In this episode of the Multifamily Innovation® Podcast, host Patrick Antrim spends time with Marc Ness, founder of WeatherShield, who shares his expertise on protecting property investments during severe weather conditions.
Marc, who has over two decades of experience in construction, investment, and insurance, provides insights on how to prepare for and handle weather-related property damage claims. He emphasizes the importance of understanding property insurance policies and claims processes to ensure maximum coverage and quick recovery.
Marc stresses the importance of being proactive in addressing potential storm damage to minimize future insurance claims. He explains that by addressing and correcting storm damage immediately, property owners can prevent further damage and potentially avoid costly insurance claims. Also highlighted the importance of being aware of storm damage to avoid selling a multifamily property for less than its worth due to undisclosed damage. Being proactive and knowledgeable about storm damage can help multifamily investors make sound and smart decisions to minimize financial losses. Multifamily property owners have a duty to mitigate damage and should address any issues promptly to prevent further damage and ensure coverage by their insurance company.
Multifamily investors can leverage insurance scenarios to make capital improvements without spending their own money. Acquisition teams need to look for properties that have the potential for found money in them where damage has occurred. By leveraging the insurance scenario, investors can get some capital improvements accomplished without spending capital improvement dollars. However, it's important for apartment investors to be proactive in these matters rather than reactive, and to have knowledge and awareness of their options. Additionally, having a sound risk preparedness plan in place as part of an asset management strategy is important.
Hidden damages can be discovered by a trained eye, such as potential leaks, holes, cracks in vinyl siding, and broken windows. By being aware of these damages, apartment property managers can address and correct them immediately, preventing further damage and potentially reducing costs in
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1
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North Texas has recently weathered a severe hailstorm.
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Now this lasted over six days with nearly every county
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impacted.
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Now the National Weather Service in Fort Worth logged a
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significant 249 hail reports from June 10th.
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To June 15.
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Now these hailstones range from two and a half inches to an
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enormous five inches across most all counties.
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Widespread damage was reported and in addition to the hail
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severe storms brought the threat of isolated tornadoes, damaging
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winds, and the intensity of these LED in through the week.
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Now, this threat persisted not only with turbulent weather, but
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also.
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Really the importance of people being unprepared.
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Welcome back to the Multifamily Innovation Podcast.
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Today we have a very special guest with us mark Ness.
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He'll show us how to protect our property investments during
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these severe weather extremes.
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Now, mark was raised in central Iowa.
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He developed an early affinity for construction, working his
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way up through lumber yards, starting his own construction
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company.
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And he did this all while in college.
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His entrepreneurial spirit and passion for buildings was just
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the beginning of a remarkable journey and property insurance
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claims and the construction industry.
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This is a wonderful collision.
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It's why he is on the show today.
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This journey spanned over two decades for his his career.
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His expertise though is in construction.
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He honed us through not only practical experience, he found
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new directions in his career and he joined one of the top five
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insurance carriers in the country.
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So you could imagine the construction experience, the
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investment experience, and then also now insurance.
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Mark.
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Really has an understanding of the ins and outs of property
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insurance.
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Not only the insurance, but the claims.
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Something not a lot of people.
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In fact, I don't know anybody in the industry that can speak to
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it with this type of experience.
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Mark then went on to oversee operations for a commercial
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roofing company.
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It was there when he witnessed firsthand the hurdles that
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multifamily and commercial real estate investors often stumble
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upon in the investments and the asset management strategies as
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they pursue acquisitions.
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Now, observing all of this, Mark identified a gap.
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Now, this was a need for a service that could guide
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investors and property managers through an often rocky terrain
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of storm damage.
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And so Weather Shield was born.
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This is a company helping clients navigate the stormy seas
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of storm damage, ensuring that they avoid the costly mistakes
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and safeguard their investments.
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As they go out their portfolio.
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Stay tuned as we delve into the experience on how to stay ahead
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of the game and make smart investment decisions.
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Mark, welcome to the podcast.
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Thank you, Patrick.
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How are you doing?
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It's great to have you back.
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You and I had a conversation on another strategic matter we were
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talking about around due diligence and, the hailstorm
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came through and this is a top of mind for a lot of owners and
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operators.
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Sometimes we don't, we're not as prepared as we need to be.
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A lot of questions and so I'm bringing you on to go through
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that and hopefully deliver some value and.
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Open up your database of depth of contractors and experience
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and experts and knowledge to help people minimize any risk.
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And there's a lot of stuff going on right now, so I'd love to
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just open up and talk about just the general overview of, what
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severe storm damage looks like, because in many cases we have o
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we have.
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People that oversee properties, asset managers, property
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maintenance technicians and sometimes damage gets dismissed
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in many cases that could cost you millions in some aspects,
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right?
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And so let us know what is really storm damage and what is
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it look like?
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Yeah, it's I think it's important to have that
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foundational knowledge going into any, to any site of.
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Storm assessment.
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So I think what most people see is what they see on the news is
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these catastrophic tornadoes.
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And hurricanes are definitely ones that, that catch a lot of
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attention on the media, but what probably doesn't get as much
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attention, and I would say is more far reaching to almost
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everyone here would be just your standard wind and hail claims.
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Those fall into that severe category simply by the amount of
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damage.
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Quantifiably that it does.
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It does a lot of damage every single year that costs
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financially is a devaluation to your assets.
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So when we go into that I think when most people say, oh, we had
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our maintenance guy look at it, everything's okay.
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It's these hidden things that you don't see right away.
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Or potential leak sources that aren't gonna show themselves
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immediately, which just talks to the importance of.
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How you need to have somebody that's trained in storm damage
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assessments do an evaluation of the property following one of
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these events.
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Knowledge of the event happening is great, but actually having
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some onsite evaluation done by a professional that understands
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what to look for is really important.
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I thought it was interesting, you brought up that it was a
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series of days in a row, I think from the 10th to the 15th here
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in June where Texas saw just back to back storms.
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With pretty record setting.
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This is large hail maybe not anything unique to Texas.
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It's known for its large hail.
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Everything's bigger in Texas.
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But what's funny is it actually went longer than that.
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So I think the news article was probably written that many days
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in it, but it was 10 consecutive days of a severe weather event
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that hit Texas.
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So from the 10th to the 19th, every single day, had some sort
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of massive, large.
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Severe storm events.
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So it just tells you the scale of what these things can do and
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how it's the time of year too.
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That's the other thing you have to consider is this is the time
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of year when storms are passing through and being aware of what
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to look for and be monitoring these events is really important
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as an investor.
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Let's talk about the damage that can come through this.
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You mentioned earlier about the hidden things that, you're the
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trained eye can discover and a lot of times these property
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managers are busy doing many things right?
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And you mentioned potential leaks.
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What type of things can surface that otherwise could be missed?
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So I think probably the biggest thing that most people are aware
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of, the common person that doesn't have background in
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either construction or storm damage assessments would really
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be, what things can I see from the ground looking up on the
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building.
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When there's severe enough and you have certain types of
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materials such as vinyl siding, you're gonna see holes when it's
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severe enough, you're gonna see cracks.
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You'll see damage to windows when glass is broken.
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These are some of the more severe large hail events.
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What you don't always see is when you have more resilient
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construction materials like a brick exterior.
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You're not gonna see from the ground what the roof looks like
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in wind events and hurricane events.
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Missing shingles are things that are indicative of storm damage.
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But when you're talking about a hail event, such as we've seen
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in Texas here, The large hail will cause damage, but typically
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it doesn't cause any immediate cause for a leak or an issue.
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So what I think most of the what I've seen in multifamily is the
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maintenance staff and professionals that are on site,
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really respond to events.
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They respond to report of a leak, they respond to
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maintenance needs, but they're not proactively looking at what
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are some potential sources of leaks that could happen next
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year.
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Or whatever.
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So by assessing'em early on, you now bring in the opportunity to
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deal with it in a proactive manner rather than a reactive
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one.
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So I think for the most part the hidden pieces are the ones
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where, I may have something that's an issue caused by this
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storm event.
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But maybe a section of gutter that was knocked loose isn't
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gonna cause any immediate, point of water intrusion, but
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eventually that's gonna leak inside the property.
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Cause some mold damage water damage to the walls and maybe
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we're not gonna see that as an investor until that tenant moves
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out.
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And at that point, how much other damage is had done.
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Let's talk a little bit more about those vulnerabilities.
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Where are those points in the building that we need to be
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aware of?
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Yeah I think the biggest concern for me when I stress it to
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either owners of property or property management staff is
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water can cause a lot of damage.
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And what we don't typically see is just this constant intense
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leak that is just, pouring water down inside of a, of an unit
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inside the building.
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And we don't really see that.
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We see drips and we see.
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Saturated insulation in attic spaces.
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We see drywall issues with staining, but it's the
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persistence of it and the long term effects where you start to
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see mold and mildew.
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And once that gets into a building and it circulated
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enough, it can cause some severe damage and some health concerns.
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So I really look for anything more.
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Water can be a point of entry.
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So is it a hole in a piece of siding?
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Even a crack can cause some damage.
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Dislodged sections of gutters and downspouts tend to direct
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water in ways that we don't intend it to by design.
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And then missing vents on your roof from either, holes in them
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from hail or missing from wind.
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Those things are gonna cause leaks that maybe they don't
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immediately show.
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But man, if you had the opportunity to go back and say,
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if I could have dealt with that in the first week when it
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happened.
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Absolutely.
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I'd rather do that than spend thousands of dollars to try to
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remediate all the damage that's occurred since.
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Yeah, let's talk about those roofs more.
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You mentioned the, like a wind storm coming through ripping off
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the vent.
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And then you have the water that comes in.
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Totally.
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Two different experiences.
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And you can't see those from the ground.
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What are the impacts to the roofs, windows, siding, things
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like that that we need to be aware of?
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I think the one that most likely, everybody's aware of
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that.
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You have a property that has a certain value, retains that, and
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after a storm event happens, you may see the functional way that
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the building works in terms of, really what a roof does is
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divert water to a certain place to get it away from the
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building.
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You may still see similar functions out of the property,
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so it's not gonna be this immediate Awareness of damage,
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but it's the the impacts.
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So a large hailstone will actually cause a bruising effect
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on a asphalt shingle, which is a very common roofing material,
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most multifamily that I've seen.
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That may not cause that immediate damage, but as water
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erodes away at that area, now shingles have an opening where
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water can get in behind it, causing damage to your roof
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decking materials.
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So the plywood or an OSB sheathing.
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As that deteriorates over time, now you have additional damage
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and it has to be replaced where you got not only mold and
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mildew, but you have rot.
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So those things that are completely preventable when
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addressed and corrected immediately.
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But I think, outside the financial side of the loss to
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your property, since I, I bought it, it's worth a certain amount.
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I expect that I can put some money into it.
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Eventually get a return on my investment.
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Now you might be faced with a situation where you go to sell a
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property, you're unaware of storm damage, and now they're
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saying it's worth less because all the roofs are shot from hail
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and all the siding needs to be replaced for the same reason.
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And if you were just aware of that, when you had the chance,
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you now open up the opportunity to even file an insurance claim
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on it potentially.
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It is really about awareness, knowledge, and the ability to
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make some really sound smart decisions at the time of these
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things happen.
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Yeah.
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And it sounds and another conversation we've had where
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you're advising those acquisition teams, finding
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properties that have potential, found money in them where damage
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has occurred, and go in there, leverage the insurance to
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scenario to get some capital improvements accomplished
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without spending.
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Capital improvement dollars.
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At least with your own.
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Yeah.
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And as an investor it does work both ways.
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It's still about knowledge and awareness and man, your options
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open up on things that you can do.
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So I'll preach it till the day I die.
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It's about being proactive in these matters rather than
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reactive.
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And that's, I think, smart business in any industry that
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you're in.
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Is just being aware of the things that you have options to
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do.
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And how do you take advantage of that knowledge?
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So those, of those, of the people listening now maybe
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they've experienced this come through.
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What do they do next?
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Is this something where they can call you and you support them?
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Consulting?
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What would they do if they call their insurance company?
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They call their contractor.
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Contractors are all over the place with when these events
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happen, right?
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Yeah.
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What do you advise?
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I, I think having a really sound risk preparedness plan in place
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for any investors, a smart decision.
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So a lot of our current clients, that's how we're involved is
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part of their asset management strategy.
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So we're monitoring.
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These storm events and when we have a situation that arises
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where, certain areas hit with their property, we see
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indicators of storm damage and we alert them to that.
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So before they may even know, we're talking sometimes minutes
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after the event happens, we can make communications out to'em
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and just make them aware if something happened within, the
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last few hours we think it hits the threshold of something, what
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it.
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Makes sense for us to have an inspector look at and then we
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move forward with that assessment.
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As far as for, when we don't have current clients that have a
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similar situation, we'll go back and evaluate if there's an
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immediate need because we have a known event that happened, very
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recently.
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We can absolutely go out and take a look at that.
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Just simply by somebody reaching out and advising here's what we
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have we'd like to see if you can help us out with that.
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We can start those discussions around what makes sense.
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In terms of is it a long-term plan to take us on as a client?
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Is it a one-off situation?
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They just want us help with one individual property.
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What I found in this business is that every investor and property
00:14:02
management company is set up slightly different, has various
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different needs.
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So we've found a way to customize and tailor what our
00:14:09
services are to meet those needs in almost every situation.
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But the reality is it's like anything else.
00:14:15
When you don't have the expertise, you need to go seek
00:14:17
out the experts, and that's where we fill the void.
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In, in a situation, I'll just give an example, if it is
00:14:22
somebody that has a property or an asset in Texas right now,
00:14:25
especially around the Dallas area, if you've been faced with
00:14:29
storm damage of some degree, you're unsure of how it is, how
00:14:32
bad it is, there's just persistent contractors knocking
00:14:36
at the door wanting to get your business.
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Maybe there's a level of trust that you don't have there just
00:14:42
yet.
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We can come out and do an independent evaluation.
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We don't necessarily need to have we, we fill a void that's
00:14:49
different than a contractor or more of a consultant company.
00:14:52
That's where I think we, we bring a little bit more, I don't
00:14:54
wanna say credibility, but a level of expertise, not driven
00:14:59
solely by the desire to, gain financially from a specific job.
00:15:04
We build partnerships with our clients and, it's about being a
00:15:07
value to them more than it is as getting any work out it.
00:15:11
I would say if there's somebody that has an immediate need,
00:15:13
please reach out.
00:15:14
You can reach me through my email address.
00:15:17
We can give out at the end here.
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I'll be right now directly from our website.
00:15:20
You could reach out.
00:15:22
Even by phone.
00:15:23
So whatever makes the most sense for that situation.
00:15:25
But what I'll stress is the urgency around.
00:15:28
Don't let it sit.
00:15:30
Have somebody do an immediate assessment on it.
00:15:32
If there's a need to maybe have some of your roofs dried in
00:15:36
where there's not if there is missing shingles or very large
00:15:39
holes and damage like that, we wanna make sure that we cover
00:15:42
those sections temporarily at least to keep water from coming
00:15:45
in.
00:15:46
So there's some immediate things I think, that need to be done.
00:15:49
But then you can take a step back, evaluate the damage,
00:15:53
understand as a team, what should we be doing with this
00:15:56
particular asset?
00:15:57
Does it make sense to move forward with the repair?
00:16:00
Should we explore an option of filing an insurance claim?
00:16:03
Those are things we can help with and giving a value to what
00:16:06
we seek.
00:16:06
The loss is that in our experience is helpful because we
00:16:10
can give you what we think an insurance settlement will come
00:16:12
back most likely as.
00:16:14
Not necessarily here's how much it's gonna cost to replace your
00:16:17
roof on a retail price.
00:16:19
We'll say if I was an insurance adjuster, I would write it for
00:16:22
this, and this.
00:16:23
So we can give you some knowledge around that too.
00:16:24
That helps guide the decision making around pursuing a claim.
00:16:28
Cuz the constant out here is how much is my deductible and what's
00:16:32
it gonna cost me to file a claim and we can help with that
00:16:35
decision as well.
00:16:37
Yeah.
00:16:38
Let's switch gears a little bit into insurance because obviously
00:16:41
that's the obvious question around these events.
00:16:43
How and I like the way that you just mentioned how you support
00:16:47
partnerships with these customers.
00:16:49
I imagine owners are talking with you because, and then you
00:16:53
have the third party managers.
00:16:55
That have a responsibility to, to report these things.
00:16:57
I imagine you're making their, their management company more
00:17:01
valuable with providing that type of service, but to the
00:17:04
owner.
00:17:06
It's also more certainty cuz they're the ultimate ones that's
00:17:09
gonna pay the loss here in a situation that they're not
00:17:13
getting the right intel or the right data.
00:17:16
They may miss on opportunities.
00:17:17
Let's go back to, or let's go into insurance and talk about
00:17:21
what is appropriate coverage for these types of things and how
00:17:24
are you seeing people navigate through this?
00:17:29
Yeah, I, what I will say the one constant is that there's usually
00:17:33
not a lot of variance in coverages when it comes to storm
00:17:38
events.
00:17:39
It's just, it's one of those losses, especially in a state
00:17:42
like Texas, as since we're talking about it, it is wind and
00:17:45
hail country, and most policies are going to be written to cover
00:17:49
that.
00:17:49
Where it comes into play is changes around limits.
00:17:54
Deductible amounts.
00:17:55
Obviously the higher the deductible, the more affordable
00:17:57
the premium is on the policy.
00:17:59
But that doesn't always work into your favor.
00:18:01
If you set a deductible so high that you can never file an
00:18:04
insurance claim, then what's that insurance policy actually
00:18:07
worth?
00:18:07
So what I see around insurance, especially in multifamily, is
00:18:11
that there's such a trend right now with cost being.
00:18:14
Issue.
00:18:15
My insurance costs are through the roof.
00:18:17
As a business, what can I do to lower that?
00:18:19
There's certain things you can do, but what you should really
00:18:21
be looking at is what is my, when do I actually plan to use
00:18:26
insurance and understanding that decision?
00:18:28
How bad of a loss do I need to have financially before I, I
00:18:32
say, I want insurance to cover this.
00:18:34
That's the conversation you should be having with your agent
00:18:37
around.
00:18:38
What is my deductible amount?
00:18:39
Ideally in a situation like what loss am I willing to accept
00:18:43
before I need somebody else come in and cover the rest of it?
00:18:47
I do see a lot of miscommunication and just
00:18:51
misunderstanding around insurance.
00:18:53
The biggest fear out there is if I file an insurance claim, I'm
00:18:57
going to be dropped, my insurance carrier is gonna drop
00:18:59
me.
