Most flippers or wholesalers avoid fire-damaged properties for many reasons, but primarily because they are harder to find than other fixer-uppers. While fire-damaged residences are indeed uncommon, there are a few investors who have mastered the skill of finding and selling them.
To find fire-damaged properties, you should use social media, network with people involved in the fire, contact community residents where a fire accident happened, ask the local fire department, contractors, insurance agents, and realtors, search the MLS, and set up web alerts for fire-damaged houses.
Ready to find and flip your first fire-damaged house? Check out the rest of this blog! We listed all the ways to find fire-damaged residences and some useful tips on how to rehab them!
Finding and flipping fire-damaged properties may seem like a lot of work but it is not always the case. When dealing with houses damaged by fire, you can run into three different scenarios.
No matter what the case is, there's still a way to earn money from a fire-damaged house. Even if the house is beyond repair, you can still rebuild or sell the land.
Most homeowners of fire-damaged houses are also desperate to sell because their insurance policy covers only minimum repairs and the fire damage has caused them trauma. Just be sure to be extra compassionate and sympathetic since a lot of emotions would surely be involved during negotiations.
Also, have a professional fire inspector accompany you when visiting a fire-damaged home so you know the extent of the damage. This way, you can give the owner a fair cash offer and avoid overspending.
Finding a fire-damaged home to wholesale or flip won't be a walk in the park that's for sure. If you still haven't figured out the formula for finding motivated sellers of fire-damaged houses, here are the secrets of those who've already succeeded.
We often hear about fires happening in a certain community because people are quick to post them on their social media accounts. A simple search on Facebook, for example, would show you different fire incidents happening all over the world.
Another way to leverage social media in finding a fire-damaged home is by following news outlets. Fires are always covered by the media so you'll probably come across some posts sharing this type of news. Identify what started the fire (ex. kitchen fire, etc.) and its location. You can then start looking for motivated sellers after a few days or weeks when the fire has died down.
Moreover, following the social media pages of local fire departments can get you real-time leads on fire-damaged homes. Fire departments usually post where a fire is located, if there is significant damage, their firefighting efforts, as well as injuries and resolutions.
They also post about community events where they share how to handle fire and other hazards and what to save on one's personal belongings during a fire. Attending these events and networking with the firemen can help you find motivated leads on fire-damaged homes.
Even before a fire happens, letting a community know that you pay cash for fire-damaged homes will give you an advantage over other cash buyers. When a fire indeed occurs and there are homeowners who want to get rid of their property, they'll contact you first because they already know you are.
After a fire happens, you may want to contact the neighbors of the ones affected since they are usually updated about their community. Most probably, they know which ones are rebuilding, moving, or looking to sell.
Most people affected by the fire are often desperate to sell and move on with their lives. Contacting them immediately can actually help them plan their next move, especially if they are still in a state of shock.
To get real-time updates on fires happening in specific areas, you can actually set up an alarm on Google Alerts using your email. For instance, if you want to get information about residential fires in New York or PG County, set up an alert system to notify you when the keywords "fire New York" or "fire PG County" are published online.
This way, you'll receive notifications from tweets, news articles, and practically any piece of information related to the fire on your email. The address is always included in these notifications so you can visit the site of the fire and check out houses that were damaged. You can also request the full report about the fire in the respective fire department.
This alert system is free and they don't require a professional to set it up. You can leverage this in addition to all the other strategies listed here. You can also get updates from multiple locations, and if over time, you don't find the updates very useful, you can turn them off just as fast as you've set them up.
Each township and county in the United States has a local fire department that keeps a comprehensive list of fire-damaged properties. Even if the fire damage properties list is not comprehensive, there would still be a record of fire occurrences in each area.
If you have already established a connection with the local fire department, fire stations, or the National Fire Protection Association, you can ask for these records for free. But you can also ask the firefighters to be your bird dogs. These are people who search the community for underpriced distressed properties.
Another alternative would be to work for the charitable groups run by the local fire department. Since these organizations are more immersed in the community through hosting local events, you'll get more leads.
If the local fire department doesn't have a charitable group yet, you can encourage them to establish one with a partnership with your real estate business. Through this, more people will learn and trust you since you are associated with an established group in the community.
When a home gets fire damaged, the first person the homeowner calls is the insurance company to file a claim. Thus, you need to build a network of insurance agents and adjusters and let them know you are buying fire-damaged houses for actual cash.
Remember that not all insurance claims are approved by the insurance company. If an insurance adjuster or insurance agent is already on your network, they can inform homeowners who did not receive any insurance money to contact you in case they want to consider selling as-is.
If the insurance agent accepts, you can give them a business card they can give to the homeowner.
Note that some insurance agents require a fee for successful referrals, especially for a rental property. You have to negotiate with them how much will be their cut in closing costs for leading the homeowner to you. If you are a flipper, you may want to add this fee to the repair costs. You don't want to end up losing more money than what's necessary.
