Greetings Philly Investors!
My rental property in West Philly was recently damaged by fire and I am considering exit strategies.
Does anyone have any experience/contacts/leads on dealing with fire escrow? Selling a fire-damaged property?
Thanks in advance!
I do--although I'm not at all versed on your market. I'm a former firefighter, 7 years as victims' services for and FD and now doing flips of fire-damaged houses. Has the insurance company given you a depreciated settlement amount? Is is a total loss or is it repairable?
I've sold a few houses with fire damage, the price reflected this and the investors still had money to make, are you looking to sell and get out of it or other alternatives?
This is a niche I was kinda "forced" to get into, after spending a decent amount of money on direct mail.
If you're looking to sell, your best bet is to find either;
1) Fire Damage Restoration companies, that also do rehabs (the lingo restoration companies use will be either "rebuilds," or "recons"). Companies that do both are hard to find (operationally they're set up differently, and margins differ as well), which is why most restoration companies usually don't do both.
2) Find an investor who has experience in this space.
Don't do an AOB (Assignment of Benefit).
@Jeremy VanDelinder : Thanks for your post. Yes, I have received the depreciated amount. Do you understand how the "recoverable depreciation" concept works? I understand that I can only receive this if I complete the repairs? Does the recoverable deprecation reimbursement only go towards actual repair charges? Or is it automatically paid out upon completion of repairs? The place is repairable, but I am considering exiting the market.
Does anyone have information/experience on the Penn fire escrow law? I'm interested in finding out how owners can get the escrow funds released. Also do the escrow funds transfer at the sale of the property?
thanks in advance!
The answer to your first question, as I understand it, is yes--you can only capture the "recoverable depreciation" upon completing the repairs. That is a little bit of a hedge against you just taking the money and walking (which some people still do.) As to the second question, my agent explained it to me that you would get the full coverage amount once the repairs are complete regardless of the actually cost (meaning if you could save money you might be able to pocket a little). HOWEVER, I'm not sure if all the insurance companies work that way. @Johnny Kang , do you know if my experience with that the widespread pattern?
There are cash buyers who look to purchase fire damaged properties. So a great exit strategy would be to post on sites like Craigslist stating that you have a fire damaged property. You may be surprised how many calls you get.
This might help; https://www.uphelp.org/pubs/getting-your-mortgage-...
Basically, whether you decide to fix it up, or sell, getting escrow funds released is not something you have to worry about, but if you decide to fix, proceeds goes from your insurance company to your mortgage company, and they'll issue checks to your licensed GC, so "profiting" from insurance proceeds is not something that can happen "on paper." (do ppl come up with creative ways to do it?; yes, but if you're going to rehab your property, you know what my answer would be).
Whichever way you decide to go, you have to make sure you have a Public Adjuster on your side, so they can be your advocate in getting the most from your claim, as well as a good restoration company that also does the rehab, so they can point out all the things needed to bring the property back to a habitable condition & the cost (the need for these ppl also applies, even if you're going to sell, since you'll need to know what the proceeds will be). These 2 parties have to work in conjunction to aid you in reaching your desired result on your claim.
@David Wright is correct. Posting it on CL, you'll get a decent amount of replies from investors.
@Jeremy VanDelinder Thanks for the info. I checked with my insurance who informed me that I would get reimbursed the recoverable depreciation dollar for dollar of incurred costs for repair.
@Johnny Kang Thanks for the further input. You really are a pro at this. No mortgage involved in my case, but I'm sure that your input will be helpful to other BP'ers.