Buying A Fire Damage House In Philly

Buying & Selling Real Estate
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Buying A Fire Damage House In Philly

Shawn Ryan
Philadelphia, PA · Member since 2017 · 18 posts · 2 votes

Hey guys looking for some info. I got a call from a homeowner looking to sell their property that had a fire recently. Im going to check it out this week. I own a few properties at this point but never purchased a house that had fire damage. The house is a philly row home. The homeowners insurance was lapsed at time of fire so they have no coverage.  According to the owner, L&I is going to start fining them 2k/day starting in September if they don't fix the hole in the roof and the boarded up openings etc. A few questions I have are:

- If I purchase the house cash, what will I have to do to satisfy L&I, and is there a time frame as to how soon repairs would need to be made?

- Will hard money lenders lend on a project like this?

- Is there a way to delay the L&I fines for the existing owner so she doesn't get burried in fines?

- Is there anything that is different in the home buying process I should know about with a fire damage house?

I would love some advice from someone that has gone through an experience like this or has experience dealing with L&I, etc. Any advice helps. Thanks in advance!

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Jeremy VanDelinder
Real Estate Coach · Round Rock, TX · Member since 2015 · 431 posts · 235 votes
6y

I flip fire-damaged properties and own a fire damage restoration company. It can be a big undertaking, although there can be profit in it IF the numbers are right and IF you have done your homework to know what you are getting into (both big “IFs”). Unless you are rather experienced with this type of damage, it may be hard for your to tell the extent of damage. 

The challenge with fire damaged properties is that there is more than meets the eye. For example, often fire damage is water damage--they put the red stuff out with wet stuff. Unmitigated water damage becomes mold damage and and there is the potential of extensive smoke damage in the same airspace. So even elements that don’t appear damaged can be contaminated.

I would recommend you find a fire restoration company/contractor to walk the property with you and give you a good understanding as to what needs to be done. There are many things that could be overlooked as part of the renovation on fire-damaged properties.

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  • Kevin MoyerBusiness Member
    Property Manager · Philadelphia, PA · Member since 2019 · 269 posts · 301 votes
    6y

    I have dealt with L&I for a few different violation issues (structural, use, etc.) I do know that they are TYPICALLY willing to be flexible if you have a detailed plan in place to address the deficiency.

    If I were you I would call the local office with the case number. Explain that you're a potential buyer and you have a contractor prepared to draw the appropriate permits to do the repairs- but you want to ensure you have reasonable time to do so (so you're not slammed with the fines). Write down EVERYTHING. Send an email 2 min after the conversation detailing whatever you were promised on the phone and by whom. A verbal promise means little if the case gets bumped to court. Written documentation will help.

    L&I cares much more about things getting fixed than the fines and 30 days here/there. I would guess you could navigate that without much issue if you really stay on top of it & your GC does what's necessary.

    I'm unsure about lender appetite or any other fire-related requirements.

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  • Shawn Ryan
    OP
    Philadelphia, PA · Member since 2017 · 18 posts · 2 votes
    6y
    Originally posted by @Kevin Moyer:

    I have dealt with L&I for a few different violation issues (structural, use, etc.) I do know that they are TYPICALLY willing to be flexible if you have a detailed plan in place to address the deficiency.

    If I were you I would call the local office with the case number. Explain that you're a potential buyer and you have a contractor prepared to draw the appropriate permits to do the repairs- but you want to ensure you have reasonable time to do so (so you're not slammed with the fines). Write down EVERYTHING. Send an email 2 min after the conversation detailing whatever you were promised on the phone and by whom. A verbal promise means little if the case gets bumped to court. Written documentation will help.

    L&I cares much more about things getting fixed than the fines and 30 days here/there. I would guess you could navigate that without much issue if you really stay on top of it & your GC does what's necessary.

    I'm unsure about lender appetite or any other fire-related requirements.

     Great info Kevin. Appreciate that! I'll reach out to L&I asap. 

    0Reply
  • Aigo Pyles
    Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
    6y

    Im sharing a property that we did that was previously damaged by fire

    2Reply
  • Jeremy VanDelinder
    Real Estate Coach · Round Rock, TX · Member since 2015 · 431 posts · 235 votes
    6y

    I flip fire-damaged properties and own a fire damage restoration company. It can be a big undertaking, although there can be profit in it IF the numbers are right and IF you have done your homework to know what you are getting into (both big “IFs”). Unless you are rather experienced with this type of damage, it may be hard for your to tell the extent of damage. 

