Wholesaling Homes in Hurricane Zones
The recent massive hurricane hitting the northeast is a powerful reminder of how important disaster preparedness is for those wholesaling homes, while opening up new opportunities for investors seeking distressed property deals.
The Most Important Factor for Protecting Your Real Estate Investment Business
For those wholesaling homes, worrying about defending individual properties isn’t nearly as important as protecting operations and cash flow.
Fortunately, most savvy wholesalers won’t get stuck holding any damaged homes in the wake of Sandy, but hurricanes and other natural disasters can freeze real estate transactions, disrupt operations and stall cash flow.
How long can you go without another paycheck?
Those who don’t have reserves set aside can quickly find themselves in real trouble if marketing campaigns are rendered useless by disasters, money isn’t flowing in, customers can’t reach you and bills go unpaid.
So have a plan for protecting homes you are holding, have reserves to stay afloat in a cash crunch and have an organizational structure and lines of communication which won’t be disrupted even if the worst happens.
For most, this will mean diversifying locations of staff and contractors via outsourcing, having alternatives for phone communications and staying wired in through the web and having a place to go to stay away from the mayhem going on in the wake of the disaster.
This is one of those moments that can either mortally cripple your real estate investment business or rocket you to the top if you are well prepared.
Dealing with the Damage
Homeowners’ insurance and additional wind and storm coverage is essential for real estate investors, but that doesn’t mean it will cover all damage or it will be easy to collect on.
The first step is to get out, or at least get your team out and secure any homes you are holding. Secure doors and windows and stop leaking roofs with tarps to prevent more damage.
Unfortunately, as much as you probably dislike dealing with lawyers, this is probably one of those times you really need one on your side. Your insurance company’s mission is not to pay out or at least to pay out as little in claims as possible. You’ll probably need an attorney to represent you if you want a fair payout, so this should be one of your first calls.
Wholesaling Hurricane Homes
In the wake of Sandy, as with other natural disasters, there are sure to be plenty of distressed homeowners looking to sell because they cannot afford to secure their properties and the expenses to deal with the disaster have bled them dry.
This also means more foreclosures and REOs and with any luck, it may mean giant private equity buyers are a little more cautious about buying rentals; creating more opportunity for the little guy.
This is all great news for those wholesaling homes, but before you rush in to scoop up masses of leaky properties, make sure you complete your due diligence and know exactly what it is going to cost to fix them and how long.
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