Reader Questions – Rehabbing a Fire Damaged House

June 18, 2010 by 8 Comments

We’ve rehabbed alot of houses that have fire damage, because of this I get quite a few questions from our readers on renovating fire damaged homes.

These types of properties can seem very intimidating to the new and experienced investor alike. You have multiple issues with fire damaged homes; not only are you dealing with the burn damage, but there is also smoke and water damage that come into play when renovating these houses.  Because of this trifecta of potential problems we usually just look at most fire damaged properties as full guts…. this way there is little question as to what we can save and what we need to replace….. we just replace it all!!!

Below are two recent questions I’ve recieved from visitors to the site along with my responses. 

Matt,
I was curious if you could give some tips on rehabbing a fire damaged property. I am making an offer on one today and would like to hear from you about any ‘gotchas’ or unique requirements from buyers, lenders, fire departments, municipalities, etc.

Thanks!

My response:

Hi,

Alot of it depends on the extent of the fire damage. Was it contained to one small room, or did the fire spread throughout the house?

We generally budget for a full gut rehab with all new mechanicals when doing a fire job. Once you have the house gutted out it becomes pretty easy.

Make sure you pay close attention to any burn damage to structural beams and joists. These usually will have to be sistered or replaced depending on the extent of the burn damage.

You can walk the building inspector through before you start the project and he will point out what he wants fixed and corrected.

Also be sure to work with a very good contractor that has experience with full gut rehabs and knows alot about framing and correcting any structural/support issues.

Good luck with your offer!!!

And now the second question:

Hey Matt

I live in Baltimore and am looking to do some similar things to what you and your partner are doing up in MAss. Can I get any tips on renovating a burned out place…Is there anything specific I need to do prior or during renovation? How do you deal with the smoke smell, do you guys like wash them down inside or once the drywall goes on it kind of encapsulates all that? Any kind of special testing group I need to bring on or anything?

And my response:
Hi,
Most of our fire damaged renovations are full guts. So we rip out all the sheetrock, carpeting, electric, ductwork etc…..
The smoke smell is tough to get rid of. We encapsulate all the burn damage with an oil or shellac based primer/sealer like Killz. We are usually tearing all the sheetrock out so this is done to burn damage that remains on wood framing, ceiling/floor joists or the roof rafters. On one project we did the fire was contained to an upstairs bedroom and hallway. So we kept some of the sheetrock on the first floor. However I did notice that on really warm days I could still smell some of the smoke left in the walls.
Make sure you are working with a good contractor that really understands framing and building codes.

Hope this helps – Matt

Obviously theres alot more that could be said on this topic and each fire damaged property is going to be unique. The best ones are when you are dealing with a small fire that only burned a couple interior rooms. The more questionable ones are when the fire really spreads throughout most of the house and does damage to the exterior walls and burns up through the majority of the roof. I’ve found that some of these can’t be fixed or it doesn’t make sense economically to rehab them, as the potential rehab cost far exceeds what the house will be worth when finished (especially in areas with lower priced homes).  
You’ll notice that in both responses I made sure to recommend using a good contractor, as this will make or break your rehab, especially when your dealing with fire damage.
Filed Under: Reader Questions, Rehabbing Tips Tagged With: , , , , ,

New Short Sale Closed and Self Directed IRA’s

June 13, 2010 by 2 Comments

We spent the last couple days in Boston at a Pensco Trust Company symposium learning about all sorts of different alternative investments that can be made using a self-directed IRA. There’s so much you can do with your IRA beyond just buying stocks, bonds and mutual funds. Did you know you can buy and sell property within your IRA tax free?? You can wholesale real estate contracts, buy rental property, give notes and mortgages, and buy tax liens.

Since the majority of our private lenders use self-directed IRA money to lend on our deals, we find it helpful to stay on top of whats happening in this area. If you have any questions or want more info on self-directed IRA’s leave a comment below or shoot us an email at info@hampdenhomebuyers.com.

Now onto one of our latest short sale deals.

We started negotiations on the property at 35 Dorothy Ave in the beginning of January and had an approval by mid March. This is really fast seeing as how most of our other short sale deals have taken 6 months to a year to get approvals. I think this one went so fast because we were dealing with a small servicer and we had direct access to the Sr. Asset Manager who was very responsive and proactive in his approach to getting the approval. This asset manager would actually call and email us looking for updates if he hadn’t spoken to us in a few days. This is a very refreshing approach as compared to dealing with the likes of Bank of America or Citi, where every little task takes them 30 days to assign or review.

