Rehabbing a badly burned house

[Mark Yuschak]

My next flip candidate is a house which was involved in a bad house fire. I have a good team to reconstruct it, however, my bigger concern is the end buyer getting funding after the rehab is done. Has anyone ever run into an issue with getting an FHA or conventional loan to close if the property was previously involved in a fire?

The last thing I want to do is rehab this property only to find out it's too late to get the end buyer funded.

[Gary Uhl]

My partner and I did the rehab that Mark is talking about. There will always be surprises in one of these unless all the systems work. This place had a condemnation order against it when Mark sold it to us, which we knew about. It had been vacant for about a year-and-a-half, so some of the pipes had frozen and ruptured. It had no electric (the aluminum service wires had melted in the fire), no water, and no gas. We had to replace more than half of the roof, including over 40 trusses and jacks. We stripped it to the studs.The furnace and water heater were salvageable, but the thing we overlooked was the well, which was shot. The other thing that we underestimated was that it would take 5 30-yard dumpsters, a 20-yarder and a 10-yarder to clean the place out and handle the demo. We had zero problems with permits and inspections, because the township was overjoyed to get the property back on the tax rolls at 50 times the value, and we were doing first-rate work, instead of trying to slip by. Our buyers had no problem getting it financed, because we did a top rate job. We turned a 1979 house into a 2000 house, and it sold with multiple offers for top dolla. I'd do it again in a heartbeat.