I Burned My House To The Ground

I Burned My House To The Ground

Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes

     I purchased this house at an auction. The owner had died and the house was auctioned by the estate. The house was in good condition. It was located across the street from an elementary school. The large lot backs to a stream. The house had some functional obsolescence. There were 4 bedrooms (all upstairs) and only one bathroom (also upstairs). My plan was to rent this for a while, then remodel it (add another bathroom and do some updating) at some point. Finding a tenant was easy. The first family I rented to had two kids attending the elementary school.

     However, I soon learned that the house would be more difficult to remodel than I had thought. The house had a staircase to the upper floor which was narrower than current code specified. That would be too expensive to remediate and make a decent profit. So, I rented the house, profitably, for several years.

     The house required little maintenance until…a crack formed in a large pipe which exited to the sewer. (This was an old house which originally had a septic field—this pipe was cast iron and was larger than any I had at any other house—I recall it was ~8 inches in diameter). This would be expensive to fix. It was time for plan C. (I try to buy properties that offer multiple backup plans).

     This house was on a lot which was large enough to be split according to the city zoning. Plan C was to knock the house down, split the lot and build 2 spec houses. My handyman at the time was an active firefighter. I jokingly asked him whether he and his friends would like to burn this down. He responded that they would. He explained that finding houses to train in was a problem for urban fire departments. Since my house was quite far from the neighboring houses it would be a good training location.

     My handyman worked for a different city. I contacted the local fire department and the Lt. was thrilled with the idea. I called my accountant to develop a plan to maximize the benefit. I decided to gift the house (just the house) to the fire department. I obtained an appraisal for the house to substantiate the value of the gift. (There are not many appraisers who can do this type of appraisal. It is more involved than just valuing the house and property and then subtracting the value of the lot. The appraisal was more expensive than a standard appraisal but well worth the expense. This appraisal was attached to my income tax return for that year and the deduction for the rather large gift was not questioned). There was prep that had to done before the fire department could burn the house (disconnecting utilities, asbestos survey, demo permit, etc). (The expenses associated with the prep were also deductible on my tax return.)

      Firemen really understand fires. I visited when they were positioning the pallets and wadding up newspaper in preparation for the burn and they were happy to explain what they were doing and what to expect when they set and extinguished the fire. They appreciated my gift.

     The training exercises were scheduled for two different days. The garage was very large—it contained a workshop and a chicken coop. The garage was burned on the first day. It was set ablaze once and put out. Then a rescue operation was staged, the garage burned again, then put out again. Finally, the garage was set ablaze and burned to the ground.

     The house was scheduled to be burned a couple days later. There was plenty of room across the street from the house for people to watch safely so I scheduled a house warming party. I invited several friends and business associates. The firemen involved in the exercises also invited their family and friends. (Firemen do not usually know where they will be working on a specific day.) It turned out to be quite an event. The house was burned, put out and burned several times over the better part of the day and into the night. There were rookies from five different fire houses (most of whom had never been in a fire before) who participated in the training. Two different fire chiefs thanked me for the donation.

      In the end the fire was allowed to burn through the supports of the house while the outside walls of the house were kept cool with firehouses from different pumpers. All of the debris except for a few bricks from the chimney fell into the basement where it continued to burn and was almost entirely consumed. Did I mention that firemen really know how to build fires? Cleanup consisted of hiring a bulldozer to push the surrounding dirt into the basement and grade the area. I solved a problem, saved money on demo, received a significant tax deduction, and provided a service to my community. How’s that for a hot idea?

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Dawn BrenengenBusiness Member
Moderator
Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
10y

@Jeff Rabinowitz  Well, that's definitely the coolest thing I've seen all day!

See this reply in the discussion

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  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Jeff Rabinowitz  Well, that's definitely the coolest thing I've seen all day!

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    Jeff:

    Didn't I already read this in a blog post ... or did you offer-up another house?

  • Flipper/Rehabber · IA · Member since 2015 · 157 posts · 35 votes
    10y

    That's so awesome. Glad it worked out for you.

  • Dana WhickerPro Member
    Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
    10y
    Originally posted by @Roy N.:

    Jeff:

    Didn't I already read this in a blog post ... or did you offer-up another house?

     I was thinking I'd already seen this story.

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    This was originally posted on my blog. I thought it might get a bit more exposure here. I would be thrilled if this inspires a few others to make similar donations. The fire departments would be very appreciative. I did add a couple different photos to this post.

  • Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
    10y

    @Jeff Rabinowitz

    Nice gift.  Nothing like training in the real thing.

    How much money did that cost you?  How much would the demo have cost you?

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    The firemen's work did not cost me anything. I did have to pay for the demo permit and to have the utilities disconnected but I would have had that expense anyway. The only expense beyond normal demo was an asbestos inspection. Since this was now a work site I had to follow OSHA regs. Fortunately there was only a small amount of old wrapping  around a heating duct that tested positive for asbestos and I was able to just discard it without having a full asbestos remediation. I recall it cost a couple thousand for the testing.

