Harvey flood damage [tenant's property has flooded - actions?]

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Houstonian
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Harvey flood damage [tenant's property has flooded - actions?]

Post by Houstonian » Sun Aug 27, 2017 12:19 pm

Hi all,

Thanks to all the wonderful people in this forum for taking time to answer even mundane questions.

I have a rental property in Houston. It is being managed by a property management company. I just received word that the property is flooded - now a feet of water in all rooms. The tenant said he is OK. Expect water to rise in next few days as well.

We do have flood insurance, home owners insurance and umbrella insurance. still owe about 150K on the mortgage. property is worth 450K.

So where do I start. what are some good resources to start researching how to proceed?

I live about 20 miles from there and we are safe for now.

Thanks again,

H

ResearchMed
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Re: Harvey flood damage

Post by ResearchMed » Sun Aug 27, 2017 12:38 pm

Houstonian wrote:
Sun Aug 27, 2017 12:19 pm
Hi all,

Thanks to all the wonderful people in this forum for taking time to answer even mundane questions.

I have a rental property in Houston. It is being managed by a property management company. I just received word that the property is flooded - now a feet of water in all rooms. The tenant said he is OK. Expect water to rise in next few days as well.

We do have flood insurance, home owners insurance and umbrella insurance. still owe about 150K on the mortgage. property is worth 450K.

So where do I start. what are some good resources to start researching how to proceed?

I live about 20 miles from there and we are safe for now.

Thanks again,

H
Especially given this distance, I'd start with contacting your insurer, ASAP, as ALL insurers are likely to be inundated with claims.
Also ask if there is any coverage included that could assist your tenant, who also should have renters insurance, of course.

The photos down there are beyond belief. Unreal.

RM
This signature is a placebo. You are in the control group.

Broken Man 1999
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Re: Harvey flood damage

Post by Broken Man 1999 » Mon Aug 28, 2017 8:13 am

Since Harvey's rain is still ongoing, I would be surprised if much of anything can be done at the moment other than you reviewing your insurance documents.

My SIL lives in a suburb of Houston and is preparing for mandatory evacuation due to the levee possibly blowing out.

Hopefully your tenant can be placed somewhere whilst your rental is being repaired. Though, with all the damage I would think that rehousing so many people is going to be difficult.

Best of luck to you. Glad you suffered no injuries.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

mmarreco
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by mmarreco » Mon Aug 28, 2017 8:31 am

From a practical standpoint, it will be months until your property is habitable again. Therefore the best course of action is to terminate the lease and tell the tenant to find a new place to live.
You may be covered for loss of use under your policy.

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Pajamas
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Pajamas » Mon Aug 28, 2017 9:35 am

mmarreco wrote:
Mon Aug 28, 2017 8:31 am
From a practical standpoint, it will be months until your property is habitable again. Therefore the best course of action is to terminate the lease and tell the tenant to find a new place to live.
He should follow Texas state law and local law and the terms of the lease. He may or may not be able to unilaterally terminate the lease, and if it is terminated by either party, he may have other obligations such as partially refunding rent, but legal advice is not an acceptable topic for this forum.

Under the circumstances, expediting any refund of prepaid but unused rent and the damage deposit would be a nice gesture from a landlord to a tenant who has lost their home and personal possessions and possibly their livelihood.

https://www.haaonline.org/rightsafterflood/

aristotelian
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by aristotelian » Mon Aug 28, 2017 9:37 am

mmarreco wrote:
Mon Aug 28, 2017 8:31 am
From a practical standpoint, it will be months until your property is habitable again. Therefore the best course of action is to terminate the lease and tell the tenant to find a new place to live.
You may be covered for loss of use under your policy.
I think I would talk to a real estate attorney about liability for the tenant's well being before taking any course of action with regard to the lease. It is possible the the property insurance or flood insurance would be on the hook for the tenant. Do either of your policies say anything about renters?

