Strategies To Reduce Your Real Estate Invesment Risk On A Vacant Building

In today’s market (or any market for that matter), we as Real Estate Investors and property owners can often find ourselves in the possession of a vacant building.

The vacancy may occur during the initial acquisition phase of the investment, when the fix-up and repairs are being performed, or simply due to tenant moving out of a single family residence.

Here are a few simple strategies that can help reduce some of your real estate investment risk created by a vacant unit/building.  Use the ones that seem to be most appropriate for your situation.

These strategies can be integrated into your real estate business policy and procedures manual to help reduce your risk or loss during a vacancy period.

• The first action you should consider is changing the locks, and while you’re at it make sure the windows are all locked tight.  This is simple and easy to do.

• Immediately purchase or change your property insurance policy if you anticipate the building being vacant for longer than a month or two. Insurance generally costs more for a vacant building, but is worth the extra cost if you should incur a loss of some sort.

• Having a standard homeowner’s policy may not cover the loss if the building is vacant.  Contact your insurance professional to help you determine what temporary changes need to be made or type of policy you need.  Consider having the insurance professional put their recommendations in writing indicating that you are purchasing the correct policy for your specific situation.

• You may also consider getting a “house-sitter” to reduce risk and cost of insurance.  Often you can find a responsible college student to perform this task.  They like to get paid while being able to study at the same time.

• Remember to turn off the water at the main water supply valve, as well as gas, and electricity (at the main circuit breaker switch box) on the day the building becomes vacant.  Imagine if you will the issue that can occur if a water leak is left unattended for several days or even weeks.

• If the area is subject to break-ins, consider having the windows boarded up and the doors screwed into the door frames. Also contact the local police department to put the property on their “watch” list.

• Post “No Trespassing,” signs at the building if indicated

• Work with the surrounding neighbors to help keep an eye on the property and notify the authorities, and yourself, if any unusual activity occurs at the property.

• With larger complexes or buildings, consider hiring a private security firm to watch it for you.

There you have it, a few simple common sense activities to help reduce your real estate investment risk when faced with a vacant building.

Onward