A flip is a flip. It does not need to have four walls, or even a roof. I flipped a fire damaged house that was 80% burned.
This one came to me through a list I order every month from Dallas Code Enforcement. I mailed a letter to the owner after I found it had burned back in April 2010. The owner lived in California but had 30% of the rehab done on it and ran out of funds from insurance. Spent it all? General Contractor ran off with his pay?? – who really knows 🙂
Owner responded to my mail and as always I jump for fire damaged properties. I made an offer and we settled on a purchase price for $18K. I used $0 out of my own money. I have a Cash Buyers list that I have used since 2004. I informed them that I had this great wholesale deal. Here are the details that I used to present my deal:
Property is located on Alta Mesa Dr. in Dallas.
3/2/2, all brick,
Price $27k (includes assignment fee)
All clean out and plumbing & electrical were in place but needed to be City inspected and permitted. As well, 75% of the sheet rock/walls were built in already. Still needed all flooring (carpet & tile) and windows, garage door, landscaping & fencing, ac/heat unit, water heater.
A rehabber jumped all over this deal and agreed to the $27K purchase price. It only took 24 days to complete rehab, get permits and my investor/buyer sold it in 33 days after putting it on the market for $90k. I was paid my assignment fee of $9K at closing in November 2010.
Most people don't understand how to price a burned property. Be sure the insurance company has paid or not and adjust your offer accordingly. My general Contractor is on a preferred vendors list with a few insurance companies and knows his way around those negotiations which makes it a lot easier in the process. All in all my investor/buyer made over $26k, I made $9k flipping it, and we got a new happy home owner.
After all said and done because I was able to close on this property quickly, the owner has 2 more rent house's in Arlington, Texas that I was not made aware of in the beginning of our conversations, that I have contracts on now they should both close in the middle of December. The kicker is the owner still has one of these homes fully furnished with a 1980's Cadillac in the garage. Makes for a good Christmas.
Do everything you promise to do and never over estimate your ability to perform. Or at least never tell the home owner/seller you can, when you cannot. The good opportunities will follow you with more property to buy, wholesale whatever you're doing in the Real Estate market. Always be looking for Cash Buyers; that is the real key to this business.