Property destroyed - what to do next ?
Hi everyone !
Out of state / out of country investor here...
I have (had ?) a rental property in Toledo, one month ago a fire broke out in the house's first floor, tenants been evacuated and house boarded up. The insurance will pay for the damages but as an out of country investor I do not have the time, energy or confidence to repair the rental.
How can I estimate how much is worth the land + house to repair on it and how can I find a buyer who has the resources and willingness to flip it ?
Thanks for your guidance !
#1 Insurance Contributor
- Insurance Agent
- Norwalk, CT
Christophe,
Normally I would not start by recommending an Independent Adjuster but they may be part of the solution. An Independent Aduster handles the claim with the insurance carrier for you for a fee (normally a percentage of the claim). If you were local and had a good agent, you probably would not look to the Independent Adjuster until there was some issue with the company or agent (why give up part of the claim payment) but in your case, having someone local to deal with the Insurance claim may be worth it.
Regarding the rebuilding, once you know how the claim amount is and what needs to be repaired you could check with a property manager or construction manager in that area to see what the cost to handle the rebuild.
Quote from @John Mocker:
Christophe,
Normally I would not start by recommending an Independent Adjuster but they may be part of the solution. An Independent Aduster handles the claim with the insurance carrier for you for a fee (normally a percentage of the claim). If you were local and had a good agent, you probably would not look to the Independent Adjuster until there was some issue with the company or agent (why give up part of the claim payment) but in your case, having someone local to deal with the Insurance claim may be worth it.
Regarding the rebuilding, once you know how the claim amount is and what needs to be repaired you could check with a property manager or construction manager in that area to see what the cost to handle the rebuild.
Thanks John for your reply. I wanted to sell the property before the incident and as I dont have any network in the area, I dont want to manage rebuilding from a distance...
Best
C
Insurance agent here and local to Toledo. Is your policy actual cash value or replacement cost? If it’s a replacement cost policy if you do not rebuild you will not get the replacement cost amount until the actual rebuild is complete.
Quote from @Jackelyn Lee:
Insurance agent here and local to Toledo. Is your policy actual cash value or replacement cost? If it’s a replacement cost policy if you do not rebuild you will not get the replacement cost amount until the actual rebuild is complete.
Actual Cash Value
If your insurance paid you out and you just want to get rid of it you could probably donate it to the land bank
Quote from @Michael P.:Thanks Michael, I've contacted them, could be an option as well, although I'd like to get something for the value of the land and house in its current state as the insurance is not covering the full value of the property, hence my initial ask :)
If your insurance paid you out and you just want to get rid of it you could probably donate it to the land bank
A lot will depend on WHERE in Toledo the property is located and how bad was the fire. Assuming the building was essentially destroyed, building costs likely run about $100 per square foot so that a 1,200 square foot home costs about $120,000 to build. If you are in a part of Toledo where houses routinely sell for $50K or less, you will naturally find few buyers willing to pay anything as there is no incentive to rebuild. You are also likely to find that the land in those neighborhoods is essentially worthless (or has a negative cash value insofar as the owner must continue to pay taxes on it). The land bank may be your best bet. If you are in one of the nicer suburbs, you can probably recover something of value form a sale.
#2 All Forums Contributor
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- Lake Oswego OR Summerlin, NV
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#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
Quote from @Darius Ogloza:
A lot will depend on WHERE in Toledo the property is located and how bad was the fire. Assuming the building was essentially destroyed, building costs likely run about $100 per square foot so that a 1,200 square foot home costs about $120,000 to build. If you are in a part of Toledo where houses routinely sell for $50K or less, you will naturally find few buyers willing to pay anything as there is no incentive to rebuild. You are also likely to find that the land in those neighborhoods is essentially worthless (or has a negative cash value insofar as the owner must continue to pay taxes on it). The land bank may be your best bet. If you are in one of the nicer suburbs, you can probably recover something of value form a sale.
building cost these days are closer to 150 a foot in most markets .. and this is the risk to properties that trade for way less than replacement costs if you have a total loss your ONLY remedy will be whatever you get from insurance.
land can and does have negative value in all these areas for the economic reasons described above.
Quote from @Jay Hinrichs:
Quote from @Darius Ogloza:
A lot will depend on WHERE in Toledo the property is located and how bad was the fire. Assuming the building was essentially destroyed, building costs likely run about $100 per square foot so that a 1,200 square foot home costs about $120,000 to build. If you are in a part of Toledo where houses routinely sell for $50K or less, you will naturally find few buyers willing to pay anything as there is no incentive to rebuild. You are also likely to find that the land in those neighborhoods is essentially worthless (or has a negative cash value insofar as the owner must continue to pay taxes on it). The land bank may be your best bet. If you are in one of the nicer suburbs, you can probably recover something of value form a sale.
building cost these days are closer to 150 a foot in most markets .. and this is the risk to properties that trade for way less than replacement costs if you have a total loss your ONLY remedy will be whatever you get from insurance.
land can and does have negative value in all these areas for the economic reasons described above.
I'm hearing that it used to take 5 months to build a house and now contractors are quoting a year because of supply line concerns.
Thanks a lot to all that replied. So does that mean that the insurance I have I should have asked for replacement value instead of Actual value ? I would have been better covered ?
#3 Insurance Contributor
- Insurance Agent
- DFW, TX
Yes sir, you pretty much always want to go the Replacement cost route. ACV means they calculate the depreciation of the materials used to build your house. Replacement cost accounts for inflated prices and new materials for rebuild.
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Insurance Agent Missouri (#3002404805), Alabama (#3002405934), Texas (#2415793), Georgia (#3595431), and New Mexico (#19197454)
- ProCo Insurance
Thanks to all that answered to the post and gave me important information.
For info, the property has been sold to another investor for 18K$ through a real estate broker. What is left of that amount added to the insurance payout is what I initially wanted for the property so all is well.
Have a good rest of your day !
Quote from @Christophe Noualhat:
Hi everyone !
Out of state / out of country investor here...
I have (had ?) a rental property in Toledo, one month ago a fire broke out in the house's first floor, tenants been evacuated and house boarded up. The insurance will pay for the damages but as an out of country investor I do not have the time, energy or confidence to repair the rental.
How can I estimate how much is worth the land + house to repair on it and how can I find a buyer who has the resources and willingness to flip it ?
Thanks for your guidance !
@Michael P. can tell you what to do in Toledo.