Shield Investment Properties from Winter Risk, Pt 2

Winter has made its presence known, but your investor clients can still fortify their “castles” against the cold. The saying “better late than never” holds true here. In this two-part article series, we are looking at four winter perils from which your clients need to shield their properties. In Part 1, we addressed ways to protect occupied properties and this time, we’ll cover vacant properties and renovation projects.

(*If you haven’t yet read Part 1 of this series, go HERE to read it now.)

Theft & Security

Security is the common thread that runs through any solid mitigation plan for vacant properties and rehab projects. Protecting these properties from various types of winter losses also requires a proactive approach to security. Not only can implementing a security plan assist your investors in preventing theft, but it can also reduce the chance of a water loss, keep fires at bay and help to sidestep serious liability issues.

Here are a few specific reasons to get on top of security:

  • An evicted renter may be tempted to come back and damage the property, or even burn it down, once their belongings are out.
  • Trespassers in the neighborhood may be looking for a place to find shelter from the elements. If there isn’t a fireplace in the home, they may start a fire in a more dangerous location…like the middle of the living room.
  • Someone looking to hide illegal drug activity may find your client’s vacant property to be the ideal spot to set up a lab or illegal substance distribution center.
  • Your client’s property may become the perfect party location for kids with nothing better to do over a holiday break.
  • If the property looks abandoned, a vandal may see it as a good place to let off some steam or hone their graffiti skills. To an arsonist, vacant properties are prime targets.
  • A thief who steals copper could leave the now-open plumbing system to spill all its contents into your client’s investment for however many minutes, hours or days (!) it takes for someone to discover the breach.

Layer the Security and Monitor, Monitor, Monitor

A good security plan includes a multi-faceted approach including an increased presence on-site. Your investor or their property manager should drive by on a regular basis, keep the mailbox clear and keep the yard tidy. Getting the neighbors involved as a second or third pair of eyes can also be extremely helpful. If the property will be vacant for some time, your client may need to board it up, but still make sure the condition of the property sends a message that it is being looked after. Lastly, your client should layer their security with good lighting, door and window reinforcement and an alarm. Your clients should do whatever they can to encourage thieves and vandals to move down the block to a more vulnerable target.

Water Damage

No doubt about it, one of the worst messes to walk into is a vacant property that has experienced a burst pipe. Water damage is one of the most frequent losses we see, and repair costs can easily climb into the tens of thousands if a leak isn’t discovered quickly. Picture indoor icicles and all kinds of ice sculptures. We have even seen a basement literally filled with ice, forming a “basement ice cube”. To add yet another complication, if the weather turns warm within a day or two after the burst, your investor client can also end up with a gross -and expensive- mold problem.

When are investors most vulnerable?

When the temperature rises after a freeze: Though a burst pipe can occur when the temperature drops, it is often not discovered until the temperature rises enough for some of the ice to melt and the water pressure to return. The pipe may split during the freeze and then finally leak during the thaw.

During a theft: A thief is not concerned about leaving the water rushing through the house as they run out the back door – they are there to remove any valuable items and make a rapid exit! During the time it takes for someone to discover the breach, water just keeps running continuously throughout the house, damaging sheetrock, flooring, trim and more.

Carelessness during the renovation phase: As plumbers work on water lines, small water leaks can occur from time to time during normal construction. What your clients should avoid is a major water catastrophe. If your client’s crew is supposed to shut the water off when they leave for the day or someone doesn’t take care to shut the water off before performing major plumbing work, it could cause significant setbacks to the completion of the project and potentially impede their ability to pay the contractor for any quality work that they have done.

How can your clients protect themselves from these scenarios?

  1. Shut the water off! Water should be turned off at the street and the plumbing system should be drained in vacant properties. At the very least, the water supply should be shut off in the house itself. That way, if your client does have a breach to the plumbing system, the amount of water will be limited to what is currently in the pipes.
  2. Insulate pipes, especially those on exterior walls. Your investor clients should not forget water lines that lead to a garage sink or that run to the hose on the outside of the house. Hose bibb covers can also help prevent outdoor spigots from freezing.
  3. Remember that insulation does not generate heat. Property owners should make sure their HVAC system is in good working order and heats the whole house adequately. If your investor hasn’t done an annual check-up of the HVAC system yet, they should get one scheduled before the tech’s schedule fills up!
  4. If your client is renovating or showing a house and they feel they must keep the water on, they should be sure to:
    • Keep the heat above 55 degrees. Your client may be tempted to save on the heating bill by turning the thermostat down, but they should remember that the air inside the walls is typically colder than the inside of the home.
    • Open cabinet doors below sinks to allow warmer air to circulate through those areas.
    • During cold snaps, leave faucets on a slow drip. Allowing water to continuously flow through the pipes may help prevent it from freezing.
  1. Instruct contractors on how to assist you with protecting the property.If your client leaves them in charge, your client needs to be able to count on their diligence in protecting the property while they are there and away.
  2. Make sure any real estate agents showing the property don’t undo their winterization efforts by turning the water back on. This goes for home inspectors too!
  3. Take time planning and implementing a solid security plan. As we discussed above, a thief doesn’t care what they damage to get the goods they want. Keeping them out is the best way to avoid damage.


