Posted by ken on September 06, 2005 at 20:52:00:
I have been paid $5000 a few times to take these houses. It will cost $15000 to knock it down so they are better off to pay you to take it
Fire-Damage House - Good Deal ? - Posted by PJ
Posted by PJ on September 06, 2005 at 09:47:42:
I got a call from a lady wanting to sell a house that had a fire on one side of the house.
She says the entire house needs work.
I have not yet seen the house.
Properties in that neighborhood are selling for $90,000.
She is asking $15,000.
Assuming the worst, the house needs to be rebuilt completely, At what price would this be a good deal?
I’m thinking about offering her $5k… heck, the land alone should be worth more than that.
Re: Fire-Damage House - Good Deal ? - Posted by Scott
Posted by Scott on September 09, 2005 at 13:24:52:
If the land is worth 15-20K and it will cost 10-15K to knockdown and haul off the house, don’t be afraid to offer 3-7K on an option contract. Look at the property and offer her a $1 option contract for what you think it is worth with a six month time period. Tell her the option allows you time to do some more research with the city to be sure they will permit it to be rebuilt then you can get back with her to sign the sales purchase contract. Then flip it to someone who can handle the rehab for an assignment fee. If you can’t find anyone to do it, the option expires an you’ve only lost $1 + any adertising you may have done.
Re: Fire-Damage House - Good Deal ? - Posted by Scott
Posted by Scott on September 09, 2005 at 13:20:08:
If the property is worth 15-20K and it will cost 10-15K to knockdown, don’t be afraid to offer 3-7K on an option. Look at the property and offer her a $1 option contract for what you think it is worth with a six month time period. Tell her the option allows you time to do some more research with the city to be sure they will permit it to be rebuilt then you can get back with her to sign the sales purchase contract. Then flip it to someone who can handle the rehab for an assignment fee. If you can’t find anyone to do it, the option expires an you’ve only lost $1 + any adertising you may have done.
Re: Fire-Damage House - Good Deal ? - RUN AWAY! - Posted by RunAway
Posted by RunAway on September 08, 2005 at 11:59:01:
It is very costly to tear down and rebuild - assuming that the city/county will even let you rebuild.
Keep in mind the costs:
- purchase price
- purchase closing costs
- property taxes
- insurance (you probably will need course-of-construction insurance - which in turn means you will probably need a licencense general contractor)
- holding costs
- costs to tear down
- costs to get plans drawn up and approved by the city/county (If they will let you rebuild! They may also restrict you to rebuilding nearly the exact structure that was originally there)
- costs to prevent liability exposure (eg. mitigate / fence off any hazards or squatable structures)
- costs to rebuild
- sale closing costs
Costs vary by region, but I expect that you would
be hard pressed to go through all this and make a
reasonable profit on a $90k sales price. Or even
on a $150k sale price.
Also keep in mind the liability: Owning a vacant fire damaged property exposes you to significant liability as does owning a construction project.
Unless you specialize in new construction or in fire damaged property, I would run away from this property.
That said, if you can get in cheaply and minimize holding costs and liability exposure, you may be able to wholesale it to a buyer who can handle a project like this.
Re: Fire-Damage House - Good Deal ? - Posted by Barry (GA)
Posted by Barry (GA) on September 07, 2005 at 12:48:47:
We just did a fire damaged house. Bought the house, 1 acre lot with well and septic for about $18k. Spent about $62k on rehab and making some improvements. Appraised when finished at $154k.
Barry (GA)
Re: Fire-Damage House - Good Deal ? - Posted by thutch fl
Posted by thutch fl on September 06, 2005 at 22:34:44:
First thing to determine is will the municipality where the home exists
allow the house to be rebuilt.
If yes, just know that you will absolutely positively have to use licensed
contractors and they will inspect inspect inspect.
That being said I recently bought a fire damaged block house for 16k
sold it at wholesale for 31 and it needed around 40k in repairs and
should have been worth around 105k.
The good news when selling is the house is usually better than new
and can command a premium compared to the neighborhood.
Fire is the smell of money. Just inhale easily and smartly.
Todd Hutcheson