00:19:00
The other one I see is what if I, what is the answer to that?
00:19:03
I get, yeah, we can't make predictions about those things,
00:19:05
but like what?
00:19:07
I mean there's a lot of factors that go into why an insurance
00:19:10
policy is canceled.
00:19:12
What I can say is that an insurance claim loan due to a
00:19:16
wind and hail event considered a what they call an act of God or
00:19:20
of nature, it cannot be negatively counted against you
00:19:23
in terms of you, that's not the basis for canceling of the
00:19:26
policy.
00:19:27
There could be a series of things that, in addition to
00:19:29
that, could lead up to it.
00:19:31
And for whatever reason, any insurance carrier can non-renew
00:19:34
a policy at the end of the term, but simply using the insurance
00:19:38
is not a basis to cancel it.
00:19:40
So I think what people see most likely in correlation, not
00:19:44
necessarily causation, is that because an event or a series of
00:19:49
events like we're seeing here in Texas has happened, a certain
00:19:52
market takes such a hit.
00:19:54
That all the policies in that area have to see a premium
00:19:57
increase for those insurance carriers to remain profitable.
00:20:01
They're seeing such high losses that they're just not gonna
00:20:04
remain profitable at that certain premium rate.
00:20:07
So they have to recover that.
00:20:09
And what we see as consumers is, oh, because I filed the claim,
00:20:14
this is what's happening.
00:20:15
I actually have an interesting situation right now where.
00:20:18
One of my clients who I'm representing on many claims in a
00:20:22
certain market on multiple assets has already received a
00:20:27
notice of premium increase before they've seen the
00:20:31
settlement on their insurance claims, which tells you that's
00:20:34
exactly why.
00:20:34
If they wouldn't have filed their claim and just said, no,
00:20:37
I'm gonna pass on this one, they would've seen that same
00:20:40
increase.
00:20:41
So what?
00:20:42
What that tells me is that absolutely it had nothing to do
00:20:44
with them filing a claim.
00:20:45
Cause they haven't seen any money out of it yet.
00:20:48
But they're already being told they're gonna see a premium
00:20:50
increase.
00:20:50
So you know that's one misconception is that I
00:20:53
shouldn't use my insurance because I will see a premium
00:20:56
increase that's just not true.
00:20:58
That including other factors, yes.
00:21:01
Having an event happen in areas is most likely the driving cause
00:21:04
of it, rather than you as an individual consumer filing a
00:21:08
claim on this policy.
00:21:11
That's great and, the question, when do you plan to use
00:21:14
insurance?
00:21:14
Not knowing that going in and making the assumption that,
00:21:18
we're just not gonna file in this event because we're seeing
00:21:21
costs go up, and we don't want to contribute to that.
00:21:24
And then in, in reality, you're getting the increase.
00:21:27
Regardless, yeah.
00:21:29
The market.
00:21:29
And the other side of this is that by delaying the the
00:21:32
conversation around how much damage do we have and what
00:21:36
should we do about it, you actually limit some of the
00:21:39
options you have with your insurance because more and more,
00:21:42
most of the carriers are going to a shorter and shorter
00:21:45
timeline that you have to file a claim after an event happens.
00:21:49
And then associated with that claim, there's a limited amount
00:21:52
of time you have to do any repairs to receive the full
00:21:55
policy benefits such as replacement cost, coverage,
00:21:58
meaning paying at the market rate for these repairs and
00:22:02
people investors specifically is if they delay this or they have,
00:22:07
let's just say you have, let's just say 10 communities in one
00:22:11
area that was hit.
00:22:12
That's a lot of work to be done.
00:22:14
And that's a lot of claims to be handling if you're going that
00:22:17
route.
00:22:18
If you wait and then you only have a year to file it and you
00:22:20
wait until nine months in and you're cutting it close, and
00:22:23
then are you limiting your amount of time you have to get
00:22:25
the work completed And then also receive the full policy
00:22:29
benefits.
00:22:30
Most of these claims, if anybody's handled one, which I'm
00:22:32
sure most of the people listening have they aren't like
00:22:35
your homeowner's claims.
00:22:36
They don't happen in a week or two weeks.
00:22:38
It's months of timing inspections, evaluations.
00:22:43
Part of what we do and add value, I feel, is that an
00:22:46
insurance claim settlement will come in and we'll look at the
00:22:48
estimate and the scope of work and say, Nope, they missed this,
00:22:51
and we'll get it right.
00:22:52
And the difference between somebody's home where we miss
00:22:55
one thing on one building is you compound that times the number
00:23:00
of buildings and the size of the buildings.
00:23:02
One little error can make a very large different financially and
00:23:05
settlement.
00:23:06
It's important to be very detailed, very accurate.
00:23:08
And we'll catch an error.
00:23:10
I've not had a claim that we've worked on that I haven't caught
00:23:12
some sort of error just in the human aspect of writing an
00:23:16
estimate.
00:23:16
It's better to have an extra set of eyes than just one.
00:23:19
Yeah.
00:23:19
These could be six figure heirs, right?
00:23:21
Oh, absolutely.
00:23:23
Absolutely.
00:23:24
Yeah.
00:23:25
Let's talk about really what to do post an event like this
00:23:28
happens.
00:23:28
If you haven't been proactive.
00:23:31
Maybe they don't have, a response plan in place or what
00:23:34
have you.
00:23:34
But what are you doing first?
00:23:37
Yeah I think one thing to think about that's different in a
00:23:40
storm event situation versus just your standard.
00:23:46
Capital improvement projects is that we're very used to that
00:23:49
process of let me get three bids and let me evaluate from there.
00:23:53
In a situation where we have severe storm damage and even an
00:23:57
idea of insurance is going to be considered, you need to take a
00:24:01
different approach as an investor because you need to
00:24:04
understand how bad the damage is first.
00:24:07
And just like anything else I encourage.
00:24:11
That investors or homeowners or whoever we're working with, that
00:24:15
they get a advocate of their own to give that assessment.
00:24:19
And don't rely on the insurance company's experts and their
00:24:22
adjusters to do that for you.
00:24:24
Get your independent assessment much like going to court.
00:24:27
You don't want to go to court without a lawyer.
00:24:30
You want to have somebody that has your best interest in mind
00:24:33
and give you that evaluation.
00:24:34
So I think first step is always going to be have an evaluation
00:24:37
done.
00:24:37
Have an assessment.
00:24:38
It's a brief one.
00:24:39
You may look at a sampling of the buildings to get an idea of
00:24:42
the overall damage that we're seeing.
00:24:44
Not overly detailed but enough safe use.
00:24:47
Is this stuff you do is that something Yeah.
00:24:48
A service you guys do.
00:24:50
Yeah.
00:24:50
So that's part of our, but what does that feel like?
00:24:52
Like right now people are evaluating these things from
00:24:55
images, emailed and maybe third party data.
00:24:58
So tell me, what does that look like?
00:25:00
If the first step is getting this assessment they give you a
00:25:03
call and then what happens?
00:25:05
Typically in our situation, so our, we have a storm monitoring
00:25:09
service that we offer, and part of that is, is when we see an
00:25:12
event.
00:25:13
That would happen.
00:25:14
I'll use last night as an example.
00:25:16
Baton Rouge had a very just sporadic storm that kind of came
00:25:20
up out of nowhere with three, three and a half inch hail.
00:25:23
I think that was hit in an area in an area that has some
00:25:26
multifamily, properties as well.
00:25:28
So it's a lot of student housing being in Baton Rouge there.
00:25:31
And within an hour we had notifications out to the
00:25:35
maintenance staff onsite and the investors letting'em know what
00:25:39
happened.
00:25:41
So that's step one.
00:25:42
Step two is now we have a plan to do an initial assessment.
00:25:45
So we're in the process of scheduling with them, that we're
00:25:49
gonna be coming out, we're gonna coordinate an evaluation.
00:25:53
I wanna say there's somewhere around 50 to 60 buildings on
00:25:56
site.
00:25:57
We're probably gonna look at a sampling of that.
00:25:58
We're gonna, throughout the different parts of the
00:26:00
community, it's a pretty large one, so we'll look at different
00:26:03
corners to make sure the whole property was affected the same
00:26:06
way.
00:26:07
But we'll just look for indications of damage that we
00:26:10
think is bad enough that something has to be done with
00:26:12
it.
00:26:13
If we get out there in order to see pretty minor things, we'll
00:26:15
give that assessment in a report.
00:26:18
So what we'll do at the end of it is produce a report that you
00:26:21
can share internally with your team that has photos,
00:26:23
documentation around causation severity we'll give.
00:26:28
On demand.
00:26:29
Sometimes not everybody wants this, but we'll give an
00:26:32
assessment of a range of prices that will value at the loss to
00:26:35
be.
00:26:36
And this is really to help guide the decision making around what
00:26:38
the next steps are.
00:26:40
So until you've done an evaluation as an investor, I
00:26:44
don't think you can really make that assessment.
00:26:45
I've seen a lot of clients that we have that will jump into a
00:26:49
claim and then notify us, and I'm almost like pump the brakes.
00:26:52
Just a second.
00:26:54
Let's take a really close look at it first, really we can come
00:26:56
in and help at any point.
00:26:57
Even if the claim's already been filed or maybe you've received
00:27:00
an initial assessment, you don't think is accurate.
