My duplex burned down, now what?

Question

My duplex investment property burned down last year. The property was under fire investigation with the insurance company for ~6 months. Since it’s been a year, the city is on my back about demolishing the property or rebuilding to prevent liens and citations. The insurance claim funds was less than the quotes I received for a rebuild, I’ve decided to move forward with the demolition, because I don’t have time for more analysis on rebuild vs demo. I plan on keeping the property and figuring out what I will do later.

I’m looking for a demolition company, but is there anything I need to think about when moving forward?

I’m looking for a demolition company, but is there anything I need to think  about when moving forward?

Kenneth Garrett · Answer

@Ashley Hughes

Before you demolish the building make sure you can rebuild.  I’ve seen many owners demolish a building to find out later, the building was non-conforming and they cannot build the same thing.  I had a property that was a two unit building and caught fire, it was non-conforming and the city was requiring me to alter it to a SFH.

I’ve been a building and zoning official for years and know my way around zoning requirements.  I was able to keep the two unit building.

Denise Supplee · Answer

I am so sorry you had to go through this @Ashley Hughes. As you move ahead, it’s very important to stay close to the city requirements so you don’t solve one problem and have another. Things like permits, how the lot needs to be left after demolition, and making sure utilities are fully handled can come back quickly if missed. It’s also a good idea to be certain the insurance side is fully settled before anything starts, just so there are no surprises later.

From there, it really becomes about protecting the land while you buy yourself time to decide the next move. Holding costs, basic liability coverage, and keeping the lot in good standing with the city will keep your options open.

JD Martin · Answer

Cap the water, sewer and gas if you've got it. Assuming overhead wires I'm sure the electric company already pulled the service line. If the lot is valuable and you think there's money to be made, get it shovel ready with utilities available. That will make the lot a lot more saleable.

John Underwood · Answer

Contest the rebuild costs. Submit contractor quotes. Get an attorney if needed to fight on your behalf.

Kenneth Garrett · Answer

@Ashley Hughes

Do not do anything until you talk to the city.  Typical ordinances will state that if the property is damaged by more than 50% of its value, it must comply with current standards, such as a SFH.

There may be some relief you could apply for if the conversation doesn’t go the way you had hoped.  A zoning variation or a Special Use or a formal appeal.  It depends on the local ordinance.

Thomas Knutson · Answer

Is it completely burned down?  Did you know that local fire departments will pay you to practice on a building?   Call them and have a discussion, it might be worth more than $25K to you to find out.

Richard F. · Answer

Why have you waited 6 months to start coming up with a plan? How do you plan to deal with asbestos, lead, or other hazardous waste in the rubble pile? Do you know what is required for handling these materials? What do you plan to do about utility connections while you have heavy equipment on site to prepare (or not) for future re-connection? What permits do you need for the demolition?

Marcus Auerbach · Answer

Or build a single family home and sell that (provided neighborhood values support it)

My duplex burned down, now what?

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