Fire Damage

About as frequent as water losses, fires are among the costliest losses we see to investment properties. Not only are they extremely destructive to the structure, but fires can also lead to serious injuries or in some cases, death. For this reason, fire prevention is of the utmost importance. Here are three key components for keeping fires at bay:

Regular inspections

Aside from driving by vacant properties, your clients will also need to periodically inspect the interior. These inspections will give your investor client an opportunity to make sure there aren’t any maintenance items that have popped up while away. Visiting a project during a reno not only gives your client eyes on the progress, it also helps to confirm whether or not the jobsite is kept clean and free of fire hazards or other safety issues.

Smoke and CO alarms

Your client will want anyone working on the property to be able to get out safely should there be a fire or Carbon Monoxide emergency. Aside from keeping workers safe, maintaining working smoke alarms are typically part of the fire code, and often a requirement of your client’s insurance policy. (Your investor client may be required to have these in place and working in order to be covered for a fire loss.) All batteries should be changed at least twice a year and the alarms themselves replaced every 10 years. Carbon monoxide alarms are important because the alarm is the only way to detect a problem. CO is odorless, colorless, and tasteless, which is why they call it the “silent killer.”

Working smoke alarms cut home fire deaths in half. -National Fire Protection Association

Fire Extinguishers

Along with smoke and CO alarms, your clients should place fire extinguishers in all common areas, such as hallways, the living room, kitchen, basement, and garage. The manufacturer’s instructions should be followed for maintenance. Extinguishers can keep a small fire from becoming a larger, more dangerous, and destructive one. With all the power tools in use on a rehab project, these are a must for any jobsite.

Liability Issues

Though investors should keep up with maintenance items to avoid injuries year-round, the risk can increase substantially during winter, meaning the potential for multiple lawsuits with your client’s name on them. With the potential of risks caused by ice, such as a slip-and-fall, it is crucial to eliminate any potential hazards, even if just for the mailman. Someone may also try to hold your client responsible if they get injured while trespassing on the property! To avoid a liability issue this winter, your clients should:

  1. Make sure all walkways, driveways and stairs are in good repair – no uneven surfaces, no loose handrails.
  2. Make sure walks and driveways are cleared during inclement weather. If this is the client’s property manager’s job, your client should check to make sure that it is getting done. They should be sure the property manager understands the importance of keeping up with this simple item. It could also keep them out of hot water.
  3. Maintain the trees. Ice storms can cause weak limbs to break, falling on any objects (or people!) below. They may also uproot an unstable tree. Winter is actually a good time to have an arborist tend to trees; without its leaves, they can more easily look for any structural issues.
  4. Specify in the lease where guests and construction crews are to park. It will keep guests safer and could help your client avoid potential fines as the property owner.
  5. During scheduled inspections to vacant properties make sure to remedy any hazardous conditions:
    • Wires protruding from walls or ceiling – electric shock or fire hazard
    • Missing light switch/outlet plates – electric shock hazard
    • Broken stairs/loose or missing handrails – injury hazard
    • Leaky pipes – water damage to property and possessions
    • Broken windows – safety hazard
    • Exposed nails – injury hazard
    • Flickering lights – electric shock or fire hazard
    • Mold/mildew – health hazard

Additional Considerations for Renovation Projects

Your investor client’s general contractor should have a plan in place for keeping the jobsite fire-free. Your client will want to know what that is along with any other safety precautions they take before they step one toe on the jobsite. The investor should not hire someone who hasn’t thought this part of the job through as it can leave your client exposed to an array of unknown and costly liabilities. And of course, always make sure anyone your client hires are properly licensed and insured for the type of work they will be performing.