A lesson to be learned from the latest storm…
Given the intense devastation this week due to Hurricane Irene, I must preach the rather trite notion of “be prepared” when purchasing an investment property. Unfortunately, it can’t be stressed enough. You can secure your property with extra flood insurance (if your insurance company will allow it), you can take all necessary precautions to lessen the damage of any potential storm to your investment, and you can (and must) certainly build into your pro forma income statement a generous allowance for emergencies.
But until you’ve waded through your property’s flooding basement in the middle of the night, wondering why you purchased this house, and ruining your decision to having done so, you eventually learn that each property you acquire will be an altogether new learning experience in how best to protect your investment.
Don’t scrimp on paper
So as mentioned above, before bidding on any investment property, make sure to add a line item in your pro forma income statement as a provision for just such emergencies, like storm related damage. It’s very easy to blow this off, especially when you’re trying to make a deal work on paper before you purchase…That is, until you’re wading through your flooded rental house basement in the middle of a hurricane. Then you’ll ask yourself why you were being so miserly.
And don’t expect insurance to necessarily pick up the costs – some policies don’t allow for flood damage, and even if it is covered, you’ll still have a deductible to contend with too. And then there are the potential demands of your tenants if they have any of their possessions damaged.
Before making your first offer on a property, try to evaluate the likelihood for flooding based on the house site and topography of the property. You know if you’re on the bottom of a hillside, you can run into problems. Same with being situated next to any water source – be it stream, lake or ocean. Make sure you look at the house during or just after a big rain storm, so you can see first hand if there are any issues with flooding or water seepage in the basement area. In addition, check to see if the current or previous owner installed any waterproofing solutions already.
The two most common ways to waterproof a house involve landscaping and/or installing an interior curtain drain (also known as a French drain). Landscaping is the more expensive solution, and can involve not just re-grading the entire perimeter of a house, but installing an exterior curtain drain at the same time around the perimeter. (Of course, always look for simple solutions to a water problem first. For example, if gutters are broken or missing, or if downspouts are emptying directly onto the perimeter, rather than being led out many feet from the house, these can be inexpensively corrected.)
Installing a gravity-fed curtain drain system leading to a sump pit equipped with a sump pump inside the perimeter of the basement is the next best alternative for waterproofing. The main drawback: if the sump pump were to fail. That’s why, in a very flood-prone area, installing a secondary, battery run sump pump is always a good idea. Of course, if power were to go out for an extended period of time, you’re still going to have a problem. Unless you get a back-up generator to run during any power outage…
One thing to avoid…
Whatever you decide, do not bother with basement wall waterproofing treatments that can be rolled on. Yes, they’re inexpensive – but they’re a waste of time. The walls may stay dry, but all that water behind the wall is just going to fall to the lowest points anyway – and will start coming up through the concrete basement floor slab at some point. This is due to all the hydrostatic pressure of the rising water table surrounding the house.
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