There is always an opportunity after disasters. Some owners of homes will want to sell after getting their insurance checks. Some will just want out, and some landlords will take this as a sign to bail.
How do you buy these houses, how do you market to find them and how do you decide which house to buy?
Marketing is the same old tried and true, walk the neighborhoods and put out fliers, road side signs, and ads in papers.
Which house to buy? Houses in areas that have not flooded in the last ten years, making this flood the exception. Houses not located in a flood map area. Any house the seller will finance for you.
How much to pay? Use the flip formula for pricing. Your anticipated sales price less 25-30% and less estimated repairs.
Repairs? Check the roof for wind damage and leaks, if the A/C condenser was under water? Plan on replacing it, if the furnace was standing in water replace it. Water heaters are a toss-up, not a big cost item; appliances probably need replacing. Sheet rock 4’ up the wall will need to go, and all non-tile flooring. replace insulation, lower plugs and outlets. Most trim that was in contact with water will warp or disintegrate, check doors for water damage, look for mold, especially if no one stripped the house of flooring and sheet rock up 4’. Then take a walk through the house and ask where would the water go and is there any thing else to check.
Take the time to accurately estimate repairs for the first house you consider, creating a cost per item list. Then use your ball-park numbers for quickly evaluating the next few houses.
Who will sell to you? People with no insurance, who have a mortgage are probably not your customer unless they have a lot of equity. Other than investors there may not be many buyers in the market place, for a while anyway.
People with insurance and who have no mortgage balance. They could take the insurance check then, sell you the house at a discount. They might carry the balance on a note with very little down. With your purchase offer and the insurance check in hand, they could be getting close to a retail price from their view point. Remember, about 30% of all homes in the US have no mortgage owed.
Some people might sell you their home as an assumption, or sub-to. The owner deeds you the house with you taking over the mortgage balance and payments. If the house has equity left after accounting for the balance owed plus your repair cost, it might work.
Loans: Getting a new mortgage for a flooded out house will be hard to come-buy, at least for a while. Lenders will be Leary of a flood damaged house and of sloppy repair work.
You can stretch your funds the most by buying houses where you get seller financing, using small down payments. It’s time to hit up your relatives and private lenders for funds and get to making offers from Rockport Texas all the way up to Louisiana.
Insurance: if you buy on of these houses, try and keep the insurance in place as new policies could prove problematic.
Keep in mind that some people will not be happy that you are trying to buy houses after a disaster, just smile and say your intention is to help those who do not want to rebuilt by offering them a alternative. You hope that by buying a house that an owner no longer wants and getting it back in shape, that it will help bring the neighborhood back.