We are right in the heart of storm season. Are you taking the right steps to protect your investments?
June to November each year is the most active storm season for the South and East Coast. This year in particular is forecast to be extremely active for storms and hurricanes. Other regions face increased natural disaster risks at this time of year too. The Midwest has its tornadoes. The West Coast has its notorious wildfires.
It is just a part of life, as is investing and managing your finances. And it certainly pays to be proactive. The real financial and mental impact of a direct hit to one of your assets will greatly depend on whether you prepared or not.
So, what should you already have done to secure your assets and the returns you planned on them delivering?
This is one of the most important reasons for diversification. If all of your money is in a few units on the beachfront in Miami, you are at a huge risk of being completely wiped out in one storm. If you are more diversified, even within one region, but nationally, then even if one of your units are impacted in a given year, the odds of your overall investment performance being hurt too much is probably pretty low.
Further diversifying between bricks and mortar and debt investments provides even more protection for your ongoing yields, future cash flow and net worth.
Plan In Advance
For some reason planning itself seems to be a great buffer to risk. When you are not prepared the worst seems to catch you by surprise. When you are prepared well, it seems the worst never shows up. I’d rather be prepared. Even if you are affected, the impact will be much lower.
Specific things that should be a part of this planning include:
- What you will do to physically protect and secure properties ahead of pending disasters
- How you will ensure business continuity and keep your investments running during disruptions
- Having teams on call to protect, inspect and secure assets before and after storms
- Laying out the action steps and process in advance so everything gets done smoothly
No one loves insurance until disaster strikes.
You should have already:
- Checked your premiums are up to date
- Optimized coverage types and amounts for current values and risks
- Put a great attorney on retainer to help fight your insurance company for what you are owed
Unless you are investing through a fund which has reserves set aside then you need to make sure you have extra financial reserves set aside to cover extra costs, as well as repairs and cash flow gaps until insurance claims are paid out. That can sometimes take months or years.
Physical Protection For Your Staff
You have to take care of your family and team members. Staff should be given adequate time to protect their own homes and get family to safety if you expect them to care about protecting your assets. You should ensure they have proper protective gear, including respirators and masks if going into properties that may have flood damage and mold.
Once you have your defense taken care of, don’t forget your offense. This can be a great time to help others by acquiring their properties, and finding discounts on storm damaged properties.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund