Buying a fire damaged investment property

[Amelia BlakeGarner]

I had made an EMD on a property, and it burned a couple of days later, before I even had a licensed contractor give me an estimate to renovate it. When he heard about the fire, my realtor told the owner's realtor that I didn't want it unless they tore it down at their own expense and sold me the empty lot. So they didn't cash my check.

I have not been inside since the fire, but from the outside, it looks like the poorly done addition burned off the back of the house. The damage is significant, but I hope the house is still salvageable. It has high ceilings and large windows and good bones. 

However, this was going to be my first flip. I have no idea how to proceed. My plan had been to buy the property for cash and use it as collatoral to get a rehab loan from a bank. However, since it now has fire damage, I am not sure that I could even get insurance, much less a loan to rebuild the back and rehab the rest of the house. Is this something you can only do with cash? No insurance?

Has anybody here had any experience with this? I am in the Shreveport area of Louisiana, where there are many old houses like this one that are being bought up by investors and redone. This one is in a decent neighborhood, while often they are in areas where you could only keep them as rentals. My realtor had guessed that the ARV was $160 to $175K, but that was before the fire. He believes this would be a money pit. Any suggestions? Should I just thank my lucky stars I hadn't already closed on the house?