Another Winter Storm: Grading Our Preparation Plan

Jan 31, 2024 | Wildhorn Insights

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Proactive Measures Against Winter Storms in Central Texas Investment Portfolio

In the heat of the summer last August, we wrote an article highlighting what we are doing to prepare for any potential cold temperatures this Winter.  We highlighted the shifting dynamics in weather patterns and corresponding changes in Insurance coverages that were driving so much of our thinking.  Throughout the last three winters, Central Texas had suffered a major winter freeze/storm/event that heretofore would have been a once-in-a-decade type thing.  

In each of those events, our portfolio suffered damage.  From frozen pipes.  Busted fire sprinklers.  Downed trees covered in ice.  We were going to do everything in our power to avoid being fooled yet again—if we had a big winter storm.  As they say: Fool me once, shame on you.  Fool me twice….

Welp, two weeks ago we did have a big winter event as we saw low temperatures hit 10-15 degrees (with wind chills near zero) for three consecutive nights.  And we stayed below the freezing mark for over 48 hours.  If you live up north, that may not sound so bad.  Here in Austin, we are just not built for that—and those are the exact types of temperatures that have caused so much damage and chaos to all property owners over the last few years. 

Now on the other side of the frigid temperatures, we’re extremely happy to report that all of our preemptive measures worked, and our overall preparation dramatically reduced the number of issues we experienced due to the cold temperatures. 

Austin Winter Preparedness - Real Estate Investment Portfolio

Quantifying the Impact on Our Austin Real Estate Investment Portfolio

Christmas Eve of 2022 saw a winter storm event nearly identical to what we just experienced—frigid temperatures for a prolonged period but relatively devoid of any snow or ice.  It offers a good point of comparison for us to review our progress. 

During that storm, we had 233 total units that were impacted. For a portfolio of roughly 4,000 units that’s just over 5% of all units that suffered some sort of impact.  Most of those units were not heavily damaged and did not require a resident to be displaced—but that was still a lot of lives that were impacted due to cold temperatures.  The total damage across the portfolio was just over $1,000,000 and we had 10 heavily damaged units that had to be taken all the way down to the studs to be replaced and rebuilt.  

This year, we had 58 units that were impacted and only one heavily damaged unit that has to be taken to the studs.  Overall, we reduced the unit damage by 75% and the financial impact by over 80%.  

While that’s not a perfect record, it’s a huge step in the right direction. 

Annual Preparation

In our previous article, we highlighted some of the proactive capex work we were doing to safeguard against known weak points—where we’d seen significant issues the previous years/storms. 

For the most part, this entailed addressing water lines that were exposed in outdoor utility closets—either serving a water heater or a washing machine.  In total we addressed 351 units; of those units, only 2 saw suffered another incident.  That is something we’re proud of. 

Beyond those fixes though, we spent a good amount of the summer last year reviewing every asset in detail.  We went through every single floor plan of every asset, studied where damage had previously occurred and tried to pinpoint any commonalities.  We sat with our construction team and brainstormed plans about additional safeguards we could investigate.  In painstaking detail we created asset-specific plans that we’d initiate should the forecast start to show a big freeze coming.  And then we reviewed those plans with our onsite teams, to make sure we were all on the same page, had all necessary supplies and were as prepared as we could be. 

Week of Preparation – Established Communication Chain

Once the forecast clearly showed we were going to be hit with a winter storm, we put our plan into place.  The cold temperatures we set to arrive on Sunday afternoon; we started preparing on Tuesday. 

We paused all the elective capital projects that we had underway across the investment portfolio, and directed those construction resources to help with the prep work.  In total, we had 15 members of our construction crews helping execute the plans we laid out during the summer.  They assisted the onsite teams as we went asset by asset getting ready for Sunday. 

We started communicating with residents early, asking anyone who knew they were going to be out of town to let us know so that we could enter their unit and prep it; we also entered every vacant unit.  Inside we did the usual prep—turning up the thermostat and opening up cabinet doors under the sinks.  On the exterior, we wrapped all exterior pipes and pool equipment and every hose bib.  We walked all the exteriors and closed all the patio doors.  In several cases our crews ran out to buy a new patio closet door after discovering the existing door wouldn’t latch or stay closed.  And we installed a lot of new weather stripping to better insulate the door seals.  

The storm was arriving on Sunday, and Monday was MLK Day—when our offices were typically closed for the holiday.  At every site we enacted a skeleton crew to ensure that all assets had at least one person there, and offered anyone that worked to stay in the model unit onsite.  Their job was to be ready to answer any emergency calls that might come in from residents, and perhaps more importantly to be vigilant in checking on the vacant units and property exteriors to look for any signs of water leaks.  What we’ve learned over the last couple of years is that small leaks are quick fixes with minor damage—if you find them quickly.  The big, nasty, costly issues occur when no one notices the water damage until someone two units down (or over) sees impact in their unit.  By then, you have a real expensive problem on your hands. 

We also established a communication chain between the onsite teams who were working and our team directly—which included both our asset management team and our construction teams.  As any issues were identified, we dispatched the appropriate crews to get onsite immediately in a first responder-type situation.

Reviewing the Plan – Asset Improvements

While reading this makes it sound a bit like a suspense-filled movie, it was a long and intense week for our entire team.  But the effort paid as, as you see above in the reduction in damages. 

Last week, while everything was still fresh in all our minds we gathered the team together to review the plans we had—and to identify any other areas we could (or should) address.   Knowing it’s still only January, was there anything we could do differently should we get another wicked storm in the next couple of weeks?  Did we see any new or recurring issues on any asset that we should earmark to explore a proactive solution in the Spring?  The answer to the first is “no”—our plan worked pretty well and there isn’t anything we could add/change in a couple of weeks.  The answer to the second is “yes”—and we have a few specific floor plans we’ll be looking for a solution for in 2024. 

Overall, these winter storm events seem like they are going to keep happening.  With each one they are creating opportunities for us to flex our asset management teams and skills, coming up with creative solutions to protect our residents and assets.  When they do occur, we’re reminded of how lucky we are to be local and ready to chip in where we can.  Asset management isn’t always super glamorous, but the work our team has done here has been incredible.  And as proud of those efforts as I am, I’d be ok if we got through all of 2024 (and 2025, 2026, 2027….) without another crazy winter event. 

Andrew Campbell
Written by Andrew Campbell

Andrew Campbell is a native Austinite and Managing Partner at Wildhorn. He is a real estate entrepreneur who first broke into the business in 2008 as a passive investor. In 2010 he transitioned into active investing and management of a personal portfolio that grew to 76 units across Austin and San Antonio. He earned his stripes building and managing his personal portfolio before founding Wildhorn Capital and focusing on larger multifamily buildings. At Wildhorn, he is focused on Acquisitions and maintaining Investor Relations, utilizing his marketing and communications background to build long-term relationships.

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