Let’s start with the obvious: the New Year is all about self-improvement. And though some people dread New Year’s resolutions, real estate investors salivate at the sound of “new”. After all, real estate investors improve things for a living. Now, improvement is wonderful, but all this betterment does take planning.
As Benjamin Franklin is credited with saying, “If you fail to plan, you are planning to fail.”
This is especially true when it comes to risk management. Many people think that they have created a bulletproof risk management strategy by incorporating or purchasing a robust set of insurance policies. But the fact is, incorporation doesn’t protect your investor clients from maintenance woes and insurance can’t – and doesn’t – cover everything that can go wrong at a property.
Taking responsibility for managing risk at the client’s own property will take some of their own sweat and muscle, but it may just make the difference between ending this year in the red or the black. So, what should your clients include in their risk management plan? To get them started, here is a list of key areas for each season you can provide to them focus on.
Spring brings new life, but it also brings thunderstorms.
1. ROOF & GUTTERS: Check for damage to the roof and clean gutters and downspouts.
Replace cracked, buckled or loose shingles, along with those missing any granules. Keep debris from accumulating in gutters, eliminate sags and dips and be sure downspouts drain away from the foundation.
2. TREES: Remove dead trees from the yard, and trim healthy trees and bushes back from utility wires.
They should hire a licensed and insured professional to trim dead branches and cut down large trees. In addition to preventing damage to the house, a clean yard deters thieves.
3. HVAC: Your client should have a professional inspect the air-conditioning system and clean the ducts.
Give the AC a look before the pros are busy during pool season. Check hoses for leaks, and make sure everything is draining properly. Clean or replace the HVAC filter on a monthly basis.
Summer is a time for fun in the sun. Your clients should be sure tenants and their children have a safe place to play.
1. DECKS: Inspect the deck and make any necessary repairs.
Replace any broken or weak deck boards and inspect handrails and grab bars to prevent injuries from falls. Sharp edges, splintered or rotting wood, rusted nails or nail pops can also be a liability hazard.
2. POOLS: Bring swimming pools and spas up to current municipal standards.
A safe pool has a fence around the perimeter with self-closing and self-latching gates, anti-entrapment drain covers, the water depth clearly marked on all sides of the pool deck and all safety equipment (life preservers, pole, etc.) in good working condition. Check municipal guidelines for additional safety standards.
3. GRILLS: Your client should remind tenants to inspect grills and make sure they are in good working condition.
Check gas grills’ burner jets for clogs and obstructions and be sure that hoses are secure. Clean charcoal grills of ash, and make sure they are free of grease residue. Tenants should not use grills on wood decks!
Fall displays beautiful colors and creates plenty of chores. Investors should start early to finish them all before the first frost!
1. ALARM TESTING: Inspect smoke and carbon monoxide detectors.
Make sure carbon monoxide and smoke detectors are installed on each floor of every one of the properties. They should be placed in each bedroom, main hallway, kitchen and basement. Units should be tested monthly and should be replaced after 10 years of use. The end of Daylight-Saving time is perfect for changing both clocks and batteries in your detectors.
2. HEATING: The furnace should be given a tune-up.
HVAC systems should be checked at least twice a year – before winter or summer arrive. Have the ducts professionally cleaned to prevent fires resulting from dust buildup. Furnace filters should be changed on a monthly basis.
3. PESTS: Prevent bugs and rodents from entering the property.
Seal or caulk cracks, gaps or holes near baseboards, windows and doors. Cable, plumbing and electric service entry points should also have a tight seal. Any hole the size of a dime or larger may allow rodents to squeeze through.
Winter can be punishing on your client’s property. Prudent preparation can get them through the season peacefully.
1. PLUMBING: Winterize all water systems.
Drain, disconnect, and store garden hoses. Install a faucet cover to help prevent outdoor faucets and any connected plumbing from freezing. Drain the sprinkler system and swimming pool pump. Turn off the water and fully drain the plumbing systems of any vacant properties.
2. WALKWAYS: Cracked, broken or uneven driveways, walkways and stairs should all be repaired.
The expansion and contraction caused by freezing and thawing can lead to significant damage to exterior walkways. If left unchecked, these hazards can cause slips and falls. Your investor client should specify in their lease who is responsible for clearing walkways and driveways of ice and snow. They may even want to provide a shovel!
3. HOLIDAY COOKING: Property owners should remind tenants to use caution in the kitchen. Cooking is the leading cause of house fires.
Never leave anything cooking unattended. Water spreads grease fires – put a lid on the pan to smother the fire or use a multi-purpose fire extinguisher. Keep potholders, clothing, and other flammable items away from open flames.
Your investor clients should develop their yearlong risk management plan now and take their RE business to greater heights this year. The extra effort will make their entire year go much smoother and may just show up in their pockets in time for the Holidays!