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Watty
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Re: Harvey flood damage

Post by Watty » Mon Aug 28, 2017 10:03 am

Houstonian wrote:
Sun Aug 27, 2017 12:19 pm
So where do I start.
I'm not an expert but I owned a house that had flood water that filled up the crawl space and was within a few inches of the floors. The damage did not look too bad but I was concerned that the foundation could have been damaged.

I had a structural engineer come in to inspect the house and give a written assessment of the damage and specify just what would need to be done to rehabilitate the house. I had the choice of paying less for a verbal report or paying more for a written report that had his professional engineer's stamp on it which carries some legal responsibility if there is an error in the report. That was in the 1990's but as I (vaguely) recall the written report cost about $500 in today's dollars.

There was no damage to the foundation and the main things were just to replace the insulation, duct work, and vapor barrier. In today's dollars that was maybe $20,000 in damage.

Paying extra to get a written report worked very well for me since I had flood insurance and when I was dealing with the adjuster I just gave him a copy of the engineers report and there was no question about what work needed to be done. I think that since I made that part of the adjuster's job so easy he may have helped me figure out how to deduct some other expenses to get up to my deductable. My impression is that the insurance adjusters often deal with angry and unreasonable people so when they run into someone that is reasonable to deal with they will try to help them out when they can.

The engineer's report became even more important when I sold the house about eight years later. I was fortunately selling the house in a strong housing market. Trying to sell a house in a flood zone that has a history of flood damage is hard enough but there is also the question of if the house had been property repaired or not. I was able to show the person that eventually bought the house the engineers report to show that there was no major damage and I had a folder with all the receipts to show that all the repair work had been done that the engineer had specified.

A few somewhat random recollections.

1) Keep very good records and photographs of everything you do not only to clean up the damage but also to mitigate the damage. In my case we tried to sandbag the house so the work we put towards sandbagging the house was something that we could put on our flood insurance claim. Make paper prints of your photos and computer notes just in case you have computer problems. Be sure to also keep very good records of the time you spend trying to mitigate the damage since you might also be able to use that.

2) I was able to just pay for the repairs and then get paid back with the flood insurance. That worked out well for me since the flood insurance check was made out to both myself and my mortgage company. I had to get someone at the mortgage company to agree to sign over the the check to me. I don't recall the details but I remember that dealing with them took a lot of phone calls.

3) You may be able to deduct unreimbursed damages on your taxes so be sure to keep good records for that too. Things like mileage may be deductible too.

4) Finding contractors to work on your house will be challenging. At least for the initial clean up phase of getting the wet stuff out of your house so that it can dry out you may need to do that yourself. You may find that friends and relatives are willing to help but they may be pretty clueless as to what to do. If you have some basic things like gloves for them you may just be able to point in the right direction.

5) Trying to prevent mold from growing will be a big issue to deal with. In a different situation we had a water pipe leak badly in an unfinished basement that got a lot of stuff wet. To dry it out we ended up renting an industrial dehumidifier at a big box hardware store. These are much different than the room dehumidifiers that you normally see and have a daily capacity measured in gallons and not pints. I would suspect that the rental companies are already out of them. These would of course require the electricity to be back on but I would be tempted to buy one even though they are expensive. You could resell it later to get some of your money back. You can search some place like Amazon for "dehumidifier industrial" to see them. There is a company named GRAINGER that is an industrial supply company that may have them locally. Normally they don't sell directly to the public but if you just show up there they will likely sell it to you in a situation like this. If you, or spouse, work for a large company then it is almost certain that the company will be a known customer of GRAINGER and you can just use that customer number but pay for the item when you pick it up. I would suspect that these will be in short supply nationwide in the near future so if you want to get one you might get it sooner rather than later.
Last edited by Watty on Mon Aug 28, 2017 10:20 am, edited 4 times in total.

munemaker
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by munemaker » Mon Aug 28, 2017 10:06 am

They are still in the search & rescue mode. Insurance companies are not allowed in yet. I would contact your insurance company to report damage, but not likely anything will happen for several days.

chevca
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by chevca » Mon Aug 28, 2017 10:10 am

It sounds like you're covered with insurance and the property management company. Any lease concerns probably have to go through the property manager. That's what you hired them to do, right?

