The S.O.S. Approach to Managing an Investment During a Crisis (like Hurricane Harvey)

As I am sure you are aware, Texas was hit by Hurricane Harvey earlier this week, and it continues to persist as of this writing. The director of FEMA, Brock Long, called Harvey the worst disaster in Texas history, and expected the recovery to take many years. So, first and foremost, our thoughts are with all of those who’ve been impacted.

 

To help those individuals who lost it all from the storm, we’ve set up a make-shift distribution center using the home of one of my investors. He is accepting supplies and is taking them to Houston shelters that are servicing those in immediate need. For those interested, click here for more information.

 

From a business perspective, when a crisis – a hurricane, fire, earthquake, etc. –  occurs and you have an investment property in the area, you need to have a process for approaching the situation, and even more so if you have private investors. The procedure I use is the acronym S.O.S, which stands for Safety, Ongoing Communication, and Summary.

 

S – Safety

 

The first step when a crisis occurs is always and most importantly safety. That is, safety for both the people and the money.

 

So, you first want to ensure the safety of both your residents and your team members on the ground. I own two apartment buildings in the Houston area. One building was unaffected, while the other was in the flood zone and received minor damage. Fortunately, from all accounts so far, the residents and team members on the ground are safe and secure.

 

From a money perspective, one of the properties took in small amounts of water. But, we have flood insurance. So, after we do a final assessment once the weather permits, we will determine if we will make an insurance claim or not.

 

O – Ongoing Communication

 

Once we have ensured the safety of the people and have an understanding of the initial damage done to the investment, we communicate that information to the investors.

 

Since this crisis was a hurricane, we had some degree of forewarning. So, once Harvey made landfall, we sent an initial email to investors to notify them if the property was impacted. And in this case, one of the properties wasn’t, so we relayed that information to our investors. For the property that did take in water, we communicated that information and stated that we would provide another, more detailed update once Harvey weakened.

 

A few days later, once the hurricane weakened, we sent the investors a second email with another status update and how we will manage the situation moving forward.

 

The important thing to remember here is to only provide sustentative information and not hour by hour updates.

 

S – Summary

 

In a week or two, we will have a better understanding of the situation. At that point, we will provide our investors with a summary of where we are netting out from an insurance claim standpoint, if there is one at all, as well as any other developments.

 

So, when a crisis occurs, the three step procedure is S.O.S. – safety of the people and the money, ongoing communication to provide your investors with status updates, and then providing a summary a few weeks later.

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