    In order to secure the tax deduction I had a special appraisal done. It was essentially two appraisals--one for the house and one for the vacant lot. There were not many appraisers with experience doing that and it was more expensive than a standard appraisal. I believe I paid ~$1,500 for the appraisal (this was ~8 years ago). That expense was also deductible.

    I would guess the demo would have cost ~$10K.

  • Flipper/Rehabber · Manchester, WA · Member since 2015 · 47 posts · 16 votes
    10y

    Excellent way to look outside the box Jeff! I'm a Lieutenant firefighter from Washington state and just like MI, the training burns are few and far between. Having more investors with your mindset benefit everyone in the community! 

    As long as you, the property owner, are patient, it saves a tremendous amount of money in disposal fees.

    Thanks for sharing!

  • Investor · Northern, NJ · Member since 2015 · 5 posts · 0 votes
    10y

    How do you that with the process with city permit for firemen to use a house for training? I have a house that is similar to your in Pennsylvania, but it is illegal to allow for the fire department to use training at my property.  But I understand that it requires to have a plenty space away from the other houses when a house needs to burn down.

  • CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
    10y

    @Jeff Rabinowitz curious, from a tax perspective, how did you structure the "gift"?

    I laughed when I saw "I burned my house down" in the "Innovative Strategies" section :)

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Brandon Hall, I drafted a gift letter, mainly with the help of my accountant. (I had a brief conversation with my attorney about it.) It made it clear that the donation was for the house only and for training purposes. The fire department's attorney suggested a few changes and we came to a version that the Fire Chief signed.  I attached that letter and the two appraisals (see previous comment) to my tax return for that year. The IRS never questioned it.

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @AnnMarie Bacino, your fire department may not be able to burn your house but they may still be able to use it for "search and rescue" exercises. 

    This house had no rear neighbor but only 126 ft. of frontage. The fire department brought a lot of equipment (they had several firehouses using this opportunity.) I asked them to save the large maple tree behind the house. They had one hose on that tree most of the time and they did save it. There was one hose on the power line in front of the house at all times. Other hoses were directed toward the roofs of the neighboring houses for considerable periods of time.

  • Investor · Phoenix, AZ · Member since 2011 · 36 posts · 9 votes
    10y

    That's just neat. :o

  • Investor · Austin, TX · Member since 2014 · 144 posts · 86 votes
    10y

    Innovative strategies for sure!  Certainly not what I expected!

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    10y

    I see the wishing well survived - looks like you got your wish :)

  • Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    10y

    @Jeff Rabinowitz

    Wow! I couldnt stop reading til the end of this fascinating story...what a brilliant idea..solved multiple problems and put some money into your pockets..

    Extremely brilliant...and congratulations....

  • Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    10y

    Super cool! Great idea as well!

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Steve Babiak, that wishing well leads to another story. The owner's daughter thought I was being disrespectful that I was burning her father's house down. (Her father died ~6 years before the fire.) Apparently, she thought it should be preserved as a monument. She asked for the wishing well. It covered the well that was no longer operative but was still there. I agreed to give it to her if she would fill in the hole. I was concerned about he liability of having an open well shaft. She was incensed with that suggestion and recruited a neighbor to help change my mind. Of course, neither offered to cover the added expenses. When I went to cover the debris from the fire (and fill in the well) we tried to move the wishing well. It was so rotted out that it fell apart as soon as we touched it.

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Ndy Onyido, the primary motivation was really to provide a service for the fire department. My handyman was a fireman and I knew several firemen through him. The tax deduction idea came about after we had decided to make the donation.

  • Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    10y

    @Jeff Rabinowitz

    All I say is, Awesome!. You did a great service to your community.....

    Very creative.....I never could have imagined that....maybe because I do not have any firman in my life.....:)

    Thanks for sharing this piece.....

  • Rental Property Investor · OR · Member since 2014 · 19 posts · 12 votes
    10y

    way to go we will be doing the same in about two more years with one  the fire dept. loves the chance to burn anything  it gives them a adrenelin  fix  

  • Banker · Bowie, MD · Member since 2015 · 57 posts · 16 votes
    10y

    Jeff,

    This is quite an innovative strategy. When I first read the title though, I thought it would be an illegal strategy. Sounds like it turned out to be a great community event too!

  • Real Estate Investor · Simsbury, CT · Member since 2014 · 17 posts · 6 votes
    10y

    Great story. Talk about being creative!

  • Seattle, WA · Member since 2014 · 307 posts · 170 votes
    10y

    @Jeff Rabinowitz

    Neat story. Leaves me with the obvious question. I bet your building dept makes you excavate that basement before a new house goes on it. That old basement will trap water. Just like old septic tanks/oil tanks have to come out of the ground. Different subject but that's what came to  my mind. Good job in this day and age pulling it all together.

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Jay C., interesting point but I don't think this will be a problem for me. This is, potentially, a splittable lot. If I do split it the new foundations would not be over the old basement. If I don't split and simply rebuild another single house it would be placed far behind the old structure. The lot is ~300 ft. deep.

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