So we closed on Dorothy Ave right at the end of April. This is a real cute ranch home located in a great neighborhood in Chicopee.  It needs the usual updates; kitchen, bathroom, etc…. but the biggest improvements we are going to make is converting it from a 2 bedroom to a 3 bedroom and finishing off the basement. Adding bedrooms and additional square footage is a sure fire way to raise the value of any house!!!

Here are some pictures: 

This house will be renovated and for sale in Chicopee MA

35 Dorothy Ave, Chicopee MA

Garage - 35 Dorothy Ave

Overgrown Back Yard

Kitchen

Kitchen 2

Bathroom

Living Room

Master Bedroom

Well that’s it for now.

If you like our blog posts you can subscribe to the email update feature located in the upper right hand corner of the site under “Subscribe to this Blog”. This way every time we post something new you will be automatically notified, and you won’t miss any of our great updates!!!!

Filed Under: 35 Dorothy Ave Chicopee MA, Private Lending, Short Sales Tagged With: , , , , , , ,

Preselling Rehabs – 8 Bosworth St Update

June 6, 2010 by 2 Comments

Things are wrapping up at our rehab on 8 Bosworth St in Springfield. All the construction is finished, the home inspection was completed last week and we are waiting on the appraisal now.

This is an interesting property because we sold it just a few days after we initially purchased it. The buyers went through our property at 53 Fullerton St and fell in love with that house. We ended up getting multiple offers on 53 Fullerton and they  missed out on it. We told them not to worry because we had a few other houses in the pipeline that would be as equally beautiful.

We took them through Bosworth St, and while we had only been working on the house for a couple days, they were able to see through all the mess and picture our finished product. They wanted it to look just like Fullerton St…. which wasn’t a problem because we finish all our homes in a very similiar fashion.

So long story short, we bought the house on April 20th and had an agreement to sell it by April 27th.

Here are some of the pictures of the work wrapping up: (you can see the before pictures HERE)

8 Bosworth St Springfield

Bosworth St Kitchen 1

Bosworth St Kitchen 2

Dining Room with Shiny Hardwoods

Living Room

Fireplace

First Floor Bath

Master Bedroom

Second Floor Bath

Shower panel with BodyJets. Glass Tile Inlay

 

We’ll be testing the new FHA seasoning rules on this house, as we haven’t owned it anywhere near 90 days, so I’m hoping we won’t hit any snags there.

So, lesson learned here, if you receive multiple offers on one of your houses, don’t let the losing bidders get away… those are “ready to go” buyers, and if you have other inventory try to steer them towards that.

Filed Under: 8 Bosworth St Springfield MA Tagged With: , , , , ,

209 Gifford St, SOLD … House Flip Recap

May 29, 2010 by 10 Comments

We officially sold our rehab at 209 Gifford St on Friday. It turned out to be a very good deal for us.

We purchased this house right off the MLS. I used to be of the school of thought that there are no deals on the MLS… that if the house was a good deal the agent would buy it themselves, or they have pocket buyers that they send their good deals to. But that’s just not the case.

This property hit the market and we had our offer in within a day. There were multiple offers on the house and it went to highest and best. I think we were the second highest offer, but we were cash, the other higher offer was financed. If you remember what this house looked like you’ll know there was no bank that would touch this property. So we ended up not being the highest… but we were the best!!!!

This was a major rehab that consisted of gutting the whole interior, ripping off the second floor and rebuilding it with a full dormer.

Once the rehab was complete we sold the property to one of our own buyers, for full price, which saved us over $9,000 on commissions.

Below is the final video we did at the end of construction. You can see our before pictures HERE and our before video HERE.

Well, the house sure did come out gorgeous.

 

Filed Under: 209 Gifford St Springfield MA, Finished Rehabs Tagged With: , , , , , , ,

Buying and Selling – House Flip Updates

May 25, 2010 by 5 Comments

Well it has been a very eventful couple of weeks. Ever since the end of April we have been cranking full speed ahead.

The expiration of the first time buyers tax credit kept us very busy in April. We put 6 of our finished rehabs on the market and 5 went under contract to sell by April 30th.  Those properties are 53 Fullerton St, 143 Lloyd Ave, 209 Gifford St, 42 Wexford St, and 8 Bosworth St.

Gifford St and Lloyd Ave are suppose to close this week, and the other three will close over the next couple weeks.

Although the first time buyer credit is now gone, and everyone thinks the market is gonna crash, we have still been quite active on the buying front. We just bought two properties today; an estate property and a bank REO…. and we should be buying three more by the weeks end. We’ll see how this strategy plays out over the next couple months…. things are definitely a bit slower now but I’ve found there are still a good amount of buyers out looking.

