Investing in Bear Creek and Canyon Gate communities

[Carlos O'Neil]

Fairly new investor looking to possibly purchase flooded homes in the bear creek and canyon gate communities.  So far, none of my offers have been accepted and that may have been a blessing!  It would seem there is alot of information being released about the precarious position of these communities in relation to possible flood loss if they ever have to release water from the dam's like they did with Harvey. 

My question is, are there other investors looking to do the same, or are they communities basically off the radar and should be avoided?  I called Fort Bend county to see if a few of the properties I was interested in would need to be elevated, but they responded that the homes are not in the flood plain and no remediation was required.

Thanks in advance for your valued advice!

[Todd Faulk]

@Carlos O'Neil I am not sure of the condition of Bear Creek and Canyon Gate but I have seen a lot of activity in North Harris County (Klein/Spring area).  I have personally been apart of several transactions with flood houses and there are some good opportunities for someone willing to take on a big project.  

My advice is to look in areas that did not flood previously to Harvey as I expect the value in those areas to stabilize before other more "risky" areas.  Also if you are new to flipping taking a swing at a flooded house that had 8' of water is like swinging for the fences, especially if you are considering working with flood elevation. You might hit it out of the park but there is a risk you could strike out as well.

Be sure to NOT use pre-Harvey values to run your projections on, there is too much risk in that.  I have heard anything from a 10%-30% pre-Harvey discount is expected but you will not know until things sell and it will be very location dependent.  Remember appraisers use "sold numbers" to come up with values, so if people discount the houses out of the gate things will be off to the races.

Finally, I would suggest partnering with someone who is or has done a rehab like this.  There will be many things with a flooded house that you need to consider, like AC, ducting, MOLD, electrical, etc that would normally not be a problem if it wasn't for the fact it was under 8' of water.  There are great opportunities out there but you need to go in eyes wide open.