Finding a too good to be true deal, Help!

[Nicholas Tanner]

Hey, so I found a deal where a house is selling for $4,500 (yes I put that correctly). I visited the house today and it is a different type of house that it was listed for. It was listed as a studio, but when I went it was a 3/2 with a den. Other houses in that area are selling for about $25,000. It isn't a terrible neighborhood but they are very small houses (mostly 2/1's). There was a small fire in the downstairs den area so I'm thinking that it might have been a drug lab related fire because it is selling for so cheap. It needs a ton of work but in that city the houses that are 3/2's sell for about $55,000. I'm also worried about liens and back taxes. I contacted the owners of the home, and it is a real estate company from multiple states away so I'm worried about how the deal might go considering it wouldn't really be face to face. I'm worried that the company that bought it found a lien and is trying to dump it off on somebody.  I tried to look online and couldn't find any, but I couldn't find a good website to find one (I'll keep looking). If the house did contain a drug-related fire would it be doomed permanently because I assumed that investors completely avoided houses that did have drugs in them. The carpets are really bad and have weird lumps in them (Does anybody know what that could be?) but other than a fire downstairs, the terrible carpet and the back deck is falling apart, it is mostly a good house. I am considering hiring a home appraiser, would it be worth it or is this just a deal to totally skip? Thanks, guys! You're awesome.

[Jeremy VanDelinder]

@Mike McCarthy is right--you don't just HOPE there isn't a title issue--that is why you use a title company and get title insurance. If there is a problem they will find it when they do a title search. 

I flip fire-damaged properties. It can be a big undertaking, but there can be good profits in it. However, unless you are rather experienced with this type of damage, it may be hard for your to tell whether it's a tear-down or rebuild situation. 

Everything can be fixed--the question is simply how much it will cost.

I would suggest getting an experienced restoration company or contractor with fire-damage experience to look at it and give you a run-down on what it will need. There are many things that could be overlooked as part of the renovation on fire-damaged properties.

If it does turn out to be a tear-down, remember to back the cost of demolition out of your max offer. It may cost you significantly to get it to buildable condition. I'd be happy to look at pictures and answer any other questions you may have.