should never hire an unlicensed or uninsured contractor just to save a buck. Though less common than an occupied or vacant property, fires do still happen on construction sites. The use of a blowtorch, sparks created while welding or improper hookup of electrical wiring can all cause fires at a rehab. Of course they should hire someone experienced, reliable and committed to fire safety to complete a rehab or maintain a rental, but investors can put themselves at risk by selecting a contractor that has no insurance to pay for damages for which they could become liable. Construction is a dangerous trade and the risk of injury is high. The cost of hiring someone without the proper licensing, insurance or who doesn’t obtain the proper permitting could land the property owner in a lawsuit!
#5 Nature Tips
For those who invest in areas prone to wildfire, it is extremely important to do make their properties as fire-resistant as possible. They may be able to save their property from being a casualty of mother nature by taking preventive action. Creating defensible space around the property and eliminating excess fuels like leaves and pine needle buildup are keys to being “firewise.”
The time and effort your clients put into fire-prevention planning and mitigation are well worth it. More than just the cost savings, they will be able to invest confidently and have peace of mind that they’ve done everything they can to avoid a loss.