00:27:03
We've come in a lot of times and done an evaluation after the
00:27:06
fact and said, no, here's how bad it is, and we'll help the
00:27:09
supplementing process and start it from there.
00:27:11
We can really add value at any point in time, but like I was
00:27:14
preaching before, proactive is best.
00:27:17
If we can be there at the beginning of it, we can really
00:27:19
bring the most value.
00:27:21
Yeah, and I think that first step is important because a lot
00:27:24
of times we just get right into the repair, right?
00:27:26
I think if going to the doctor, it's like you just go right into
00:27:29
surgery.
00:27:29
It's wait let's get the MRI first.
00:27:31
Let's figure out what's going on.
00:27:33
It, is it crucial to work with specific contractors after an
00:27:38
assessment like this, or does it, is it unique?
00:27:43
I think it's unique to each investor either owner of the
00:27:47
multifamily or if it's third party managed.
00:27:50
It really depends on your level of comfort and trust.
00:27:53
If you're a investor that has a very lack of a certain market
00:27:58
and you probably have really good contact contracted
00:28:00
relationships and you know your experts and everybody's got it
00:28:03
figured out, if you're spread out across the country, you may
00:28:06
not have that same level of confidence and trust.
00:28:09
And the one thing I would say is that not every contractor is
00:28:13
built the same.
00:28:14
A lot of'em are very talented, very good at doing the work, but
00:28:18
assessing damage from storms is different than putting new
00:28:22
shingles on the roof.
00:28:24
And so where we bridge the gap is we look at it through the
00:28:26
same lens as a contractor would, as well as what an adjuster
00:28:30
would.
00:28:31
We can see both sides of it say although you may think this is,
00:28:34
looks like damage, I can tell you it's actually not storm
00:28:37
damage.
00:28:38
It has the appearance of it, it's something else.
00:28:40
And that's what a digester would actually look at in the
00:28:43
insurance perspective.
00:28:44
Whereas a contractor, we can look at it through that lens and
00:28:46
say, although this is damaged, we also know that the way this
00:28:49
is built, the scope of forecast to reflect these nine other
00:28:53
things to be done correctly per code.
00:28:56
So we bridge the two worlds together.
00:28:59
And really help things along as, as an independent, outside of
00:29:01
that more of a consulting company, but really does come
00:29:04
down to each individual investor.
00:29:06
It makes sense for them.
00:29:07
It can ever hurt to have somebody look at it, doesn't
00:29:10
have a direct financial interest and either paying a claim or
00:29:15
gaining some work out of it.
00:29:16
So I think that's, again, where we come in is we don't
00:29:19
necessarily have a financial benefit just in the assessment
00:29:22
aspect of it.
00:29:24
So we're not swayed one way or the other.
00:29:27
And you know what you, I would add another third element is the
00:29:31
investor component because like you just mentioned, the
00:29:35
alignment and the, even some cases, the bias around some of
00:29:39
these things.
00:29:40
Somebody is a contractor trying to get you the lowest price
00:29:44
competitive bid to get the job, may miss something that later
00:29:49
on, on a disposition could cost you if somebody's hired you to
00:29:52
go into that deal.
00:29:53
Yeah.
00:29:53
And excellent.
00:29:54
You bring up an excellent point then is that goes back to I
00:29:57
think the mindset of capital improvement projects.
00:30:01
We look to bid at the lowest price possible.
00:30:04
To get the most we can out of that, dollar.
00:30:07
But when it comes to insurance work, it's not the same approach
00:30:10
is that it doesn't benefit you in any sort of way to drive the
00:30:14
price down the absolute lowest cost.
00:30:17
It benefits the insurance company.
00:30:18
But what you end up getting is probably, it's like anything
00:30:21
else.
00:30:21
You pay for what you get.
00:30:23
And if you're paying the lowest dollar price out there, are you
00:30:27
really getting the best service?
00:30:28
And I always try to relate things back to what people are
00:30:31
familiar with.
00:30:32
You have an accident with your car and you have the option to
00:30:35
take it to a really high priced body shop that does excellent
00:30:41
work.
00:30:41
You've seen it, or this guy that's really cheap does it in,
00:30:44
his spare time is not quite as good, doesn't have all the best
00:30:48
tools.
00:30:49
It'll come out looking pretty good, but maybe there's some
00:30:52
issues underneath that's hidden and things like that.
00:30:55
If you're paying the same deductible, which one do you
00:30:57
want?
00:30:58
And you probably want the better service, the one that you can
00:31:00
really trust, the one that offers the better warranty.
00:31:03
All that type of things.
00:31:05
So if you're paying for the insurance to have either option,
00:31:09
why would you not go for the best value?
00:31:13
Let's go into a hypothetical, I guess here.
00:31:17
You're a property owner, multifamily.
00:31:21
This event just came through on two levels.
00:31:25
What are you doing after this event?
00:31:27
First?
00:31:28
Secondly, what are you doing on the insurance conversation in
00:31:33
debriefing, all that we've talked about today?
00:31:35
That's happened.
00:31:36
You have to take care of the real estate, you have to take
00:31:38
care of the investor, you have the financial piece, the
00:31:40
insurance piece, you know all that.
00:31:42
Yeah.
00:31:43
What are you doing with those two areas?
00:31:46
Yeah, so one thing that most.
00:31:48
Investors are probably run into, if they've had a claim, is that
00:31:51
one, that there is a requirement in the policy insurance policy
00:31:54
that you as the owner, have a duty to mitigate.
00:31:58
So if there is something wrong with the property, is your
00:32:01
responsibility to make sure you address it in a way that can be
00:32:05
takes care of the issue.
00:32:06
So if it's a missing shingle or sectioned roof that needs to be
00:32:09
covered up to prevent any further damage.
00:32:12
Otherwise the insurance company may not cover any resulting
00:32:15
damage from that.
00:32:16
So one, you have to be aware of it in order to take any action.
00:32:20
So step one is to have the property assessed for storm
00:32:24
damage.
00:32:24
There's lots of ways to do it.
00:32:26
There's new technology that's being used all the time.
00:32:28
Drones are a great thing anymore to do.
00:32:31
A widespread broad brush approach of an analysis, but
00:32:35
nothing will ever beat getting up on a roof to, do an
00:32:38
assessment, see how bad damage is.
00:32:40
Assess some conditions such as, what's the decking condition?
00:32:43
Just little things like that you'll never see from a drone,
00:32:46
but having that assessment done first then empowers you to say,
00:32:50
all right, knowing what I know now about how bad it is, I can
00:32:54
decide is it something we're comfortable taking care of as
00:32:58
repair and just moving on with business?
00:33:01
Or do we now need to address some temporary repairs and
00:33:05
pursue an insurance claim?
00:33:07
That's a very strong possibility in some of these really severe
00:33:10
things.
00:33:10
So having the knowledge to do that allows you then go to the
00:33:14
next step and start alerting your insurance company.
00:33:17
But by doing having the assessment done and doing the
00:33:21
temporary repairs, you're already set up for success
00:33:23
because the insurance company's gonna come in and know that the
00:33:27
the mitigation's done.
00:33:28
There's no risk for interior water leaks.
00:33:31
You get an in inspection set up with an insurance adjuster, a
00:33:35
company like us would come out then as the next step and be
00:33:38
part of that evaluation process and the inspection process,
00:33:41
making sure that we're documenting and showing
00:33:43
everything that we found in our evaluation to that claim
00:33:47
adjuster so that nothing's missed.
00:33:49
It's much easier to address it upfront during the first
00:33:52
inspection than it is to come back later and say you missed
00:33:55
these things, you missed these things.
00:33:57
Cuz most people don't like to hear the things they do wrong.
00:34:03
Pursuing an insurance claim, as you mentioned, I'd love to do a
00:34:06
follow up episode with you on that.
00:34:07
Maybe we can bring in some experts along with you on that
00:34:11
one.
00:34:11
That would be absolutely fun.
00:34:13
I know there'll be more questions that you have as
00:34:15
listeners.
00:34:16
One of the things I would encourage you to do is if you
00:34:19
are hearing my voice today, and you've experienced this, or you
00:34:22
want to be proactive and just even the little nuggets around
00:34:26
compliance and minimizing.
00:34:29
The ability to process future claims by having proactive
00:34:33
measures in place.
00:34:34
Reach out to Mark.
00:34:35
He's a wealth of knowledge and again, the reason why I brought
00:34:37
him on is number one he's a client of ours here.
00:34:40
We work together on, on stuff within the industry on thought
00:34:44
leadership and all these things.
00:34:45
But the reality is having somebody that has.
00:34:49
The construction background, the insurance background, the
00:34:53
financial investment background, and being deep into the weeds of
00:34:59
real deals of things, case studies of projects were
00:35:03
millions of dollars were found or saved.
00:35:06
It's worth a call.
00:35:07
It would, it's it would be.
00:35:10
It would be interesting to see that when you have you're seeing
00:35:13
the expert economy come to play here you have people that do
00:35:18
many things and, you don't get coverage over the real true
00:35:22
value of a partnership.
00:35:24
And when you see a company focusing on one thing, doing it
00:35:27
well, that's a fascinating thing.
00:35:29
So Mark I appreciate what you're doing for our listeners listen
00:35:32
if you wanna keep this conversation going, follow us on
00:35:35
social media.
00:35:36
We're gonna be on LinkedIn, Facebook, Instagram, Twitter
00:35:39
wherever you reach out on social media.
00:35:41
Give us a mention or shoot me a message.