    The challenge with fire damaged properties is that there is more than meets the eye. For example, often fire damage is water damage--they put the red stuff out with wet stuff. Unmitigated water damage becomes mold damage and and there is the potential of extensive smoke damage in the same airspace. So even elements that don’t appear damaged can be contaminated.

    I would recommend you find a fire restoration company/contractor to walk the property with you and give you a good understanding as to what needs to be done. There are many things that could be overlooked as part of the renovation on fire-damaged properties.

    3Reply
  • Jeremy VanDelinder
    Real Estate Coach · Round Rock, TX · Member since 2015 · 431 posts · 235 votes
    6y

    @Aigo Pyles Nice Job!

    0Reply
  • Aigo Pyles
    Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
    6y

    @Jeremy VanDelinder thank you! We did quite a lot of those in the last 3 years.

    0Reply
  • Aigo Pyles
    Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
    6y

    @Shawn Ryan, we have done more than a few now, about 9 now. You need to pay attention to the structure. When you have brick fire does not consume brick, of course not, brick is made with high temperatures... you need to analyze how much $$$ you have in the deal. In other words, buy CHEAP! Otherwise, your numbers won’t be in your favor. A lot of times you don’t have to re-wire the entire house, however sometimes you might, and that’s why it’s important to have someone that is familiarized with your code and cost. The good thing about a burned-out it’s that you will end up having a new home afterward. We had really good experiences with it. But remember the rule of thumb is to make money. I kept my first house and after that, I rented, with ZERO maintenance. I’m going to the 3rd year with cash flowing all the way. I love it and I’ll keep doing it. Good luck to you and make sure your numbers are solid!!!

    1Reply
  • Shawn Ryan
    OP
    Philadelphia, PA · Member since 2017 · 18 posts · 2 votes
    6y
    Originally posted by @Aigo Pyles:

    @Shawn Ryan, we have done more than a few now, about 9 now. You need to pay attention to the structure. When you have brick fire does not consume brick, of course not, brick is made with high temperatures... you need to analyze how much $$$ you have in the deal. In other words, buy CHEAP! Otherwise, your numbers won’t be in your favor. A lot of times you don’t have to re-wire the entire house, however sometimes you might, and that’s why it’s important to have someone that is familiarized with your code and cost. The good thing about a burned-out it’s that you will end up having a new home afterward. We had really good experiences with it. But remember the rule of thumb is to make money. I kept my first house and after that, I rented, with ZERO maintenance. I’m going to the 3rd year with cash flowing all the way. I love it and I’ll keep doing it. Good luck to you and make sure your numbers are solid!!!

    Great info! Philly row home are pretty much all brick and stone foundations but thats great info. Its definitely all about getting it for the right price. The homeowner got a offer for 85k from someone sight unseen. ARV is probably 270-300k. 85k seems like a high offer given the cost of renovation, hard money, and closing costs. But I'm also assuming the worst when it comes to reno. Doing the math on this one I just don't see it being a solid enough deal. But we will see what happens. Appreciate the info!

    1Reply
  • Shawn Ryan
    OP
    Philadelphia, PA · Member since 2017 · 18 posts · 2 votes
    6y
    Originally posted by @Jeremy VanDelinder:

    I flip fire-damaged properties and own a fire damage restoration company. It can be a big undertaking, although there can be profit in it IF the numbers are right and IF you have done your homework to know what you are getting into (both big “IFs”). Unless you are rather experienced with this type of damage, it may be hard for your to tell the extent of damage. 

    The challenge with fire damaged properties is that there is more than meets the eye. For example, often fire damage is water damage--they put the red stuff out with wet stuff. Unmitigated water damage becomes mold damage and and there is the potential of extensive smoke damage in the same airspace. So even elements that don’t appear damaged can be contaminated.

    I would recommend you find a fire restoration company/contractor to walk the property with you and give you a good understanding as to what needs to be done. There are many things that could be overlooked as part of the renovation on fire-damaged properties.

    Absolutely. I called a few restoration companies today that are full service gutt, remediation, and reconstruct so I could get an idea of what the numbers could possibly be. I think I'd have to get the property much less than what someone else offered to make it work based on ARV, closing costs, etc. Appreciate the info!

    1Reply
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