Is a fire damaged house worth pursuing?

Question

Has anyone had good results wholesaling or flipping a fire damaged house lately?

I was thinking owner might get a payoff from insurance and then might sell for salvage and walk away with insurance check and my check and start over somewhere else? Might be a great opportunity to get a really good deal.

Johnny Kang · Answer

@Patrick GoebelActually, if you can teach yourself how to consistently get fire damaged properties, it's one of the best lead sources to target. Probably even better than probate, because there are so many more exit strategies available on fire damaged properties.I know quite a bit about it, because that's exactly what I did. I spent about a year honing down on data mining, aggregation, cross-referencing, and skip tracing. (that was just the data collection part). It took me another 2 months or so to figure out how to monetize this list I learned to compile. I'm sure you can start networking with adjusters and various fire departments to get consistent leads. Monetizing1) Rehab Jobs90% of owners will want to rehab it and get on with their lives. But a lot of these renovation jobs are well over $100,000~$150,000 and sometimes more (at least in NYC). If you're a rehabber, you can still pick up renovation jobs and make a decent profit. Hey, money is money.If you're not a contractor, you can refer that business & get a referral fee, which is what I did with one of my 1st appointments. I referred it to a contractor, where the cost to renovate was $150,000. All boarded up 2) AcquisitionA small portion of those owners (10%) will want to sell, and often As-Is. Now, my personal experience is that due to the fact it's a seller's market, even owners who have had fire damage is asking way too much, given how the house needs to be fixed. But it's a numbers game, and you'll find people who'll let it go at a price that makes sense for everybody. In NYC, on average, there are about 60-80 fire damaged properties per month. 75% are 1-4 Residential Properties. 25% Commercial. I taught myself how to get EVERY SINGLE PROPERTY, every month. Now, again, it took me about a year to do this, and I just started learning how to monetize it but my ratios are:Of the 50 owners I talked to14 Will be open minded to discuss renovating or selling7 Will set an appointment with me that week; often next day or 2 days5 Will keep the appointment (the other 2 will have had legitimate reasons, but will reschedule)1 Renovation/Acquisition transactionIf the #s make sense to acquire the property, you can either fix & flip, assign the contract, or fix & hold, depending on how everything works out in your market.

Johnny Kang · Answer

Hey @Thomas Kim, Yes, I remember our conversation. Thanks for reaching out.To answer your questions:1) I'd say about 1 in 50 leads will end up doing something with you. Ratio should increase as you get more familiarized with the restoration process of fire damaged properties and owners see you as the expert (i.e. addressing fire, soot, smoke & water damage)2) Yeah, I wouldn't recommend calling them right away. They'll need some time to gather their thoughts, find temporary housing, deal with the insurance company, etc. So wait a few days after the incident, but definitely call within 7 days. 3) We can provide a script that's worked for us when we were testing out this list to see what the ratios would be, before we made it available for ppl in NYC. But this is only for subscribers. (we'll be expanding into other cities soon). You can call our office # on our site to get the promo rate. Johnny

Thomas Kim · Answer

Are you the same Johnny from firedamagedproperties.com? I think I spoke to you and some lady on the phone.Quick questions1. What is the response rate on these types of deals?2. How do you contact them at the right time? I think you mentioned that your data is real time but is it wise to call them literally a day after the fire?3. My inside sales rep is making calls. Do you have any scripts that you can share?Btw.. Can I still get that promo deal?

Patrick Goebel · Answer

Excellent points Johnny! Might be a small niche to go after. Need to align with local Fire departments for leads. I know a fireman. Really making the ideas come out to play. Thanks again for input!

Patrick Goebel · Answer

Thanks Stephen and Aaron for input! I think wholesaling would be the best option. I noticed an old post that recommended offering land value only. The house actually looks pretty stable from the exterior. Not sure otherwise yet. Just a drivey by view of it.

Jalen Carethers · Answer

Don’t waste your time. In my experience it is not worth the headache

Aaron Abraham · Answer

It's certainly worth pursuing. You would need to determine the extent of damage to structural elements. There is a certain amount of fire damage permit-able to remain as long as the structural integrity is still intact. Just because a beam is charred doesn't necessarily mean it needs to be replaced, but you will have to check local code and maybe speak with your building inspector to ascertain what will pass. There will be a lot of cleaning to remove soot and smoke damage. Maybe you can help the owner maybe not but it's worth a shot.

Stephen R. · Answer

Yes, there is. However your buyers list does shrink a good bit as you can imagine not all investors are comfortable buying fire damaged houses.