How Did The Stealthy Rich Fare During Snowvid 2021 in Houston, Texas

Y’all, it’s been quiet the last few weeks here, for which we apologize. It was going so smooth to start 2021, we had no vacancy, which is the sweetest thing ever, and we weren’t buying anything because the market is nuts right now. Therefore we literally had nothing to talk about, so we were laying low and taking in rent and watching our bank account grow when, BAM! we have the worst weather event ever for our portfolio. It’s not even hurricane season…

At the end of February, we got the coldest weather I have personally ever experienced in Texas in nearly 40 years of living in this great state. It got down to 10 degrees Fahrenheit. Those temperatures don’t happen here. EVER.

Massive Texas Power Outage

Then to add insult to injury, we had a black swan event with our state’s power grid. Texas has its own power grid, and when it doesn’t make enough power for everybody, bad things happen. There were several supposed reasons for this, but I think the main was is that we had several major plants down for scheduled maintenance, and the thought was, “why would we ever need max power generation in Texas in February?” Well, frigid weather will do it. At one point, spot power generation was going for insane prices per kWh. Free markets at play! People are getting energy bills for thousands of dollars if they weren’t on a fixed-rate plan. (I personally pay about .08 cents a KWH, fixed.)

So now you have people without ways to heat their homes with 10-degree weather and icy roads. Several people died sitting in their cars trying to keep warm and died from Carbon monoxide poisoning. Others passed away from the frigid cold. Others had to bundle up and hope for the best. The real issue here was that there wasn’t a good way to make power fast. We couldn’t just take from another grid since we were completely isolated. We were without power for 36 hours. Then when it came back, the power company issued rolling blackouts to ensure the grid’s integrity.

Luckily we had a gas fireplace and a generator which powered some lights, fridge, and could charge our phones.

In the case of first-world problems, I was worried about our pool. Texas homes and systems were not designed for this type of weather. With power, I could just run my pool constantly, and the pipes would not freeze, however with no power, all bets were off, and my expensive equipment and pipes were at risk of bursting. I got up at 2 am and drained the equipment with a flashlight. Luckily this prevented any permanent damage. You can see though we still got about a 2-inch layer of ice frozen solid on the pool.

Natural Gas & Generator to the rescue

Many people here have a whole-house generator that runs off natural gas and can power 90% of your house during a power outage. I do not, however. They cost about $12k installed, and they don’t add a ton of value to your home, and they require regular maintenance. So I went with the Stealthy Rich version of a whole house generator.

I have a small portable gas generator which I converted to natural gas. This does two things for me. It gives me an unlimited supply of fuel during an emergency, and I don’t have to worry about liquid gas gumming up the carburetor while I’m not using it or storing gas and fear of it going bad. (We have never had natural gas supply issues, thankfully) There’s nothing worse than trying to find gas during an emergency or trying to fire up your generator during years of non-use just to find out it’s busted… I’ll do a future post on my setup, but it’s pretty awesome!

How Did the Farm Hold Up?

So, of course, the real question you all are probably wondering, “How did the rentals hold up?” Not well… We have 55+ houses, and we had problems with about 15 of them (26%). Luckily, most problems were with exterior water lines, which froze and busted. I don’t think we will have to replace any flooring because of leaky pipes, but we will have to do a fair amount of drywall repair. We are fortunate our contractors were so quick to get to most of our houses. We had one family without water for 7 days because of part shortages. We had one colleague with 350 doors, and he had 138 units go down. Yikes! These arent our houses but others around Houston.

I imagine we had $5,000 – $7000 in damage over 15 properties.  Our deductibles are so high it’s not worth it to file an insurance claim. It could’ve been much worse!

A Run on the Pipe Supply Chain

The real issue after this power outage was that since so many homes had pipes break, there were no replacement parts to be had. Lines seemed infinitely long at Home Depot and Lowes; people drove u-hauls to other states to grab parts. It was crazy. It took about 5 to 6 days, but the supply chain caught up, and people could find PVC and SharkBite fittings again. I’ve never seen anything like it. It seems like I’m saying that often this last year.

What We Learned from Snowvid 2021

Real estate is full of challenges and risks, usually the greatest for which you are not adequately prepared. This freakish cold snap was one of those risks for us. The homes here are not built for this type of weather and can cause significant damage when it falls to 10 degrees. Add in not having power/heat, and then things get dicey. Luckily, we escaped with only minor bumps and bruises. Many others were not so lucky. We keep trying to determine what our “Black Swans” could be, but likely we won’t know till they happen.

In the meantime, keep a healthy cash reserve, and don’t overstretch yourself with maximum leverage, and you’ll be able to weather almost any storm!