How to Rehab Burn Houses

Here’s the caution about rehabbing fire jobs.

There is a heavily reinforced brick wall that you need to know about. Not only will it put knots on your head, but it can also fracture your skull if you bang into it hard enough. That wall is fire jobs.

Fire jobs are houses that have been burned out.

Investors get them when the people who owned them were bought out by the insurance company (if they are lucky) and just put the remains of the house are up for sale as is, where is. These properties can be somewhat seductive to us because at first glance, there is likely a big spread between what we have to pay for the property and what it will resell for when it is rehabbed.

This is where the forehead hits the bricks, friends. Experienced investors may think that because we have done a dozen make ready rehabs that we have enough expertise to do a fire job. Ain’t necessarily so. It is only once we begin the project that we begin to understand just what a kaleidoscope of complexity these jobs can be.

Burn jobs are much different than regular rehabs.

Here’s what you need to understand. Burn jobs are way different than rehabs. They require a different set of skills from the workers, they require building permits from the municipalities (read Building Permits and Inspections) and they require management and scheduling skills from the investor that is unlike any other project. The cities inspector (which is signing off on the work permit) will define the scope of work of your project, they will tell you what your rehab will be. They will tell you how much you will replace whether you think it all needs replacement, or not. It is their rules and there is no court of appeal, if they don’t sign off on your work permit you’re not going to be able to sell it.

The right contractors for the job.

The contractors you’ve been using to do your make ready rehabs may not be able to do the framing necessary to satisfy the city. All of the work must be permitted, which means that a licensed electrician will be installing your light fixtures and a licensed plumber will be installing your sinks and toilets. Licensed hands are more expensive than make ready hands, and they are compelled to do more than the make ready workers do in a lot of instances. They must also know about such practices as spraying silver paint on smokey attic rafters, joists and roof decking to make sure the house doesn’t smell like a giant ash tray on rainy days. They must be familiar with the products and procedures used to clean the Sheetrock walls that will be left and repainted. They must be ready to go in and get all the burned trash and belongings out of the house and go home most days smelling like they rolled around in the ashes of the house.

The investor should have a good knowledge of home building.

The investor must have a knowledge of home building that far exceeds the requirements of your average rehab. You must know the order in which a house is built and the order in which the inspections must take place. You must know how to juggle and balance all of the trades working on the house so that one guy does not show up and then turn around and leave because the job is not ready for him to work. Incidentally, if you make this mistake, you will find that your contractor will probably put you on the end of his schedule to come back because you have wasted his time.

Investors will need to watch the contracting like a hawk.

The investor must watch these kind of contracting jobs like a hawk. You cannot afford the luxury of coming by the job every two, or three days to see how things are going. The tradesmen can go way wrong in just the course of a day, and by the time they figure out that your job is not important enough for you to be there, they will give it the same kind and amount of attention that you do. This means that you will begin to come by and find that there is only one person on your job besides you, and he is a kid with a broom that is holding his chin up while he is staring out the window. Frankly, I have only seen two kinds of guys who can successfully manage a burn job; one because he stayed there on the job all day long and worked with the contractors, and the other because the guy came by twice a day and was on the phone to the contractors all the time during the times he was not there.

Questions to ask yourself about rehabbing a fire house.

An investor also has to ask himself whether he is prepared to put a large amount of money into rebuilding one house, or if it would make more sense to do two or three make ready rehabs with the funds he has available. With all of your money in one house, your fortune rises, or falls on the sale of that one house. With the money spread out over more properties, then you spread the risk around and are able to do a better job of managing cash flow because the cash is always flowing.

If, after having read all of that, you still want to do a burn job, consider this; take $5,000 in $100 bills out into your back yard and start a fire in your bar-b-cue pit with them. This will closely approximate the experience you will most likely have when you do your first burned out house.

By Kevin Smith, with contributions and edits by Joshua Berg

Article excerpts, contributions and edits have been made by HousesFast editors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur.