New investor ? On flooded rehabs

[Rachel Lang]

Hi BP community!

New member here in Houston, tx. My husband and I are still in the research stage but growing more excited about buying our first flip house, utilizing the all cash plan.

Question for you all...my local market is saturated with flooded houses from hurricane harvey. Is anyone familiar with a similar market? Is it smart to take on a flooded home knowing it may be difficult to resale as people are averse to these homes, or would it be better to slightly overpay for a nonflooded home as these are in high demand right now?

Thanks!

Rachel

[Will Stafford]

Hi @Rachel Lang, and welcome! A couple of tips on buying flooded homes: 1) assume that the ARV post-flood will be at least 10% lower than pre-flood. 2) Only buy houses that flooded for the first time in Harvey. If a house has flooded more than once, only buy it for (less than) lot value in a good neighborhood for new construction. 3) Be VERY conservative with rehab estimates. There is no chance you rehab the flooded level of a home for less than $40/sqft right now. Even second floors will be higher than normal because of labor demand.

Bottom line, flood or no flood, all that matters is if the numbers work. A deal is a deal! Good luck.