I'd say, stay safe, ride out the storm, and assess and contact everyone after it's over and things can be figured out.

Thoughts and prayers to those in the area.

SueG5123
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by SueG5123 » Mon Aug 28, 2017 10:25 am

Read your flood insurance. Government flood insurance has a ceiling of 250K as I remember, so you may be out of pocket the balance.

Stay dry! We're in Katy, water got to the doorstep last night!

Admiral
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Admiral » Mon Aug 28, 2017 10:27 am

No true advice (glad you are safe!) except to say that everyone who posts on the forum about "real estate being superior to stocks" should read your post. I'm sure you will be made whole, but the risks in r.e. investing are self-evident.

Not a reflection on you personally--I'll assume you are a savvy investor--but your post should be fair warning for others, who should get into this game with eyes wide open.

Let us know how it turns out.

Rupert
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Rupert » Mon Aug 28, 2017 10:53 am

Go ahead and file a claim with your insurance company. Then be very patient. Be prepared to wait weeks before an adjuster looks at your property. Every insurance adjuster in the country will be in that area within a few days, but literally everyone anywhere near the area is filing a claim at the same time. Then be prepared to wait months (at least) to find a contractor to do any work. It's gonna be a huge mess for a long time, and there won't be anything you can do about it. Your property may not be inhabitable for a year or more given the amount of water you've described. You may not even be able to get to your property for a long time as the basic infrastructure may be damaged (e.g., no bridges, roads). Note that if you're overextended, i.e., if you can't pay your mortgage on the property without a tenant, some banks will start programs that permit you to postpone payments until insurance monies start flowing. Pay very close attention to the details of such programs. Most require you to catch-up the payments with interest within a set period of time. FEMA may eventually help out with the lost rental income, but, again, that process takes time to get going. Get your paperwork in order now, and don't embellish when it comes time to apply (I've only recently stopped representing people charged with post-Katrina FEMA fraud; the statute of limitations finally ran out on those crimes, thank god).

Hockey10
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Hockey10 » Mon Aug 28, 2017 12:14 pm

Call your insurance company today to file a claim. They will put your claim in their queue and will eventually send out an insurance adjuster. The sooner you call, the sooner the adjuster will be at your house assessing the damage.

We went through this with Hurricane Sandy. We called USAA the day after the hurricane and the adjuster came out about a week later. I had neighbors that waited a week or so to call and they had to wait months for the adjuster to come out. We were not able to access our property until 5 days after the storm (due to a ban on travel to the town). The first thing I did when I got to the house was to take lots of pictures and a video of the damage. I loaded them to the USAA website the following day. Also, start gathering receipts for items that you purchased for the house (appliances for example) that are damaged. You can upload copies of those to your insurance website.

I also contacted a local contractor (home builder) and asked him for a detailed estimate to repair the damage. I provided this to USAA. USAA's final repair estimate was only 1% lower than what the contractor had estimated.

On a related note - USAA did a great job of handling my claim. I was satisfied with the amount that they paid us and the speed with which they finalized the transaction.

Good luck and stay safe.

Allan
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Allan » Mon Aug 28, 2017 3:38 pm

Some new regulations go into effect in a few days regarding insurance claims.

https://www.aol.com/article/finance/201 ... /23188474/

August
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by August » Mon Aug 28, 2017 4:14 pm

First of all if both you and yours and your tenant and their family is ok that is the most important thing.

Second you will want to go ahead and file a claim with both your home-owners and flood insurance policies. Then as said above, please be patient. Lots of adjusters are being deployed to that area but it will likely take months for all the damage to be accessed. Adjusters typically get 10s or 100s of claims all at once, and it takes time to work through them. You will also want to contact your mortgage company and let them know of the loss.

Your tenant will also want to go ahead and file a claim under his or her renter's insurance. Most homeowner's policies do not cover tenants for contents damage or relocation. Depending on their policy, they may or may not be covered for flood damage.