Fire-damaged properties are a nightmare to real estate agents, especially if the homeowner wants to sell as-is. Only a few people want to buy fire-damaged houses, especially if there is serious damage that would require thousands to repair. This is why in most cases, realtors don't take the job or they look for cash buyers who buy fire-damaged properties.
Moreover, realtors were trained to find fire-damaged properties and other difficult types of fixer-uppers. In other words, they can serve as lead generators of a fire-damaged home for home buyers.
Another great thing about realtors is that they have up-to-date information on people who want to sell their homes due to fire because they have access to the MLS, mortgage lender applications, etc.
The only downside about working with realtors is the fact that they know how to play the game.
Some real estate agents price their fire-damage leads ridiculously high or they want a percentage on the closing costs. It's possible that instead of getting a higher ROI, all you'll get is a problematic fire-damaged property. But you can still take your chances. Just be extra cautious as realtors can be tricky to work with.
Contractors and home repair companies are also great sources of fire-damaged house leads. However, you have to establish a connection with them first.
If you do not personally know a general contractor, a utility company, or someone from home repair companies who handles fire damage, you may ask your own circle, family members, or friends if they know anyone.
Another strategy when real estate wholesaling would be to build a landing page that offers fire restoration services. Drive traffic to it using pay-per-click ads and capture potential clients using a form. Even if you don't find leads on fire-damaged houses immediately, you can sell the leads you'll gather to contractors and repair companies — a great way to earn extra income.
Through this strategy, you can also establish a connection with the contractors and potentially ask them to tip you off if they have leads on fire-damaged houses that are beyond repair. Once they know that they can trust you, you'll get a steady amount of burned house leads from these people.
The MLS isn't open to the public. Only brokers or real estate agents are granted access to it due to security concerns and operational costs.
If you want to have access to the MLS to find leads on fire-damaged properties, you have the following options:
If you have the time, energy, and money, you can also study to be a real estate agent so you can get a license. This way, you can legally access the MLS and find not only a burned house.
There is no single answer to this since there are different types of investors. But flippers are called as such because they earn more by rehabbing fixer-uppers even those affected by a home fire.
If a property still has great structural integrity after a house fire and only a small portion was affected, repairing fire damage makes it possible to sell at a competitive price. However, if the house is totally burned down, rebuilding may be too expensive. Home buyers can just clear up the land and sell it for a higher fair market value.
Whether or not you plan on repairing fire-damaged homes, it's worth knowing what repairs are needed and how much it'll cost so you can market the properties for the correct selling price. This is especially true if you wholesale fire-damaged properties under an assignment contract.
For flippers, on the other hand, rehabbing fire-damaged properties can quickly get very expensive. Here are three main tips when flipping a fire-damaged property so you can save time and money.
Smoke damage, water damage, and soot damage are all crucial to repair but they should not be the main priority if the house has structural damage.
Experienced contractors would tell you how vital it is to ensure structural integrity for a home and so, they'll suggest prioritizing damaged trusses, floor joists, and the property's interior framework.
A licensed electrician should inspect the electrical system of a fire-damaged home. Most probably, the wiring, fixtures, and outlets would need to be replaced due to water and smoke damage, as well as the breaker box of the whole property.
Once you have worked on the structural integrity of the property as well as its electrical system, you can address the rest of the rehab project.
Do it one room at a time so you don't get overwhelmed. This is what most restoration experts suggest, especially if you need to restore or replace drywall and replace floors.
Yes. A house loses actual cash value after a fire compared to other properties that haven't sustained damages in any form. This is especially true if the extent of property damage is beyond repair.
When it comes to how much value a house will lose after a fire, there's no black-and-white answer, as this will depend on the damage. But if the damage was covered by insurance and the owner made necessary repairs or rebuilt before selling, the property will still be worth the same or even more.
Yes. Fire-damaged properties make good investments because you'll have less competition and you can buy them at a significant discount.
Moreover, once these properties are professionally restored to their pre-fire condition, their fair market value would even be higher than it once was.
To make an informed decision in buying fire-damaged homes for real estate investing, always look at the cost of rehab, replacement cost, other associated costs involved, and after-repair value.
Whether you are a homeowner selling a fire-damaged property or a real estate investor or cash buyer who already rehabbed the house, you should still stay on the right side of disclosure in every real estate transaction.
Even if the state where the house is located doesn't legally require disclosure, you don't want to hide this crucial information from the buyer because you'll lose their trust.
Also, remember that you'll be liable to the buyer for whatever will happen to them as they stay in the property. If you did not disclose previous fire damage and the house isn't structurally sound, accidents may occur and you may face legal actions.
Finding fire-damaged properties requires patience and skills. You need to scour the web, set up alerts, and talk to a lot of people involved in a fire to find homeowners who are ready to sell. Moreover, talking to these homeowners won't be easy because of the trauma the fire has caused them.
If you applied all the tips we shared in this blog and still can't find leads on fire-damaged properties, you may want to expand your options. One great alternative is buying leads from pay-per-lead platforms.
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