00:35:43
I'd love to hear your questions.
00:35:45
Maybe we can structure some good follow up conversations with
00:35:48
Mark and his team.
00:35:49
But we will be pursuing.
00:35:51
A little bit more around pursuing insurance claims and
00:35:53
all that goes into that.
00:35:55
And we'll bring in some experts, mark and can take us through
00:35:57
that as well.
00:35:58
So if you've enjoyed this episode, please subscribe, rate,
00:36:01
review give us a tag on LinkedIn so we can amplify that and know
00:36:05
that you're watching.
00:36:06
That helps us do a great job and also helps others discover the
00:36:10
value of the guests that we bring on here today.
00:36:12
So with that, we'll see you guys on the next thing.
North Texas has recently weathered a severe hailstorm.
00:00:04
Now this lasted over six days with nearly every county
00:00:07
impacted.
00:00:08
Now the National Weather Service in Fort Worth logged a
00:00:11
significant 249 hail reports from June 10th.
00:00:16
To June 15.
00:00:17
Now these hailstones range from two and a half inches to an
00:00:21
enormous five inches across most all counties.
00:00:26
Widespread damage was reported and in addition to the hail
00:00:30
severe storms brought the threat of isolated tornadoes, damaging
00:00:35
winds, and the intensity of these LED in through the week.
00:00:39
Now, this threat persisted not only with turbulent weather, but
00:00:45
also.
00:00:46
Really the importance of people being unprepared.
00:00:50
Welcome back to the Multifamily Innovation Podcast.
00:00:53
Today we have a very special guest with us mark Ness.
00:00:56
He'll show us how to protect our property investments during
00:00:59
these severe weather extremes.
00:01:01
Now, mark was raised in central Iowa.
00:01:05
He developed an early affinity for construction, working his
00:01:08
way up through lumber yards, starting his own construction
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company.
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And he did this all while in college.
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His entrepreneurial spirit and passion for buildings was just
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the beginning of a remarkable journey and property insurance
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claims and the construction industry.
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This is a wonderful collision.
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It's why he is on the show today.
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This journey spanned over two decades for his his career.
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His expertise though is in construction.
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He honed us through not only practical experience, he found
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new directions in his career and he joined one of the top five
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insurance carriers in the country.
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So you could imagine the construction experience, the
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investment experience, and then also now insurance.
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Mark.
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Really has an understanding of the ins and outs of property
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insurance.
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Not only the insurance, but the claims.
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Something not a lot of people.
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In fact, I don't know anybody in the industry that can speak to
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it with this type of experience.
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Mark then went on to oversee operations for a commercial
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roofing company.
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It was there when he witnessed firsthand the hurdles that
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multifamily and commercial real estate investors often stumble
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upon in the investments and the asset management strategies as
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they pursue acquisitions.
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Now, observing all of this, Mark identified a gap.
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Now, this was a need for a service that could guide
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investors and property managers through an often rocky terrain
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of storm damage.
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And so Weather Shield was born.
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This is a company helping clients navigate the stormy seas
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of storm damage, ensuring that they avoid the costly mistakes
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and safeguard their investments.
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As they go out their portfolio.
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Stay tuned as we delve into the experience on how to stay ahead
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of the game and make smart investment decisions.
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Mark, welcome to the podcast.
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Thank you, Patrick.
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How are you doing?
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It's great to have you back.
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You and I had a conversation on another strategic matter we were
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talking about around due diligence and, the hailstorm
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came through and this is a top of mind for a lot of owners and
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operators.
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Sometimes we don't, we're not as prepared as we need to be.
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A lot of questions and so I'm bringing you on to go through
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that and hopefully deliver some value and.
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Open up your database of depth of contractors and experience
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and experts and knowledge to help people minimize any risk.
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And there's a lot of stuff going on right now, so I'd love to
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just open up and talk about just the general overview of, what
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severe storm damage looks like, because in many cases we have o
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we have.
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People that oversee properties, asset managers, property
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maintenance technicians and sometimes damage gets dismissed
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in many cases that could cost you millions in some aspects,
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right?
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And so let us know what is really storm damage and what is
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it look like?
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Yeah, it's I think it's important to have that
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foundational knowledge going into any, to any site of.
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Storm assessment.
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So I think what most people see is what they see on the news is
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these catastrophic tornadoes.
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And hurricanes are definitely ones that, that catch a lot of
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attention on the media, but what probably doesn't get as much
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attention, and I would say is more far reaching to almost
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everyone here would be just your standard wind and hail claims.
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Those fall into that severe category simply by the amount of
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damage.
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Quantifiably that it does.
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It does a lot of damage every single year that costs
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financially is a devaluation to your assets.
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So when we go into that I think when most people say, oh, we had
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our maintenance guy look at it, everything's okay.
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It's these hidden things that you don't see right away.
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Or potential leak sources that aren't gonna show themselves
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immediately, which just talks to the importance of.
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How you need to have somebody that's trained in storm damage
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assessments do an evaluation of the property following one of
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these events.
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Knowledge of the event happening is great, but actually having
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some onsite evaluation done by a professional that understands
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what to look for is really important.
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I thought it was interesting, you brought up that it was a
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series of days in a row, I think from the 10th to the 15th here
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in June where Texas saw just back to back storms.
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With pretty record setting.
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This is large hail maybe not anything unique to Texas.
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It's known for its large hail.
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Everything's bigger in Texas.
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But what's funny is it actually went longer than that.
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So I think the news article was probably written that many days
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in it, but it was 10 consecutive days of a severe weather event
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that hit Texas.
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So from the 10th to the 19th, every single day, had some sort
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of massive, large.
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Severe storm events.
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So it just tells you the scale of what these things can do and
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how it's the time of year too.
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That's the other thing you have to consider is this is the time
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of year when storms are passing through and being aware of what
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to look for and be monitoring these events is really important
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as an investor.
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Let's talk about the damage that can come through this.
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You mentioned earlier about the hidden things that, you're the
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trained eye can discover and a lot of times these property
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managers are busy doing many things right?
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And you mentioned potential leaks.
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What type of things can surface that otherwise could be missed?
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So I think probably the biggest thing that most people are aware
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of, the common person that doesn't have background in
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either construction or storm damage assessments would really
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be, what things can I see from the ground looking up on the
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building.
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When there's severe enough and you have certain types of
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materials such as vinyl siding, you're gonna see holes when it's
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severe enough, you're gonna see cracks.
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You'll see damage to windows when glass is broken.
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These are some of the more severe large hail events.
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What you don't always see is when you have more resilient
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construction materials like a brick exterior.
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You're not gonna see from the ground what the roof looks like
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in wind events and hurricane events.
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Missing shingles are things that are indicative of storm damage.
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But when you're talking about a hail event, such as we've seen
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in Texas here, The large hail will cause damage, but typically
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it doesn't cause any immediate cause for a leak or an issue.
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So what I think most of the what I've seen in multifamily is the
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maintenance staff and professionals that are on site,
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really respond to events.
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They respond to report of a leak, they respond to
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maintenance needs, but they're not proactively looking at what
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are some potential sources of leaks that could happen next
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year.
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Or whatever.
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So by assessing'em early on, you now bring in the opportunity to
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deal with it in a proactive manner rather than a reactive
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one.
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So I think for the most part the hidden pieces are the ones
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where, I may have something that's an issue caused by this
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storm event.
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But maybe a section of gutter that was knocked loose isn't
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gonna cause any immediate, point of water intrusion, but
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eventually that's gonna leak inside the property.
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Cause some mold damage water damage to the walls and maybe
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we're not gonna see that as an investor until that tenant moves
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out.
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And at that point, how much other damage is had done.
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Let's talk a little bit more about those vulnerabilities.
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Where are those points in the building that we need to be
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aware of?
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Yeah I think the biggest concern for me when I stress it to
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either owners of property or property management staff is
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water can cause a lot of damage.
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And what we don't typically see is just this constant intense
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leak that is just, pouring water down inside of a, of an unit
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inside the building.
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And we don't really see that.
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We see drips and we see.
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Saturated insulation in attic spaces.
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We see drywall issues with staining, but it's the
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persistence of it and the long term effects where you start to
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see mold and mildew.
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And once that gets into a building and it circulated
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enough, it can cause some severe damage and some health concerns.
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So I really look for anything more.
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Water can be a point of entry.
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So is it a hole in a piece of siding?
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Even a crack can cause some damage.
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Dislodged sections of gutters and downspouts tend to direct
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water in ways that we don't intend it to by design.
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And then missing vents on your roof from either, holes in them
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from hail or missing from wind.
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Those things are gonna cause leaks that maybe they don't
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immediately show.
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But man, if you had the opportunity to go back and say,
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if I could have dealt with that in the first week when it
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happened.
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Absolutely.
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I'd rather do that than spend thousands of dollars to try to
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remediate all the damage that's occurred since.
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Yeah, let's talk about those roofs more.
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You mentioned the, like a wind storm coming through ripping off
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the vent.
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And then you have the water that comes in.
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Totally.
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Two different experiences.
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And you can't see those from the ground.
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What are the impacts to the roofs, windows, siding, things
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like that that we need to be aware of?
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I think the one that most likely, everybody's aware of
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that.
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You have a property that has a certain value, retains that, and
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after a storm event happens, you may see the functional way that
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the building works in terms of, really what a roof does is
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divert water to a certain place to get it away from the
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building.
