Just wanted to know if anybody had any experience with fire damaged property. I got a tip on a property that has been fire damaged and they are selling it for 55,000 making no repairs (as-is). Wanted to know what would be the best steps in trying to get all the info I needed to pursue this property or to see if it makes sense to even try and get to fix up. Also, here is what the remarks state:
VACANT/FIRE DAMAGE/AS-IS CONDITION. SELLER WILL MAKE NO REPAIRS. FIXER-UPPER OR REMOVE HOUSE AND RECONSTRUCT A NEW ONE. NOT SAFE TO ENTER. ENTER AT YOUR OWN RISK. UHABT.
Not any different than any other rehab deal. Get bids to fix it up and see if you can make a profit. I just looked at one that need about $70,000 in rehab and they were asking about the same price for the duplex. the property next door was listed at $130,000 and was rented with new paint and appliances and carpet. Too much trouble and not enough profit. I wanted to offer $20,000 but did not even bother.
I posted a discussion on fire damaged properties back in December, so you may have to look for it a few pages back. To sum up the whole discussion, basically what happened is I found a fire-damaged REO property. Very cute and quaint, great potential for resale of 89, 000. I was going to get it for 11-15k. Repairs would cost about 48k. My contractor was chomping at the bits because he felt like he could definitely repair it. The problem was that I couldn’t get any insurance on it, so I could never secure the rehab loan. My lender saw pictures of it and admitted it was a money making deal, but because no company would give me insurance, I had to bail. The whole deal ended up wasting about 3 months of my time. It was a good lesson learned though. I think I last heard that a more experienced rehabber bought it and tore it down to build a new lot. I went through every insurance company I could think of.
Just some advice: the companies wouldn’t insure it because there was a large hole in the roof and a minor whole in a load bearing outer wall. If your house has the same problems, be prepared for some headaches. If not, be prepared to make some good money. Hope this helped.
Thanks for the replies. I will definitely do my homework on this. I will call some insurance companies too, and find out their criteria. Thanks again.
There are companies that write builders risk policies no matter how bad the rehab. Hint: It is not All State or Farmers or State Farm etc. Just keep asking for builders risk policies from independent agents and you will find a carrier.
I will keep that in mind.