All Forum Posts by: Sean Williams

@Mark Ainley well what are the odds that I accidently tag you? lol I meant to take Marian as a response but it appears BiggerPockets knew I needed to get connected with you on this. Thanks for the information, the contractor we hired is working directly with the adjuster on this. His experience and expertise on how to negotiate with the insurance adjuster has been fantastic.

It has not been a total loss but the cost of the renovation is more than what we originally paid for the home which is nice! I purposefully, and uneducatedly, set the replacement cost of the policy at $75k while I knew the property was only worth about $50k...not sure if that is bad practice or not but I am the type that likes to make sure I am REALLY covered! 

@Mark Ainley the city has no input whatsoever (atleast here in Louisville) with the repair/restoration of the property. It's totally up to us as the homeowner how or who we want to repair and rehab the property. On a side note, items such as electrical and plumbing must be up to code so those items will be inspected.

@Jim Kittridge appreciate the input. I have hired an experienced 3rd party restoration company and so far (knock on wood) they have done a fantastic job communicating with the adjuster and getting the scope of work nailed down. 

I was not aware of the IICRC or Master Restoration Certification so I wish I had known to check that in advance. This was a referral from a friend of mine that had a similar situation happen and used them with great success. Also, they do have a odor-free guarantee as part of their contract.

I'll let you know how things turn out in the end. We are currently in the process of gutting the home!

Try Covenant On Call - Smitty Smith  www.covenantbuilt.com

First and foremost, thank God no one was hurt or killed!

Thursday I got the call as a landlord you never want to get: "The house is on fire!"

Naturally I had to do a double-take to make sure I heard correctly, as you never think something like this would actually happen to you. As you'll see below from the photos, the damage was pretty severe - including smoke and water damage as well. Just a real reminder why it's CRITICAL to make sure you have proper coverage and to review your policy at least once a year to make sure it's sufficient. Luckily, I did not opt for the cheap route and appear to have pretty solid coverage (I did go with the higher deductible at $3k).

I would love to get some feedback or input from anyone that has dealt with this before. I'll share the basic details of my policy as well as the process we are being told to follow via insurance:

$55k +/- fair market value of home

$75k insured value classified as "replacement cost"

$3k deductible with fire, water and smoke damage coverage

$3k coverage on loss rents

$39k principal balance left on mortgage

We submitted the claim online with the photos below. I am currently waiting on the Fire Report from the fire department which I should have in the next day or so. The insurance company said they would review and if deemed to be bad enough they would send out an adjuster to assess the damage (safe to say they'll need to send someone out ha!). In the meantime I have already contacted a local restoration company (Paul Davis, any other suggestions?) to give me an initial idea of what we're dealing with.

I have a hunch that the damage will be more than the FMV of the house...I have to believe this is $50k+ worth of damage by the time you factor smoke and water damage, plus electrical and structural components. There is a second floor not shown in these pictures that also has significant damage too...the entire house has smoke damage. I am just trying to get an idea of what the possible outcomes may be taking into account the cost of the repairs may be more than the market value of the property...do they just send us a check for the repairs, do they send us a check for the market value, do they send us a check for the replacement cost etc etc?

Also, any additional info on the "replacement cost" vs. "actual cost" what that means for us in this scenario would be appreciated too...

@Harjeet Bhatti this is what I am finding out as well from our lender, thank you for the input! Our lender said the appraisal would include a request for the appraiser to do a Fair Market Rent (FMR) analysis of the property and we would be allowed to use 75% of the income as you mentioned above.

The lender also mentioned the possibilities with a conventional loan (which of course would require more down) but we are being told that they will let you do the same thing as it relates to the rent on the duplex/triplex with the 75%, BUT they would also allow us to use a signed lease (plus proof of 1st month’s rent collected) to offset the payment on their current home that they will eventually be vacating. So, if we had a renter lined up we could conceivably wash out some or all of that payment as well…………also calculated at 75% of the lease rate.

Appreciate the input! @Christopher Phillips not sure why purchasing a home on a conventional mortgage in the recent 3 years would matter? Theoretically couldn't a buyer apply for a 2nd FHA after just 13 months of occupying their current FHA residence? (another topic).

Anyways, spoke with the lender. They are in fact able to factor in the potential market rents on the other 2 units on the triplex with the owner-occupant living in the 3rd. I am told this is something the appraiser will do. Of course keeping the existing property and renting it does hurt them though since they cannot factor in the rent they will receive from it.

I am awaiting a response from our lender, but figured it couldn't hurt to ask here...

I have a client interested in a tri-plex where they would purchase it via FHA and live in it as a house hack...live in 1, rent out the other two. The property will be vacant at the time of closing.

The property is priced at $375k, which is quite a bit higher than what they usually could afford (about $225K +/-). The mortgage would be about $2300/month, however the 2 other units would provide right at about $2300/month in income...aka live for free!

My question is can the lender factor the potential market rents of the other 2 units into the buyer's DTI ratio or monthly payment to help them afford more house?

Of course the kicker here is they already own a primary residence on a conventional loan (purchased 2 years ago), but that would of course be rented out at the time they move into the tri-plex. Any input is greatly appreciated!

I am a real estate broker and I have a client/friend with a single lien of $93k on top of 2 properties...one valued at $80k +/- and another at about $100k +/-. She is wanting to sell the one valued at $80k, so we are checking with the lienholder (private party) to see if they would consider a partial release so we can sell just the 1 property. The lienholder actually recommended doing a deed in lieu, which I alarmingly told her not to do since she would essentially just be walking away from the properties. 

I am considering some possible solutions where I can purchase the $80k property (at the right price of course) and help relieve her trouble without having to list it on the market. Any input on some creative solutions would be great!!??

Also, I am assuming the balance of the lien would just be reassigned to the 2nd property on the lien, correct? - as long as the lien-holder is agreeable. She is trying to avoid the situation of doing something such as a short sale and going down that road.

Your input is much appreciated!!

@Cris Mullen let me know if you have any particular questions about the Louisville area I can help you with. I am a Louisville native. Depending on what type of numbers you are looking for I can point you in the right direction.