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You may still see similar functions out of the property,
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so it's not gonna be this immediate Awareness of damage,
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but it's the the impacts.
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So a large hailstone will actually cause a bruising effect
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on a asphalt shingle, which is a very common roofing material,
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most multifamily that I've seen.
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That may not cause that immediate damage, but as water
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erodes away at that area, now shingles have an opening where
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water can get in behind it, causing damage to your roof
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decking materials.
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So the plywood or an OSB sheathing.
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As that deteriorates over time, now you have additional damage
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and it has to be replaced where you got not only mold and
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mildew, but you have rot.
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So those things that are completely preventable when
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addressed and corrected immediately.
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But I think, outside the financial side of the loss to
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your property, since I, I bought it, it's worth a certain amount.
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I expect that I can put some money into it.
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Eventually get a return on my investment.
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Now you might be faced with a situation where you go to sell a
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property, you're unaware of storm damage, and now they're
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saying it's worth less because all the roofs are shot from hail
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and all the siding needs to be replaced for the same reason.
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And if you were just aware of that, when you had the chance,
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you now open up the opportunity to even file an insurance claim
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on it potentially.
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It is really about awareness, knowledge, and the ability to
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make some really sound smart decisions at the time of these
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things happen.
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Yeah.
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And it sounds and another conversation we've had where
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you're advising those acquisition teams, finding
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properties that have potential, found money in them where damage
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has occurred, and go in there, leverage the insurance to
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scenario to get some capital improvements accomplished
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without spending.
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Capital improvement dollars.
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At least with your own.
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Yeah.
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And as an investor it does work both ways.
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It's still about knowledge and awareness and man, your options
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open up on things that you can do.
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So I'll preach it till the day I die.
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It's about being proactive in these matters rather than
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reactive.
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And that's, I think, smart business in any industry that
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you're in.
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Is just being aware of the things that you have options to
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do.
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And how do you take advantage of that knowledge?
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So those, of those, of the people listening now maybe
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they've experienced this come through.
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What do they do next?
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Is this something where they can call you and you support them?
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Consulting?
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What would they do if they call their insurance company?
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They call their contractor.
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Contractors are all over the place with when these events
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happen, right?
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Yeah.
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What do you advise?
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I, I think having a really sound risk preparedness plan in place
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for any investors, a smart decision.
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So a lot of our current clients, that's how we're involved is
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part of their asset management strategy.
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So we're monitoring.
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These storm events and when we have a situation that arises
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where, certain areas hit with their property, we see
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indicators of storm damage and we alert them to that.
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So before they may even know, we're talking sometimes minutes
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after the event happens, we can make communications out to'em
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and just make them aware if something happened within, the
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last few hours we think it hits the threshold of something, what
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it.
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Makes sense for us to have an inspector look at and then we
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move forward with that assessment.
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As far as for, when we don't have current clients that have a
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similar situation, we'll go back and evaluate if there's an
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immediate need because we have a known event that happened, very
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recently.
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We can absolutely go out and take a look at that.
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Just simply by somebody reaching out and advising here's what we
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have we'd like to see if you can help us out with that.
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We can start those discussions around what makes sense.
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In terms of is it a long-term plan to take us on as a client?
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Is it a one-off situation?
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They just want us help with one individual property.
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What I found in this business is that every investor and property
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management company is set up slightly different, has various
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different needs.
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So we've found a way to customize and tailor what our
00:14:09
services are to meet those needs in almost every situation.
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But the reality is it's like anything else.
00:14:15
When you don't have the expertise, you need to go seek
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out the experts, and that's where we fill the void.
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In, in a situation, I'll just give an example, if it is
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somebody that has a property or an asset in Texas right now,
00:14:25
especially around the Dallas area, if you've been faced with
00:14:29
storm damage of some degree, you're unsure of how it is, how
00:14:32
bad it is, there's just persistent contractors knocking
00:14:36
at the door wanting to get your business.
00:14:39
Maybe there's a level of trust that you don't have there just
00:14:42
yet.
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We can come out and do an independent evaluation.
00:14:45
We don't necessarily need to have we, we fill a void that's
00:14:49
different than a contractor or more of a consultant company.
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That's where I think we, we bring a little bit more, I don't
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wanna say credibility, but a level of expertise, not driven
00:14:59
solely by the desire to, gain financially from a specific job.
00:15:04
We build partnerships with our clients and, it's about being a
00:15:07
value to them more than it is as getting any work out it.
00:15:11
I would say if there's somebody that has an immediate need,
00:15:13
please reach out.
00:15:14
You can reach me through my email address.
00:15:17
We can give out at the end here.
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I'll be right now directly from our website.
00:15:20
You could reach out.
00:15:22
Even by phone.
00:15:23
So whatever makes the most sense for that situation.
00:15:25
But what I'll stress is the urgency around.
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Don't let it sit.
00:15:30
Have somebody do an immediate assessment on it.
00:15:32
If there's a need to maybe have some of your roofs dried in
00:15:36
where there's not if there is missing shingles or very large
00:15:39
holes and damage like that, we wanna make sure that we cover
00:15:42
those sections temporarily at least to keep water from coming
00:15:45
in.
00:15:46
So there's some immediate things I think, that need to be done.
00:15:49
But then you can take a step back, evaluate the damage,
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understand as a team, what should we be doing with this
00:15:56
particular asset?
00:15:57
Does it make sense to move forward with the repair?
00:16:00
Should we explore an option of filing an insurance claim?
00:16:03
Those are things we can help with and giving a value to what
00:16:06
we seek.
00:16:06
The loss is that in our experience is helpful because we
00:16:10
can give you what we think an insurance settlement will come
00:16:12
back most likely as.
00:16:14
Not necessarily here's how much it's gonna cost to replace your
00:16:17
roof on a retail price.
00:16:19
We'll say if I was an insurance adjuster, I would write it for
00:16:22
this, and this.
00:16:23
So we can give you some knowledge around that too.
00:16:24
That helps guide the decision making around pursuing a claim.
00:16:28
Cuz the constant out here is how much is my deductible and what's
00:16:32
it gonna cost me to file a claim and we can help with that
00:16:35
decision as well.
00:16:37
Yeah.
00:16:38
Let's switch gears a little bit into insurance because obviously
00:16:41
that's the obvious question around these events.
00:16:43
How and I like the way that you just mentioned how you support
00:16:47
partnerships with these customers.
00:16:49
I imagine owners are talking with you because, and then you
00:16:53
have the third party managers.
00:16:55
That have a responsibility to, to report these things.
00:16:57
I imagine you're making their, their management company more
00:17:01
valuable with providing that type of service, but to the
00:17:04
owner.
00:17:06
It's also more certainty cuz they're the ultimate ones that's
00:17:09
gonna pay the loss here in a situation that they're not
00:17:13
getting the right intel or the right data.
00:17:16
They may miss on opportunities.
00:17:17
Let's go back to, or let's go into insurance and talk about
00:17:21
what is appropriate coverage for these types of things and how
00:17:24
are you seeing people navigate through this?
00:17:29
Yeah, I, what I will say the one constant is that there's usually
00:17:33
not a lot of variance in coverages when it comes to storm
00:17:38
events.
00:17:39
It's just, it's one of those losses, especially in a state
00:17:42
like Texas, as since we're talking about it, it is wind and
00:17:45
hail country, and most policies are going to be written to cover
00:17:49
that.
00:17:49
Where it comes into play is changes around limits.
00:17:54
Deductible amounts.
00:17:55
Obviously the higher the deductible, the more affordable
00:17:57
the premium is on the policy.
00:17:59
But that doesn't always work into your favor.
00:18:01
If you set a deductible so high that you can never file an
00:18:04
insurance claim, then what's that insurance policy actually
00:18:07
worth?
00:18:07
So what I see around insurance, especially in multifamily, is
00:18:11
that there's such a trend right now with cost being.
00:18:14
Issue.
00:18:15
My insurance costs are through the roof.
00:18:17
As a business, what can I do to lower that?
00:18:19
There's certain things you can do, but what you should really
00:18:21
be looking at is what is my, when do I actually plan to use
00:18:26
insurance and understanding that decision?
00:18:28
How bad of a loss do I need to have financially before I, I
00:18:32
say, I want insurance to cover this.
00:18:34
That's the conversation you should be having with your agent
00:18:37
around.
00:18:38
What is my deductible amount?
00:18:39
Ideally in a situation like what loss am I willing to accept
00:18:43
before I need somebody else come in and cover the rest of it?
00:18:47
I do see a lot of miscommunication and just
00:18:51
misunderstanding around insurance.
00:18:53
The biggest fear out there is if I file an insurance claim, I'm
00:18:57
going to be dropped, my insurance carrier is gonna drop
00:18:59
me.
00:19:00
The other one I see is what if I, what is the answer to that?
00:19:03
I get, yeah, we can't make predictions about those things,
00:19:05
but like what?
00:19:07
I mean there's a lot of factors that go into why an insurance
00:19:10
policy is canceled.
00:19:12
What I can say is that an insurance claim loan due to a
00:19:16
wind and hail event considered a what they call an act of God or
00:19:20
of nature, it cannot be negatively counted against you
00:19:23
in terms of you, that's not the basis for canceling of the
00:19:26
policy.
00:19:27
There could be a series of things that, in addition to
00:19:29
that, could lead up to it.
