Are people reluctant to buy sandy damaged homes that only had few feet water damage on first floor? There are quite a few great deals that are homes right on the jersey shore water (step out back onto huge decks with dock feet away) that are gutted on first floor but are clean as a whistle everywhere else. 1 is priced at $225k and the arv could pull a easy $380k. All rooms and kitchen and outside are in great shape. There is potential to make a good profit. Wondering if any investor is reluctant to buy and flip due to getting flooded during sandy. I've found info that the cost to raise a 1,500-2,000 sq ft home could be $15k-$30k. But if even after a raise and repairs, there's decent profit, why not? I'm thinking the thought of raising is too much risk and time and money (shrugs)
I dont invest there, but I would call a insurance company before buying anything there. If a house is now on the 100 year flood map, their mortgage company will require flood insurance which can cost big money. That will for sure make it hard to move the house after the rehab.
This is exactly what I am working on! Just be careful and do ALL the numbers. The cost to raise the home is maybe 15-30k but does that include prep for the lift, the foundation (What kind of foundation does the home need?), utilities, plumbing.... probably not. Make sure to go with a contractor that has EXPERIENCE. Even if he gets a sub for the actual lift, there are many incidentals that only an experienced contractor will be able to handle. Take a very close look at the insurance that the house lifter has.
@Rafael Floresta is right about the flood map. The requirements have changed drastically in some areas making it difficult to buy these properties that look to be good deals. Also walking past a few of these properties undergoing transformations yesterday I saw another problem that may not be a simple solution. One home in particular was being jacked but it had a garage. Pending on the layout of the house making a garage into standard living space may require a lot of work. Also most garages do not have standard outlets and lighting since it is not considered living space. In my opinion properties with garages may cause an extra dilemma.
You will not be able to get reasonably priced flood insurance if there was flooding. This will generally kill any chance of a mortgage and require a cash buyer.
The cost to raise a house (and new foundation) would be a MINIMUM 60k. That is if everything goes perfect and does not include decks/access and utilities (5-15k).
I have bought some cheap homes that had flood damage knowing I will not be able to mortgage but are offering great rental returns. I have also been looking for more flood damaged homes under 50k for small rehab and rent. We can get 2-3% rule of rents down here.
It is definitely about the flood insurance. Real waterfront is going to sell at some level regardless but that is in the second home territory or higher end ocean front in the right community. Maybe cottages like seaside park will sell too. The middle of the road buyer can't afford flood insurance, NJ taxes, and the mortgage for a full time live in house so flipping that is probably not worth it. Although I would like to hear from people who made it work. In Middlesex county with a house with tidal flooding (swamp front) the insurance for just flood was 3000 thousand and climbing and the house was already flood damaged...
I have been following two properties that look interesting. The first is a cape directly on the lagoon/canal. I suspect they are having problems selling due to the changed flood insurance requirements.
The second is also on a canal, but was damage significantly. I think it may justify leveling the house and building a prefabricated house. I have no experience in this area at all, so I wouldn't attempt it myself. Does anyone else have experience in this area?
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