It was a late summer evening, a Friday night at around 8 o’clock. The phone rang. It was Lorraine. There was a hesitation in her voice, like she was going to deliver bad news and she didn’t want to make it sound like bad news.
But I already knew. After all, as far as I could remember she had never called before. Ever. All of our exchanges had been via email. She worked for a property management company. I was one of their clients. Until that point all of our exchanges were rather mundane. Taxes needed to be paid, the additional parties added to the insurance policies and the property inspections conducted. All routine activities.
To receive a call at that hour, it couldn’t have been good. This time it was about a ceiling in a rental property. Specifically, the ceiling had come crashing down for no obvious reason.
“Was anyone hurt?”, I asked.
“No one was home”, came the reply.
A sigh of relief. It was in a little girl’s bedroom. As one can see from the photo above, the entire ceiling of the room ended up on the floor, exposing the rafters in the attic. As many people can attest, owning rental property isn’t always a bed of roses.
Lorraine wanted to know what I wanted them to do. I asked if they had ever had this happen with other properties under management. Somewhat surprisingly, it had happened a couple of times among their 650 homes. So what did they do about it?
The ceiling caving in is a problem. But it’s not the only problem. Things fail all the time, some times catastrophically. Cars breakdown. Buildings fail. People of off the deep end. Entire societies can breakdown. I’m not apocalyptic but the reality is it takes vigilance to prevent or at least counter the chaotic nature of the world.
Fortunately, due in part to my tendency to worry – some would call it paranoia – I often think ahead even though the optimistic part of me thinks nothing bad will ever actually happen. I suspect a lot of people are like this. It’s human nature.
The important thing is to have a plan or system in place that allows order to prevail despite the inevitable tests that will arise, regardless of whether the magnitude is that of a hiccup, speed bump or a giant crater. Craters may or may not break a robust system but the more likely hiccups and speed bumps definitely should not.
Drop a BRIC
From the outset I had a plan to deal with major issues. I call it the BRIC system. That’s not a reference to Brazil, Russia, India and China. Rather it stands for Budget, Reserves, Insurance and Credit – the components listed in order of preference for dealing with problems.
I can’t say I saw this one coming. In fact, I never would have guessed. So I did not specifically budget for it. But I was prepared to deal with it in the broader sense that something was bound to go wrong at some point. So at least I should have reserves on hand to pay for whatever happened.
And for the really big potential disasters, there’s insurance. Not just any insurance but landlord insurance to cover property damage, as well as an umbrella policy to protect myself from additional liability. Imagine if someone had been injured.
Finally, if something really costly happened that was more than my reserves or insurance would cover, there’s always credit. Whether it’s a credit card, a credit line or some other lending option, you want to make sure you don’t ever get caught in a situation where a property is uninhabitable because you can’t fund those repairs. That’s an express ticket to Lose-A-House-ville.
How It Played Out
Back to the house in question. We sent a crew in to clean it up the next morning. It turns out the ceiling drywall was only held in with nails. And short ones at that. Over time the weight of the insulation and the sagging of the drywall just caused the nails to back out. Once it reached a critical point the whole thing just collapsed.
I don’t know when drywall screws became widely available but it doesn’t take a genius to recognize that attaching ceiling panels with screws is far more sound than using nails.
Come to find out this had happened a few other times in the neighborhood. I’ve found empty beer cans left between the walls from when they were originally built in the 1970s. No wonder everything was crooked. The door frames, closet shelves, rods. The construction was shoddy. The 1970s are still living up to the stereotypes of an ugly decade of malaise.
Then I asked the management firm to obtain a couple of quotes for repairs as well as to screw, patch and paint the ceiling in the rest of the house. In the mean time, I contacted my insurance company to figure out if it made sense to file a claim.
Not only that, it was important to get the insurance company’s advice on how to proceed. As a first time “catastropher”, it was important to gather as much info from the different parties as possible to draw the most accurate conclusion.
That and I wanted to ferret out anyone whose tactics may have resembled those of Crassus of ancient Rome. There’s never a good day to feel like someone has your stones in a vice.
The Bottom Line
The cost for all the work needed came to a tidy $3,000. The insurance deductible was $1,600. However, the catch was that only repairs for damages were covered. The cost of the work on the ceiling in the other parts of the house – the preventive portion – which was about $1,200 of the total, was not covered. Plus any claim would have led to increased premiums down the road.
So there was no benefit in filing a claim in this case (surprise!) as insurance wouldn’t pay to proactively fix the ceilings to avoid a repeat of the ceiling falling down. I got lucky once that no one was home. You can bet I wasn’t going to take another chance by being penny wise and pound foolish. Plus the tenants needed to be reassured this wasn’t going to happen again. So I paid for it out of pocket from my reserves.
Greater caution is the order of the day when risks can’t be predicted accurately. It requires greater expense or hassle to address. But those additional layers of planning and protection offer the peace of mind needed to cover yourself and help ensure things hew closer to plan.