Concerns about rehabbing a flood damaged house?

Rehabbing & House Flipping

Concerns about rehabbing a flood damaged house?

Real Estate Investor · Forked River, NJ · Member since 2011 · 96 posts · 10 votes

Hello everyone. I am a beginning real estate investor from NJ and am currently mailing to probates and out of state owners. The area I live in was pretty heavily hit by Hurricane Sandy. I'm about 5 miles from Seaside, where the roller coaster still juts from the ocean (if you've seen it on the news).

Many of the houses I'm receiving calls on have flood damage. I have an appointment to see a house this Wednesday. It is an inherited house, currently vacant, and had about a foot of water in it during the storm. The owner is starting to feel motivation, since they do not plan on making any repairs, and know they will have to take a cash price for the home.

I plan on taking pictures and/or video of the home on Wednesday, so hopefully I can get some assistance with estimating the repair costs. If it is a deal that I plan on pursuing, I will bring in multiple general contractors to give me quotes on the work. I also am going to give my realtor a call so she can provide me with some comps .

To be proactive, I wanted to get everyone's insight as to what I should be aware of with flood damaged homes. Is there anything in particular I should look for as I'm inspecting the property? Also, I assume this property will require flood insurance, which from what I've read is pretty expensive. In your experience, how will this affect my ability to sell the property?

Thanks in advance for all of your help.

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Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes

J. Scott did it, I would not. Depends too on how long it was flooded and with fresh or salt water, that makes a difference.

Check the subfloor carefully, glue in the plywood isn't that water proof in exterior ply, much less interior ply. Joints will seperate, nails will "pop" and loosen giving you a squeaky floor. Even in untreated lumber, like joists, you may get twisting and lose structural integrity.

Electrical connections don't like water, especially salt water, that includes low voltage circuits as well, HVAC controll, security wiring, door bell, cable and phone.....all wiring. Salt water and humidity play on sheetrock, even the ceilings if water stands for some time.

Hollow core doors can hold water and retain moisture, get rid of them.

These issues were found with flooding along the White River in Branson and the Mississippi floods, fresh water, but also contaimnated water.

You have no idea what chemicals were in such flooded waters, how they will effect materials even if they appear clean since wood can absorb chemicals and dry out, like petrolium products.

While some of this may not be a problem for the seller, it can increase liability issues especially if not disclosed. You don't know what you don't know or what you may have missed. If water was standing for weeks, I might buy the lot and factor in debris removal from the foundation up.

So, yes, I'd say you would have some marketing issues, your buyers could have some lending issues as well. For that reason I'd probably pass. Just me.....

'

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George Gray
Investor · Birmingham, AL · Member since 2010 · 72 posts · 21 votes
13y
Great job on jumping out there and getting involved. You may get another shot at this one, or a similar one in the area. I have handled insurance claims off and on for about 25 years, hundreds of them being flood claims in New Orleans in 2005. There are a lot of unknowns with these types of rehabs. Be safe rather than sorry! Also make sure getting permits to do the work is not going to be a problem before you make the offer! You don't want to own a house you can't repair. The last paragraph will explain why. Here is my advice on the major issues:

1)Demo everything to the framing at the 4 foot level on the walls and down to the floor framing. Water will wick up the back side of the drywall and the insulation well above the water line. You can't see it from the front. The subfloor is either going to buckle or start delaminating. It may not be immediate but you can count on it about 80% of the time, and hopefully not after you put down new floor covering. Doors and door frames are going to swell. In July, the doors will start sticking if they are not dealt with. Most cabinetry is plywood or particle board framed. Neither material holds up well after standing in water. Remember that anything that is porous is going to absorb water and is suspect until proven differently.

2)Once the demo is complete, you need to dry out the house with commercial air movers and refrigerant based dehumidifiers (like Serv-Pro uses). Mildicide needs to be applied to all of the studs and framing and they need to be sealed. Duct cleaning/replacement could be accomplished at this time. This would probably be a good point for the mold test if you are going to get one. It may be good risk management to let one of the big remediation companies handle all of #2. They will give you a scope of work and a final checkout sheet with all the final moisture measurements taken. It may be a little pricey, but it could be helpful in overcoming buyer objections or if you have issues post sale.

3)Plan on replacing the electrical outlets, the wire drops, and anything electrical and hvac that stood in water. You may be able to repair some of this eventually, but again, initially plan for the worst.

4)Tile and other non porous surfaces can be cleaned and sealed. Be cautious about large areas of loose tile. Some counter tops and most plumbing fixtures can also be salvaged if they are handled carefully.

Mold doesn't usually grow in cold weather. However, houses that have been sealed up and remained wet on the inside for months are likely to have much bigger problems with mildew and mold when warmer weather arrives. Mold can start to grow in the attics and on the ceilings. I would be VERY cautious of those houses.

The problem with many of the houses in the New Orleans area is that there was a long moratorium on building permits while the authorities were deciding where and under what circumstances rebuilding was going to be allowed, if at all. Most of these houses a previous poster referred to were likely repaired without permits. When the authorities finally made the decision and began issuing permits, these houses didn't comply either because the damage exceeded some % of value, the elevation of the structure, or the neighborhood where they were located. Owners and investors with high leverage walked and left the problem for the banks to deal with. Attorneys had a field day suing the sellers of houses that did manage to be resold and the contractors that repaired them. Everyone got paranoid and the whole thing eventually ground to a halt.

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Greg S.
OP
Real Estate Investor · Forked River, NJ · Member since 2011 · 96 posts · 10 votes
13y
George Gray, thank you very much for the comment. This is great information to know.
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Steven Del Prete
Contractor · Brick, NJ · Member since 2011 · 86 posts · 12 votes
13y
@George Grey. About the tile. Tile isn't waterproof. It needs to be ripped up as all other floors do. Also the sub floor under it needs to get ripped up. When you see a tile shower going in they either have a shower pan or use the rubber lining for the floor.
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George Gray
Investor · Birmingham, AL · Member since 2010 · 72 posts · 21 votes
13y
Steven Del Prete you are correct. I apparently went from a framed floor to slab on grade somewhere in the post. Thanks for pointing it out.
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Steven Del Prete
Contractor · Brick, NJ · Member since 2011 · 86 posts · 12 votes
13y
Originally posted by George Gray:
Steven Del Prete you are correct. I apparently went from a framed floor to slab on grade somewhere in the post. Thanks for pointing it out.

Oh ok see what u did there. No problem
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