You may or may not have coverage for your loss of income from the tenant.

You may also want to look into loans or grants that may become available through FEMA (just in case). I'm a bit rusty on the specifics of flood insurance policies but I know they are a bit "bare bones" in certain areas.

Once you are able to safely access the area, you will want to take photos or videos of everything you can. If any emergency repairs need to be done and you are able to do them or front the money to have them done, go ahead and do them.

It will be a process, likely taking several months to get everything back to normal.

Best of luck,

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N1CKV
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by N1CKV » Tue Aug 29, 2017 8:23 am

I have recent flood experience. I flooded last year in S. Louisiana with almost 3 feet.

As a landlord your flood insurance policy is (or should have been) structural only. Your tenant would have to have had their own FLOOD policy to cover contents/ personal property, the policies exist but are extremely rare to be purchased. Your policy does not cover them.

At this point you need to be concerned with preparations to get the house empty and gutted A.S.A.P. to prevent and mitigate mold problems. Get multiple dehumidifiers and a wet vacuum NOW - FEMA reimbursed me for these items. Order them on Amazon if you have to, you have time for it to ship before you can put them to use. Those that waited had issues, I was in as soon as the street was dry and had 90% gutted on first day. I only had a small patch of mold behind the master shower that took me a few days to get tools and help to remove but that was easily mitigated. Some neighbors took multiple weeks to complete gutting and the moisture readings on the frame showed it. Their homes were not ready to close walls for a couple months.
You also need to begin understanding your duties to your tenant. Ideally seek to have the lease terminated. If you want the tenant back get contact information and let them know they will be top of the list when reconstruction is complete.

One house next to me was a rental. Their tenant came in, grabbed their personal belongings that survived (all fit in his Prius) and left everything else. The landlord and he got in to a shouting match, landlord told him if he didn't empty the personal contents & furniture he would lose his deposit, tenant laughed and said he could keep it (I can't blame him).
I have met a lot of people that claim to love money, but they also seem to be the same people that are in the biggest hurry to get rid of it.

whomever
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by whomever » Tue Aug 29, 2017 9:25 am

I've been on the tenant side of this, FWIW.

My suggestion is to remember to keep the tenants informed. They have some tough choices to make as well. In our case the house plumbing worked, and it was summer, so we camped in a detached garage for a couple of weeks. We helped the landlords strip carpet, etc. The contractors you need to e.g. reinstall carpet are swamped, but the landlords kept us up to date. It's been a while, so I don't remember if they gave us a break on the rent for the month or so it took to get it habitable (dry out, new carpets and new paint, mostly), but if you can afford it that would be a nice thing to do.

This was a much smaller town, so things probably got back on track sooner. One thing to consider is whether the tenants want to move. If they have local ties, like jobs, housing may be in short supply and camping in a semi habitable house might be their best option. OTOH, if they want to move elsewhere, or to a local relative's, that simplifies your problems a little.

At the risk of stating the obvious, one big problem is that the local reputable contractors will be overwhelmed, and the out-of-area ones who show up are liable to be of questionable quality. I don't know a good solution to that. If there is semi skilled work to be done (pulling drywall, painting, ...) hiring the tenants might be a win/win, depending on the tenants.

DurangoWino
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by DurangoWino » Tue Aug 29, 2017 9:46 am

Gov. Abbot has changed the law concerning flood victims that will go into effect Sept. 1st. Make sure you notify your insurance company before then. You can probably Google the change and cause/effect.

feehater
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by feehater » Tue Aug 29, 2017 11:17 am

The tenant's renter's policy should also cover their hotel/housing needs for a limited period of time I think? Not nearly enough, I'd imagine, but at least something to remind them to look into...

