The recent massive blizzard is a fresh reminder for MA income property owners to be strategic and prepared for anything in their real estate investment portfolio. So what smart moves can help Mass. investors better secure their performance?
Major snow falls, wind storms, and other natural disasters can bring a variety of threats to real estate investors. Aside from the direct threat of property damage, there are risks of being injured trying to get out and manage properties, and interruptions to income. With this in mind here are just some of the considerations and smart plays for MA real estate investors to make to reduce risks and maximize long term returns…
Smarter Acquisition Strategy
In order to minimize risk and ensure consistent results investors should start with a smart acquisition strategy. This will take into account the strength of individual properties to weather storms, as well as ensure diversification. Rather than putting all eggs into one basket consider more properties and units. For example; those investing in Boston, might be well advised to diversify with properties further from the coast in Worcester County.
A proactive approach to property maintenance will help Mass. landlords to stay ahead of the game, and minimize the financial impact and anxiety when storms are approaching.
Even if paying all cash for investment properties in Massachusetts, or holding them free and clear, insurance is just wise. In addition to basic property insurance this might also include business insurance, gap insurance to cover cash flow shortfalls, and requiring tenants to have their own insurance too. Remember to review insurance coverage regularly and adjust as needed. With allowing policies to lapse being one of the most common issues when investors need to make claims; look to direct deposit, or other systems to automate payments so that you are never left exposed.
Planning & Preparation
It’s important for income property investors to have a plan for dealing with severe weather and natural disasters in advance. Who will get out to prepare properties in advance, and who will be the first out as soon as it is safe to clean up properties and secure them? How will records be kept secure so they are not lost?
Reserves and Proper Expectations
One of the biggest pitfalls of blizzards and hurricanes is that most investors aren’t prepared for the potential income interruption. Retail tenants can be hit if consumers can’t make it out to shop. Office tenants can suffer if communications, or banking services are down for extended periods of time, and residential tenants might be snowed in and unable to work for several days or weeks. So expect to have to negotiate and work with them, and for income to stall and come in more slowly.
Professional Property Management
Fortunately MA real estate investors can alleviate most of the above, and skillfully and successfully navigate the potential issues while staying warm if they have professional property management in place well in advance.