All Forum Posts by: Troy Smith

Thanks for the responses. Those articles are interesting but not very directly related to building on fire damaged lots. I don't imagine that Talent and Phoenix are going away and i suspect there is strong housing demand in the area. I'd be surprised if those lots don't get rebuilt and i see some are for sale. I'm just not sure if i want to be the one to buy them. 

I'm not sure if it's a matter of hiring a crew to cleanup the site and then build as normal, or if there will be some nightmare of red tape, soil remediation or who-knows-what kind of obstacles.

I'm sure i could ask the listing agents for some information but they are hardly impartial so I wouldn't want to rely on that. 

I'm curious about building spec homes on lots that were destroyed in the fires last fall, down around Talent or Phoenix perhaps. Is anyone doing this? Is it a great opportunity or a headache with environmental cleanup concerns or something like that? 

I'm surprised not to see any conversations about building on fire damaged lots already, considering how much was lost last year. Maybe I'm no good at finding the existing conversations?

There were a lot of wildfires last fall in Oregon, and in recent years in a lot of places. What are pros/cons and things to be aware of when considering buying a fire-destroyed lot and building a new spec home on it?

I don't know anything about it (yet) but here are some possible things i thought of...

Pros:

• Already graded, utilities, etc.
• may be closer-in to city than other available lots

Cons:

• Cleanup, haul off old foundations, etc
• Maybe toxic - require special remediation or something?
• Lingering issues result in lower resellability?
• May not be desirable if other burnt sites surrounding

I own a rental house in Independence Missouri. In late may there was a fire and the house is now damaged and vacant. I live in Oregon and have decided that I'd rather sell this damaged house as-is than try to get it repaired.

My insurance company paid out on the loss and issued two checks, one to me and another made out to me AND the City of Independence. The city requires this as a sort of security deposit to ensure that the house will be repaired and not left in a dangerous state of disrepair. The city will refund my money when the house is repaired to their satisfaction.

Since I want to sell the property now, as-is, i'll be dependent on the purchaser to repair the property so that the city is happy and I can get my money back from the city. This makes me uncomfortable because of the risk that the new owner does not get the property fixed and I don't get my money back. 

I've asked the buyer to pay me an extra $15,000 (the amount the city is holding) and we'd write a contract stating that i'd reimburse them when the city reimburses me. The buyers are (understandably) not enthused about that idea because of the risk that I might not pay them and also due to the additional up front cash requirement.

What other options are there? How can we structure this so that both I and the buyer can be comfortable?

Things I've considered are:

1. Put a lien on the property. Because the lien would only be for $15,000 i've been advised by  a friend who is an attorney (though one used to dealing with far more expensive properties) that it wouldn't really make sense.
2. Have an attorney write up a contract that places the deed in collection escrow until the city is satisfied and my funds are released, at which point the escrow company will release the deed to the buyers. This would cost a little money, but less (i'm told) than the lien, perhaps a couple thousand bucks.
3. Roll the dice, sell the property and just hope that the buyer follows through on repairs in a timely way so i get my money back. This would be in everyone's interest, but still is a bit scary since it's completely out of my control. Not ideal.

What other advice and ideas do you fine and creative folks have?

Hi Folks,

I have a rental house in Independence, MO near the high school. I purchased in 2016 and did some repairs / make-ready work myself. It's been rented and producing well until late May when there was a fire in the house. The fire dept and insurance investigators were not able to determine a cause of the fire. I (probably unwisely, certainly unfortunately) had the house insured for a fixed amount of coverage at $60,000 which is about what I have invested in the property. My rationale was to protect my investment from common occurrences but not necessarily be able to rebuild the house in the event of a catastrophe (not expecting a catastrophe). That was probably a mistake but that's history and it's not what i want to discuss right now.

Market value for the house was probably somewhere around $90-100k. It was renting for just under $1,000 on a 2 year lease. If i rebuild and it's got new appliances and finishes it might pull in a little more.

Repair costs will probably be $100k or more. I've got one rough estimate in from a contractor and another should be coming in soon.

I would consider demolishing the house and selling the lot if that is the more financially prudent way to go. I'd also consider selling as-is. I have periodically received yellow letters or "I buy houses!" postcards and I called the most recent guy (maybe a site member?) and he's going to take a look at the house and let me know what he can offer for it.

How would you all decide how to proceed with this situation? Any advice or recommendations for me?

I think i'll do my best to put together a spreadsheet modeling the financial outcome of various scenarios

1. Use insurance money and invest additional cash to repair house and rent it back out. It will now have a lower return due to having more invested, but may still be a reasonable investment.

2. Sell as-is. Depends on what sort of price i can get for it

3. Demolish and sell lot. Not sure what it would cost to demolish. I've heard $6-8k from someone at the city, and i heard $20k thrown out by a contractor. Then there's the issue of selling a bare lot in a fairly low-value neighborhood, would it even be sellable?

4. ??? Probably lots of things i haven't thought of.

Thanks for any responses!

Yeah, i just got a quote at 5.125% when i was expecting something in the low four range. Time to start shopping around a little more. I have great credit but it is a "baby" loan as someone else mentioned... a $56,000 house in KC.

So on the shorter term loans like that, what do you do at the end of the term if your strategy is long-term buy and hold?

You must mean a loan for your own primary residence? If you're finding loans like that for investment properties, i wanna hear about it.

Great info, thanks!

How did you learn that the other operations are all full? Just calling them up and asking? 

I wonder how i would get an idea of the used capacity in a given town. If you just call around and ask, they'd obviously tell you if they do or do not have ANY units available, but I would imagine that most would decline to tell you exactly how many units are vacant...