2015
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by 2015 » Tue Aug 29, 2017 11:41 am


Daryl
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Daryl » Tue Aug 29, 2017 7:31 pm

feehater wrote:
Tue Aug 29, 2017 11:17 am
The tenant's renter's policy should also cover their hotel/housing needs for a limited period of time I think? Not nearly enough, I'd imagine, but at least something to remind them to look into...
I'm a renter. My renter's policy covers "Loss of Use" that would likely apply in this situation for up to 2 years.

August
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by August » Tue Aug 29, 2017 8:06 pm

Renter's policies typically include loss of use, however Flood is not always a covered peril, so the tenant may be denied by his renter's policy.

mouses
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by mouses » Wed Aug 30, 2017 9:20 am

When I had flood damage in California, State Farm, which stiffed me on other areas of the claim, did pay me minimum wage for the work I did shoveling out mud, removing ruined items, and cleaning up. My recollection is it amounted to about $3000, which I used to pay for some of the stuff they should have covered but didn't. I took lots of photos of the process and mess.

ResearchMed
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by ResearchMed » Wed Aug 30, 2017 12:19 pm

Apparently that "September 1st" deadline for claims limits is for *lawsuits*, not for claims:

https://www.cnbc.com/2017/08/30/harvey- ... s-say.html

RM
This signature is a placebo. You are in the control group.

Houstonian
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Houstonian » Wed Aug 30, 2017 4:06 pm

Thank you to every one of you who took time to reply.

My family and I are safe and hope to move back to our primary residence by tomorrow. Our primary home is safe and unaffected by the flood.

After reading through the info I have received, these are the steps I have done:

Went to check out the property, met with tenant. He lost quite a bit of personal belongings. He is trying to look through and salvage what he can. He has found a place to live. I have asked the property manager to assist him with termination of lease, and prorate any rent that he did not use and return his deposit.

As far as the property is concerned, there was 27 inches water all around and in it. All the laminated wood floors, cabinets etc have been damaged.

I have asked the property manager to start cleaning up ASAP and have a structural engineer or other professional to give me a itemized list of damage. also asked him to proceed with arranging to gut the damaged area so as to prevent mold.

I am not in good physical shape to do any handy labor myself.


I have registered with FEMA and called the flood insurance company. Do I need to call the umbrella insurance as well?


Longterm, I guess my options are to repair the damage and lease it out again, or demolish it. I am not in a position to manage it myself, hence will have a property manager for sure. We have been blessed to have good finances, in addition to have found this forum 4 years back. I think I follow the investment advise here mostly ( except owning a rental property I guess).

Currently we are living and employed 20 miles from the property, however there is a chance that we may move back to the same neighborhood as the flooded property in the future for employment ( may be 10 yrs down the lane). Hence I am inclined to just demolish the property and hold the bare land for next 10 years. ( we can afford it , and the appreciation of land minus the property tax and minor lawn maintenance cost over next 10 years may likely give me more returns on the investment than if I were to repair it all and lease it again for 10 yrs with an eventual plan to rebuild)

These are my thoughts anyways.

Thanks again for helping me although we have been really fortunate considering the circumstances, and look forward to paying it forward ( not in kind as I am not that savvy an investor) , but to other people that have more basic needs that were affected by the flood.

.

ResearchMed
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by ResearchMed » Wed Aug 30, 2017 4:19 pm

You should probably also check with the regular property insurer and see if you should file a claim, not just under the flood coverage.
I don't know if umbrella coverage helps with "above the limit" for flood insurance coverage. (That would be nice.)
IF you need to do this, the sooner you get "on the list", the sooner an adjuster will get to your property, etc.
I'm not sure if there might be any claims that wouldn't be covered by the flood policy (never having made a flood policy claim).

You might want to re-think, at your leisure, whether you want to keep that land for future home for you, or for rental again.
It's not impossible that something could happen again (not wanting to get into a climate change viper pit).
Just a thought. IF you demolish, how about higher ground next time? (Sell now and re-purchase elsewhere, keep and sell later, or sell and buy later... several choices if you are *sure* you'd want to stay there if you demolish.)

So glad things weren't worse than it was, for you.
(Some of the photos showing the degree that water receded in 24 hours are astonishing, though I know that isn't the same everywhere, alas.)