00:19:31
And for whatever reason, any insurance carrier can non-renew
00:19:34
a policy at the end of the term, but simply using the insurance
00:19:38
is not a basis to cancel it.
00:19:40
So I think what people see most likely in correlation, not
00:19:44
necessarily causation, is that because an event or a series of
00:19:49
events like we're seeing here in Texas has happened, a certain
00:19:52
market takes such a hit.
00:19:54
That all the policies in that area have to see a premium
00:19:57
increase for those insurance carriers to remain profitable.
00:20:01
They're seeing such high losses that they're just not gonna
00:20:04
remain profitable at that certain premium rate.
00:20:07
So they have to recover that.
00:20:09
And what we see as consumers is, oh, because I filed the claim,
00:20:14
this is what's happening.
00:20:15
I actually have an interesting situation right now where.
00:20:18
One of my clients who I'm representing on many claims in a
00:20:22
certain market on multiple assets has already received a
00:20:27
notice of premium increase before they've seen the
00:20:31
settlement on their insurance claims, which tells you that's
00:20:34
exactly why.
00:20:34
If they wouldn't have filed their claim and just said, no,
00:20:37
I'm gonna pass on this one, they would've seen that same
00:20:40
increase.
00:20:41
So what?
00:20:42
What that tells me is that absolutely it had nothing to do
00:20:44
with them filing a claim.
00:20:45
Cause they haven't seen any money out of it yet.
00:20:48
But they're already being told they're gonna see a premium
00:20:50
increase.
00:20:50
So you know that's one misconception is that I
00:20:53
shouldn't use my insurance because I will see a premium
00:20:56
increase that's just not true.
00:20:58
That including other factors, yes.
00:21:01
Having an event happen in areas is most likely the driving cause
00:21:04
of it, rather than you as an individual consumer filing a
00:21:08
claim on this policy.
00:21:11
That's great and, the question, when do you plan to use
00:21:14
insurance?
00:21:14
Not knowing that going in and making the assumption that,
00:21:18
we're just not gonna file in this event because we're seeing
00:21:21
costs go up, and we don't want to contribute to that.
00:21:24
And then in, in reality, you're getting the increase.
00:21:27
Regardless, yeah.
00:21:29
The market.
00:21:29
And the other side of this is that by delaying the the
00:21:32
conversation around how much damage do we have and what
00:21:36
should we do about it, you actually limit some of the
00:21:39
options you have with your insurance because more and more,
00:21:42
most of the carriers are going to a shorter and shorter
00:21:45
timeline that you have to file a claim after an event happens.
00:21:49
And then associated with that claim, there's a limited amount
00:21:52
of time you have to do any repairs to receive the full
00:21:55
policy benefits such as replacement cost, coverage,
00:21:58
meaning paying at the market rate for these repairs and
00:22:02
people investors specifically is if they delay this or they have,
00:22:07
let's just say you have, let's just say 10 communities in one
00:22:11
area that was hit.
00:22:12
That's a lot of work to be done.
00:22:14
And that's a lot of claims to be handling if you're going that
00:22:17
route.
00:22:18
If you wait and then you only have a year to file it and you
00:22:20
wait until nine months in and you're cutting it close, and
00:22:23
then are you limiting your amount of time you have to get
00:22:25
the work completed And then also receive the full policy
00:22:29
benefits.
00:22:30
Most of these claims, if anybody's handled one, which I'm
00:22:32
sure most of the people listening have they aren't like
00:22:35
your homeowner's claims.
00:22:36
They don't happen in a week or two weeks.
00:22:38
It's months of timing inspections, evaluations.
00:22:43
Part of what we do and add value, I feel, is that an
00:22:46
insurance claim settlement will come in and we'll look at the
00:22:48
estimate and the scope of work and say, Nope, they missed this,
00:22:51
and we'll get it right.
00:22:52
And the difference between somebody's home where we miss
00:22:55
one thing on one building is you compound that times the number
00:23:00
of buildings and the size of the buildings.
00:23:02
One little error can make a very large different financially and
00:23:05
settlement.
00:23:06
It's important to be very detailed, very accurate.
00:23:08
And we'll catch an error.
00:23:10
I've not had a claim that we've worked on that I haven't caught
00:23:12
some sort of error just in the human aspect of writing an
00:23:16
estimate.
00:23:16
It's better to have an extra set of eyes than just one.
00:23:19
Yeah.
00:23:19
These could be six figure heirs, right?
00:23:21
Oh, absolutely.
00:23:23
Absolutely.
00:23:24
Yeah.
00:23:25
Let's talk about really what to do post an event like this
00:23:28
happens.
00:23:28
If you haven't been proactive.
00:23:31
Maybe they don't have, a response plan in place or what
00:23:34
have you.
00:23:34
But what are you doing first?
00:23:37
Yeah I think one thing to think about that's different in a
00:23:40
storm event situation versus just your standard.
00:23:46
Capital improvement projects is that we're very used to that
00:23:49
process of let me get three bids and let me evaluate from there.
00:23:53
In a situation where we have severe storm damage and even an
00:23:57
idea of insurance is going to be considered, you need to take a
00:24:01
different approach as an investor because you need to
00:24:04
understand how bad the damage is first.
00:24:07
And just like anything else I encourage.
00:24:11
That investors or homeowners or whoever we're working with, that
00:24:15
they get a advocate of their own to give that assessment.
00:24:19
And don't rely on the insurance company's experts and their
00:24:22
adjusters to do that for you.
00:24:24
Get your independent assessment much like going to court.
00:24:27
You don't want to go to court without a lawyer.
00:24:30
You want to have somebody that has your best interest in mind
00:24:33
and give you that evaluation.
00:24:34
So I think first step is always going to be have an evaluation
00:24:37
done.
00:24:37
Have an assessment.
00:24:38
It's a brief one.
00:24:39
You may look at a sampling of the buildings to get an idea of
00:24:42
the overall damage that we're seeing.
00:24:44
Not overly detailed but enough safe use.
00:24:47
Is this stuff you do is that something Yeah.
00:24:48
A service you guys do.
00:24:50
Yeah.
00:24:50
So that's part of our, but what does that feel like?
00:24:52
Like right now people are evaluating these things from
00:24:55
images, emailed and maybe third party data.
00:24:58
So tell me, what does that look like?
00:25:00
If the first step is getting this assessment they give you a
00:25:03
call and then what happens?
00:25:05
Typically in our situation, so our, we have a storm monitoring
00:25:09
service that we offer, and part of that is, is when we see an
00:25:12
event.
00:25:13
That would happen.
00:25:14
I'll use last night as an example.
00:25:16
Baton Rouge had a very just sporadic storm that kind of came
00:25:20
up out of nowhere with three, three and a half inch hail.
00:25:23
I think that was hit in an area in an area that has some
00:25:26
multifamily, properties as well.
00:25:28
So it's a lot of student housing being in Baton Rouge there.
00:25:31
And within an hour we had notifications out to the
00:25:35
maintenance staff onsite and the investors letting'em know what
00:25:39
happened.
00:25:41
So that's step one.
00:25:42
Step two is now we have a plan to do an initial assessment.
00:25:45
So we're in the process of scheduling with them, that we're
00:25:49
gonna be coming out, we're gonna coordinate an evaluation.
00:25:53
I wanna say there's somewhere around 50 to 60 buildings on
00:25:56
site.
00:25:57
We're probably gonna look at a sampling of that.
00:25:58
We're gonna, throughout the different parts of the
00:26:00
community, it's a pretty large one, so we'll look at different
00:26:03
corners to make sure the whole property was affected the same
00:26:06
way.
00:26:07
But we'll just look for indications of damage that we
00:26:10
think is bad enough that something has to be done with
00:26:12
it.
00:26:13
If we get out there in order to see pretty minor things, we'll
00:26:15
give that assessment in a report.
00:26:18
So what we'll do at the end of it is produce a report that you
00:26:21
can share internally with your team that has photos,
00:26:23
documentation around causation severity we'll give.
00:26:28
On demand.
00:26:29
Sometimes not everybody wants this, but we'll give an
00:26:32
assessment of a range of prices that will value at the loss to
00:26:35
be.
00:26:36
And this is really to help guide the decision making around what
00:26:38
the next steps are.
00:26:40
So until you've done an evaluation as an investor, I
00:26:44
don't think you can really make that assessment.
00:26:45
I've seen a lot of clients that we have that will jump into a
00:26:49
claim and then notify us, and I'm almost like pump the brakes.
00:26:52
Just a second.
00:26:54
Let's take a really close look at it first, really we can come
00:26:56
in and help at any point.
00:26:57
Even if the claim's already been filed or maybe you've received
00:27:00
an initial assessment, you don't think is accurate.
00:27:03
We've come in a lot of times and done an evaluation after the
00:27:06
fact and said, no, here's how bad it is, and we'll help the
00:27:09
supplementing process and start it from there.
00:27:11
We can really add value at any point in time, but like I was
00:27:14
preaching before, proactive is best.
00:27:17
If we can be there at the beginning of it, we can really
00:27:19
bring the most value.
00:27:21
Yeah, and I think that first step is important because a lot
00:27:24
of times we just get right into the repair, right?
00:27:26
I think if going to the doctor, it's like you just go right into
00:27:29
surgery.
00:27:29
It's wait let's get the MRI first.
00:27:31
Let's figure out what's going on.
00:27:33
It, is it crucial to work with specific contractors after an
00:27:38
assessment like this, or does it, is it unique?