The three purchases coming up at the end of the week are pretty interesting.

One is a short sale that has given us all sorts of trouble. The bank gave us a verbal approval at a very good price. A day before the bank was to issue the approval letter we find out the sellers ex-husband filed for bankruptcy, whom I thought was no longer on the loan anymore, but obviously he still was. 

We got everything squared away with the bankruptcy court and are ready to close…. when all the sudden we find out there is also a second mortgage on the property and two judgement liens, which we had no clue about.

OK, so we gotta put the first on ice while we try to take care of these new liens. The second is with TD Banknorth and these fools decide they are not going to take anything less than a full payoff. I’m not sure what their thought process is here… the first is taking a $50,000+ haircut, we sent them the appraisal showing the house is worth nowhere near the debt owed, and they still won’t budge. I guess they don’t realize if it goes to foreclosure they will get wiped out and receive nothing!!!!

So we may have to bite the bullet and pay the second in full, which I don’t want to do, but there is enough room in this deal that we can do that and still make it work.

I guess the moral of the story is to do a good title rundown prior to doing your short sales.  

Well that’s it for tonight. We’ll be getting some more pictures and videos together as these deals unfold.

Filed Under: Deal Updates, Short Sales Tagged With: , , , , , , ,

1892 Parker St -Executive Ranch Rehab Complete- House For Sale

May 18, 2010 by 6 Comments

The renovations are now complete on 1892 Parker St, Springfield.

This is an executive ranch that has 5 bedrooms, 2 1/2 baths and just under 2,000 sq. ft. of living space on the first floor. Add in the finished basement and this house is pushing 3,000 sq. ft. Another nice feature of this house is the large yard. There is about a half acre, which is very big for the city.

We did a full renovation on this house including a new roof, new windows, new electric, new kitchen with granite counters and top of the line stainless steel appliances, 3 new bathrooms, new flooring, new paint, and alot of other stuff…… 

It really came out top notch!!

Here are some photos I took; (you can see the before pictures HERE and the before video HERE)

House For Sale Parker St Springfield MA

1892 Parker St Springfield MA

House for sale Springfield MA

House for Sale Parker St Springfield MA

House for sale 1892 Parker St Springfield

Kitchen with Granite Counters, 18X18 Floor Tiles

Stainless Steel Applainces, Tile Backsplash

Kitchen Staged. Birch Wood Cabinets

GE Profile Series French Door Fridge

1892 Parker St For Sale

Front Entrance looking into Kitchen

Living Room with Fireplace

Dining Room open into Kitchen

Open Dining Room Living Room Area

Full Bath Staged

Tub with Tiled Surround

Home for sale Parker St springfield MA

Master Suite with new Berber Carpet

Master Bath with Tile Floor and new Fixtures

Master Bath Tub

Finished Basement with Half Bath and Bar

 

Wow!! Isn’t this sprawling, executive ranch a real beauty!! She’s gonna make some lucky family a real nice home.

Filed Under: 1892 Parker St Springfield MA Tagged With: , , , ,

1892 Parker St Video Preview

May 15, 2010 by 4 Comments

Heres a look at our ranch located at 1892 Parker St in Springfield. I showed you the before photos a few weeks back, now have a look at the before video.

 

This house is now complete and ready for the market. I will post some of the finished pictures in a couple days.

Filed Under: 1892 Parker St Springfield MA Tagged With: , , , , ,

House Flipping News Story Update

May 8, 2010 by 5 Comments

Our story aired on Thursday night during both the 6PM and 11PM news and it really came out great. Jen Thome with CBS 3 did an awesome job of putting it all together and putting a good, positive, spin on the story. I wasn’t sure just how long it was going to be, but it turned out to be over two and a half minutes.

Heres the link to the story that aired: (just click on it to open)

Local Company Flips Historic Homes

And here it is on Yutube:

On top of our company being on TV, Jen invited us to the CBS 3 studio so we could check out the newsroom and help anchor the 11 PM news.

Here are the photos of Dominic and I in action

Hampden Homebuyers on the news

Matt and Dom covering the Days Top Stories

Dom covering Sports

Matt Giving a Weather Update

Matt, Jen and Dom discussing all the latest Trends in Flipping Houses

We’re officially Famous….. so if you want an autograph just leave a request in the comments section below!!! LOL

Filed Under: 151 Bowdoin St Springfield MA, Hampden Homebuyers in the News Tagged With: , , , , , , , ,