RM
This signature is a placebo. You are in the control group.

Rupert
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Rupert » Wed Aug 30, 2017 4:27 pm

I believe umbrella insurance is liability only. So I can't imagine a need to call your umbrella insurer. I would go ahead and file a claim with your regular HO insurer though, just in case there's some damage they will cover above what the flood insurance covers. I would hold off on making a decision about what to do with the property right now. When the full extent of the storm's damage is known, I imagine (hope) there will be a vigorous debate about to what extent the national flood insurance program can continue to cover properties in flood-prone areas. I wouldn't rebuild until I was certain I could get insurance for the property. At the very least, you can expect new regulations re building foundation heights, etc.

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Watty
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Watty » Wed Aug 30, 2017 9:16 pm

Houstonian wrote:
Wed Aug 30, 2017 4:06 pm
Hence I am inclined to just demolish the property and hold the bare land for next 10 years.
That likely isn't really an option because;
1) You have a mortgage on the property so you can't choose to demolish it without paying off the mortgage.
2) If I remember right the flood insurance will only pay for the damage if you actually do the the repairs so you can't just pocket the check.

Houstonian
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Re: Harvey flood damage [tenant's property has flooded - actions?]

Post by Houstonian » Tue Sep 12, 2017 1:12 am

Thanks to all bogleheads for prompt response again.
Watty, you are right, I finally found out.Unless the mortgage is paid off you cannot cash the check.

Anyways, I was thinking I will post some updates regarding the flood insurance claims process.

I had been very busy over the last week trying to read as much information as I can regarding what to expect during the flood insurance claims process.

I realize that quite a bit of the members in this forum are professionals with advanced knowledge regarding such things.

When reading a lot of information on the internet it was difficult to understand, as most of the language was technical. I was hoping that I could find somebody who would've posted in layman terms what to expect . I didn't see many in that genre . So I intend to periodically update y'all regarding my experience in layman terms. I realize that it could be my way of paying it forward to this form , and hopefully more knowledgeable people can correct me with more technical terms and insight.


After freaking out for a whole week and reading up a lot about the process, this is what I did......

First and foremost I called the insurance and they gave me the name contact of an Insurance adjuster .
I called insurance adjuster and he gave me an appointment a week later to come inspect my property . He was obviously very busy due to multiple homes that he was inspecting due to the hurricane . He gave me some tips to begin with that can be done before he comes to the property. He asked me to remove the drywall 2 feet above the flood line . He asked me to remove the damaged flooring which was wood panel . The tenant was a great guy , He lost most of his stuff with water damage and he didn't have renter's insurance. Despite this he cleaned out everything that he owned from the property within three days .


I called my property manager and had him get some guys over to the property and start cleanup process. I had them gut out drywall 4 feet all around and the wood paneling floor all around. Then bleach was applied and left all the fans and air conditioner running. All this work took about a weeks time.

I had gone to the property every single day since the flood and took pictures and video of the entire property every single day .

I met with the insurance adjuster yesterday and he was a nice guy . He suggested some more gutting of areas that I didn't think would have been affected by flood . he took a lot of pictures and some measurements and he had a device to check moisture level in the wall etc. I went around the property with him and tried to point out things that I thought would make my case that needs a replacement. He seemed to agree with me with all that I pointed out. I'm not sure if that speaks of my ignorance or that he was just a great guy.

he said he will forward me a form to be signed to accept an advanced payment on the claim which would be 30 to 40% of the actual claim. I just received this today and will be returning tomorrow so hopefully the first check will come soon . I found out from reading that once I get the check this needs to be forwarded to my mortgage company , will then disburse funds for the work.

thankfully being a boglehead, I have substantial emergency funds which being used at this time to get the initial work going .

next I will be sending the adjuster all the pictures and videos in the thumb drive per his request . After this I believe he will send me a proof of loss form .

So this is where I am at right now . Hope it doesn't sound too basic .

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