00:27:43
I think it's unique to each investor either owner of the
00:27:47
multifamily or if it's third party managed.
00:27:50
It really depends on your level of comfort and trust.
00:27:53
If you're a investor that has a very lack of a certain market
00:27:58
and you probably have really good contact contracted
00:28:00
relationships and you know your experts and everybody's got it
00:28:03
figured out, if you're spread out across the country, you may
00:28:06
not have that same level of confidence and trust.
00:28:09
And the one thing I would say is that not every contractor is
00:28:13
built the same.
00:28:14
A lot of'em are very talented, very good at doing the work, but
00:28:18
assessing damage from storms is different than putting new
00:28:22
shingles on the roof.
00:28:24
And so where we bridge the gap is we look at it through the
00:28:26
same lens as a contractor would, as well as what an adjuster
00:28:30
would.
00:28:31
We can see both sides of it say although you may think this is,
00:28:34
looks like damage, I can tell you it's actually not storm
00:28:37
damage.
00:28:38
It has the appearance of it, it's something else.
00:28:40
And that's what a digester would actually look at in the
00:28:43
insurance perspective.
00:28:44
Whereas a contractor, we can look at it through that lens and
00:28:46
say, although this is damaged, we also know that the way this
00:28:49
is built, the scope of forecast to reflect these nine other
00:28:53
things to be done correctly per code.
00:28:56
So we bridge the two worlds together.
00:28:59
And really help things along as, as an independent, outside of
00:29:01
that more of a consulting company, but really does come
00:29:04
down to each individual investor.
00:29:06
It makes sense for them.
00:29:07
It can ever hurt to have somebody look at it, doesn't
00:29:10
have a direct financial interest and either paying a claim or
00:29:15
gaining some work out of it.
00:29:16
So I think that's, again, where we come in is we don't
00:29:19
necessarily have a financial benefit just in the assessment
00:29:22
aspect of it.
00:29:24
So we're not swayed one way or the other.
00:29:27
And you know what you, I would add another third element is the
00:29:31
investor component because like you just mentioned, the
00:29:35
alignment and the, even some cases, the bias around some of
00:29:39
these things.
00:29:40
Somebody is a contractor trying to get you the lowest price
00:29:44
competitive bid to get the job, may miss something that later
00:29:49
on, on a disposition could cost you if somebody's hired you to
00:29:52
go into that deal.
00:29:53
Yeah.
00:29:53
And excellent.
00:29:54
You bring up an excellent point then is that goes back to I
00:29:57
think the mindset of capital improvement projects.
00:30:01
We look to bid at the lowest price possible.
00:30:04
To get the most we can out of that, dollar.
00:30:07
But when it comes to insurance work, it's not the same approach
00:30:10
is that it doesn't benefit you in any sort of way to drive the
00:30:14
price down the absolute lowest cost.
00:30:17
It benefits the insurance company.
00:30:18
But what you end up getting is probably, it's like anything
00:30:21
else.
00:30:21
You pay for what you get.
00:30:23
And if you're paying the lowest dollar price out there, are you
00:30:27
really getting the best service?
00:30:28
And I always try to relate things back to what people are
00:30:31
familiar with.
00:30:32
You have an accident with your car and you have the option to
00:30:35
take it to a really high priced body shop that does excellent
00:30:41
work.
00:30:41
You've seen it, or this guy that's really cheap does it in,
00:30:44
his spare time is not quite as good, doesn't have all the best
00:30:48
tools.
00:30:49
It'll come out looking pretty good, but maybe there's some
00:30:52
issues underneath that's hidden and things like that.
00:30:55
If you're paying the same deductible, which one do you
00:30:57
want?
00:30:58
And you probably want the better service, the one that you can
00:31:00
really trust, the one that offers the better warranty.
00:31:03
All that type of things.
00:31:05
So if you're paying for the insurance to have either option,
00:31:09
why would you not go for the best value?
00:31:13
Let's go into a hypothetical, I guess here.
00:31:17
You're a property owner, multifamily.
00:31:21
This event just came through on two levels.
00:31:25
What are you doing after this event?
00:31:27
First?
00:31:28
Secondly, what are you doing on the insurance conversation in
00:31:33
debriefing, all that we've talked about today?
00:31:35
That's happened.
00:31:36
You have to take care of the real estate, you have to take
00:31:38
care of the investor, you have the financial piece, the
00:31:40
insurance piece, you know all that.
00:31:42
Yeah.
00:31:43
What are you doing with those two areas?
00:31:46
Yeah, so one thing that most.
00:31:48
Investors are probably run into, if they've had a claim, is that
00:31:51
one, that there is a requirement in the policy insurance policy
00:31:54
that you as the owner, have a duty to mitigate.
00:31:58
So if there is something wrong with the property, is your
00:32:01
responsibility to make sure you address it in a way that can be
00:32:05
takes care of the issue.
00:32:06
So if it's a missing shingle or sectioned roof that needs to be
00:32:09
covered up to prevent any further damage.
00:32:12
Otherwise the insurance company may not cover any resulting
00:32:15
damage from that.
00:32:16
So one, you have to be aware of it in order to take any action.
00:32:20
So step one is to have the property assessed for storm
00:32:24
damage.
00:32:24
There's lots of ways to do it.
00:32:26
There's new technology that's being used all the time.
00:32:28
Drones are a great thing anymore to do.
00:32:31
A widespread broad brush approach of an analysis, but
00:32:35
nothing will ever beat getting up on a roof to, do an
00:32:38
assessment, see how bad damage is.
00:32:40
Assess some conditions such as, what's the decking condition?
00:32:43
Just little things like that you'll never see from a drone,
00:32:46
but having that assessment done first then empowers you to say,
00:32:50
all right, knowing what I know now about how bad it is, I can
00:32:54
decide is it something we're comfortable taking care of as
00:32:58
repair and just moving on with business?
00:33:01
Or do we now need to address some temporary repairs and
00:33:05
pursue an insurance claim?
00:33:07
That's a very strong possibility in some of these really severe
00:33:10
things.
00:33:10
So having the knowledge to do that allows you then go to the
00:33:14
next step and start alerting your insurance company.
00:33:17
But by doing having the assessment done and doing the
00:33:21
temporary repairs, you're already set up for success
00:33:23
because the insurance company's gonna come in and know that the
00:33:27
the mitigation's done.
00:33:28
There's no risk for interior water leaks.
00:33:31
You get an in inspection set up with an insurance adjuster, a
00:33:35
company like us would come out then as the next step and be
00:33:38
part of that evaluation process and the inspection process,
00:33:41
making sure that we're documenting and showing
00:33:43
everything that we found in our evaluation to that claim
00:33:47
adjuster so that nothing's missed.
00:33:49
It's much easier to address it upfront during the first
00:33:52
inspection than it is to come back later and say you missed
00:33:55
these things, you missed these things.
00:33:57
Cuz most people don't like to hear the things they do wrong.
00:34:03
Pursuing an insurance claim, as you mentioned, I'd love to do a
00:34:06
follow up episode with you on that.
00:34:07
Maybe we can bring in some experts along with you on that
00:34:11
one.
00:34:11
That would be absolutely fun.
00:34:13
I know there'll be more questions that you have as
00:34:15
listeners.
00:34:16
One of the things I would encourage you to do is if you
00:34:19
are hearing my voice today, and you've experienced this, or you
00:34:22
want to be proactive and just even the little nuggets around
00:34:26
compliance and minimizing.
00:34:29
The ability to process future claims by having proactive
00:34:33
measures in place.
00:34:34
Reach out to Mark.
00:34:35
He's a wealth of knowledge and again, the reason why I brought
00:34:37
him on is number one he's a client of ours here.
00:34:40
We work together on, on stuff within the industry on thought
00:34:44
leadership and all these things.
00:34:45
But the reality is having somebody that has.
00:34:49
The construction background, the insurance background, the
00:34:53
financial investment background, and being deep into the weeds of
00:34:59
real deals of things, case studies of projects were
00:35:03
millions of dollars were found or saved.
00:35:06
It's worth a call.
00:35:07
It would, it's it would be.
00:35:10
It would be interesting to see that when you have you're seeing
00:35:13
the expert economy come to play here you have people that do
00:35:18
many things and, you don't get coverage over the real true
00:35:22
value of a partnership.
00:35:24
And when you see a company focusing on one thing, doing it
00:35:27
well, that's a fascinating thing.
00:35:29
So Mark I appreciate what you're doing for our listeners listen
00:35:32
if you wanna keep this conversation going, follow us on
00:35:35
social media.
00:35:36
We're gonna be on LinkedIn, Facebook, Instagram, Twitter
00:35:39
wherever you reach out on social media.
00:35:41
Give us a mention or shoot me a message.
00:35:43
I'd love to hear your questions.
00:35:45
Maybe we can structure some good follow up conversations with
00:35:48
Mark and his team.
00:35:49
But we will be pursuing.
00:35:51
A little bit more around pursuing insurance claims and
00:35:53
all that goes into that.
00:35:55
And we'll bring in some experts, mark and can take us through
00:35:57
that as well.
00:35:58
So if you've enjoyed this episode, please subscribe, rate,
00:36:01
review give us a tag on LinkedIn so we can amplify that and know
00:36:05
that you're watching.
00:36:06
That helps us do a great job and also helps others discover the
00:36:10
value of the guests that we bring on here today.
00:36:12
So with that, we'll see you guys on the next thing.
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