Good evening, I'm new to real estate investing so hopefully you guys can help me out. I've come across a home that has some extensive fire damage. I'm wondering about strategies to aquire the property and any advice from those that have rehabbed a property with extensive fire and smoke damage. I'll tell you the little that I know. It's an all brick home from the 60s. So far what I can tell it started in the kitchen and moved to the side room. It burnt out through the roof, so I believe it burnt for a while. The home is just under 1700 sqft. They're asking $50,000 for it and I figure a house in that area that size in pristine condition would sell for around $145,000. Any advice would be greatly appreciated.
Most likely it will be a gut to the studs renovation. You will have some framing issues in the attic and roof system. A skilled contractor/builder can get you some really good ideas and estimates.
Most of the electrical should be okay except in the heaviest fire damaged areas, plumbing as well.
I work in large loss insurance claims just like you stated and see repairs like this completed all the time.
You will have money tied up for at least 4-6 months depending on how bad the damages are and possible longer depending on your contractors "other" projects going on at the same time.
Without knowing any details other than 1700sf a rough guess would be 60-80k in repairs assuming a simple single family home 3/2.
Trust me if its not done right that "smoke" smell will never ever go away. The odor is literally smoked into the lumber building materials. Most of the exposed lumber (attic framing, roof framing, etc.) will require sealing with a stain blocker.
My guess is that it didn't burn very long or you would have substantially more damage. A kitchen fire can burn through the roof in less than 10 minuets provided the likely building materials from the 60's (paneling, ceiling tile, etc).
Just my .02
While fire is always the immediate danger, once it is gone, what it leaves behind will continue to affect the house. Anything you want to save or re-use will need to be carefully cleaned. The fire damage repair process is always unexpected and usually comes at an inconvenient time. One way you can make it easier is to make a plan and keep notes.
Most important thing insurance companies are not allowed to pressure you towards their favorite. In our experience this is not a common problem, but it can happen. You will want to file a claim, and keep a record of your claim number.
Thanks guys. I really appreciate the advice.
@Jeremy Bridges Could you give us an update?
Did you purchase the fire damaged property and if so how much rehab did it require?
How did the numbers work for you?
i decided not to buy the house. Being my first, didn't want to go over my head. The numbers looked good, but didn't leave much room for unforseen problems. Which I'm sure there would have been.