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Senior Member
Posts: 2,275
Reply with quote  #1 
Interview with Bruce today on his website.

1. First, although the eye of Irma went right over Leesburg (where Bruce built) he did see 85 MPH winds which damaged one roof, but nothing catastrophic compared to what has happened elsewhere.  Bruce said it has been many decades since Leesburg was really damaged by a storm.  (By contrast, during Andrew the winds were 165 MPH and they were putting word pieces through telephone poles).

2. Hurricane Andrew had 165 MPH winds and the basic damage was via the wind, not water to nearly the same extent.   Although the damage looked bad, in fact, Bruce bought and rehabbed alot of houses for 10 to 20% of their original value.  But the wind damage is very different from water damage.  First, there is wind coverage under a standard fire insurance policy, very different from flood damage which requires a prohibitedly expensive separate coverage (multiple times fire insurance).  So, many of the homeowners Bruce spoke with already had a check from their insurer for 80% of the damage----and paying the homeowner the remaining  10 to 20% meant that they were paid in full (pretty much) for the value of the house---and could move away.  And although the building departments had red tagged alot of these type of houses, once the debris was removed and they reinspected it, they gave the OK to rebuild, no problem.

3. Water damage is far harder to rehab than mere wind damage.  Bruce once bought a group of mobile homes in Napa County that had been under 6 feet of water.  And even though he paid only a small fraction of their normal value, this did not turn out to be a good deal.  Given that the Texas houses have been under many feet of water and experienced (or will experience) considerable mold, this is not an easy fix situation.  Although after Andrew, Bruce was able to convince the building department to withdraw their red tags once the debris had been removed, the situation in Houston and elsewhere is that the red tags may be 100% valid---and require alot of remediation.   So, taking this risk in Houston and similar areas look alot closer to speculation than investment. 

4. The other distinction is in terms of whether neighborhoods will get rebuilt (and here we are closer to a Katrina type situation---not at all like Hurricane Andrew).  Even if you buy a house and rehab it what good does it do to the value if the rest of the neighborhood are moldy houses that no one can afford to rehab.  Alot of areas of New Orleans have never recovered---and it appears that there might be neighborhoods in Houston (and perhaps elsewhere) that will suffer the same fate.  

5. Another issue: Once you fix the house, you can rent it out or sell it so long as the market in general recovers in your neighborhood  When Bruce came down for Andrew there were a total of two (2) houses for rent in the Miami newspaper.  There was no room in hotels, there were no rental houses to move into, there were alot of people living in their cars because their houses were red tagged and they had nowhere to go.  So you had alot of motivated buyers who wanted to pack up and leave.

6. Labor issues: Right now a roofer in South Florida / Texas in the storm zones probably has a year's worth of work---and a similar story for other construction trades.  There was already a labor shortage, in fact, in the homebuilding industry---so where will all this necessary labor come from?    And how soon will your house get worked on?  In Andrew, I think Bruce imported a crew from out of state---and that might be necessary again, even assuming (and Bruce hasn't made this assumption at this point) that you can find houses to rehab at a reasonable cost in a good, improving neighborhood.  It sounds like Bruce isn't going to Houston, and won't go to Florida unless he can find homes damaged by the wind, not flood or water.

Bottom line, if you can find wind damaged houses in intact neighborhoods in Florida there might be deals you can make, provided you can find someone to work on it.  I think Bruce has seen enough of Texas at this point, since he sold out.  But given that Florida already has alot of investors---and those more experienced with that particular market ---I don't get the sense that Bruce is announcing a new Gold Rush.


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Posts: 1,082
Reply with quote  #2 
This seems beyond the scope of the average investor. So much skill and speculation both is involved.

But I do wonder if there is an immediate hit to the Florida market and home sales are down. If you were planning to buy a home there anyway - maybe now is a good time?

Kind of like buying stock on bad news. 


Senior Member
Posts: 2,275
Reply with quote  #3 
I recently heard a news story about Florida, which has been a traditional place to retire, is really taking a hit because of all the storms and the bad press.

I don't really see too many people---whether investors or otherwise-- reading this story and heading for either hurricane zone.

But I was fascinated to learn that Bruce had gone there previously during Hurricane Andrew.

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