I am fairly new to the BP community, but am eager to become an active member.
Here is the situation....
I am a licensed RE broker in the state of Colorado. I was chatting with my roofing guy (who owns a Fire, Hail and Flood restoration company) about buying fire damaged properties, fixing them up and flipping them.
I know most of the logistics in regards to what needs to occur for the future buyer to get financing, insurance etc... The guy I would partner with knows all about permitting and the restoration process... What we do not know is how to go about actually acquiring these properties.
Here is an example: Home catches on fire and causes total loss, owner files a insurance claim, insurance pays lien holder and owner. Owner decides to not move back into the home and move on. What happens to the house? How do we go about finding/buying these properties?
Thank you so much for any insight!
@Mark Risley in your example, and all of the claims that have happened for my clients, the deed has not changed hands and is still in the name of the property owner.
Thanks @Jason Bott !
So basically, once the mortgage company has been paid off with the insurance money the owner still retains the deed to the property? It would then be up to owner to decide if they want to sell the property or not after it is free and clear? Just want to make sure I am 100% clear:)
That is correct.
Usually my clients will decide to rebuild with the insurance $ as it will financially make more sense then to pay off the note.
One thing to keep in mind, it is not easy to buy insurance on a fire damaged house. There is too much Liability. So if you are going to go after these, you will need to put together a creative stradegy for this piece of it, otherwise you will be stuck with very high insurance premiums during the reuild.
@Mark Risley I listed and sold this house last year. It was a rental. Tenants collected on their rental insurance and moved on. Owner collected on their property insurance - and used some of the proceeds to pay off the mortgage. Then they listed with me and I sold it at "fire sale" price. They pocketed that money and moved on. As long as repairs are done to code there should be no problem obtaining appropriate insurance. The fact that a fire occurred should be disclosed. I would advise that detailed before and after pictures be taken before walls are closed, etc. so that buyers and inspectors can see that it was done right.
@Teri S. & @Mark Risley just want to clarify that getting insureance during the rehab is challenging, once the property has been rebuilt, it's very easy to get coverage.
I target fire-damaged properties and I did have trouble getting insurance in my Last flip. I am trying to find a better plan for insurance during the rehab. So I’d be interested in others’ ideas on this.
@Jeremy VanDelinder hey I’m sending you a private message with a question about purchasing fire damaged house. Thx
@Jeremy VanDelinder hey I’m sending you a private message with a question about purchasing fire damaged house,
Any updates on insurance during the rebuild phase
Yes!! I’ve started purchasing a “builders risk” policy with Nationwide—has worked perfectly for the last couple of properties.