Should you buy a house that has fire damage?

[Zachary Vanheyningen]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $20,000
Cash invested: $50,000
Sale price: $110,000

First, fix and flip. Complete burn-out property. Learned a lot and was able to scale from this experience.

What made you interested in investing in this type of deal?

Getting started to just jump in and get my feet wet. I learned a lot, but it was 100% worth it and doing it with my best friend was more than worth my dedication to the fix and flip.

How did you find this deal and how did you negotiate it?

I found it on the MLS and it was listed for about 50k. We negotiated that asking price in half to about 25k. There was significant damage to the property but we were able to get it across the finish line successfully.

How did you finance this deal?

We financed this with cash up front for the property, and then I used my credit cards to purchase all of the equipment and supplies necessary to get the project across the finish line.

How did you add value to the deal?

This property was a complete burn out, so it had to be completely gutted down to the studs. We completely redesigned the floor plan and went all out with making what was a dated burned-out home into a gorgeous modern family home for a new family.

What was the outcome?

The outcome was that we were able to build our network and relationships in the greater Memphis area and get one of the hardest properties to rehab across the finish line successfully and still make a profit despite several headwinds. We had to deal with theft on numerous occasions, there were contractors that left us high and dry with our cash, and there were a couple of instances where gun crime became a serious concern.

Lessons learned? Challenges?

The biggest challenge was initially to stop theft from happening at the property. For about two months we experienced over 12 robberies in various sizes which resulted in a loss of $30k-$40k in equipment and tools. Thankfully we had insurance to cover part of that loss but we still incurred a heavy loss on the project because of this. The biggest lesson that I took away from this project is that you need to get the project done in as little time as possible to reduce bad things from happening.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I would highly recommend Josh Hisaw and his team in Memphis Tennessee.