Is a fire damaged house worth pursuing?

[Patrick Goebel]

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]

@Patrick Goebel

Actually, 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. 

Monetizing

1) Rehab Jobs

90% 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) Acquisition

A 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 to
• 14 Will be open minded to discuss renovating or selling
• 7 Will set an appointment with me that week; often next day or 2 days
• 5 Will keep the appointment (the other 2 will have had legitimate reasons, but will reschedule)
• 1 Renovation/Acquisition transaction

If 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.