🌳 Lots For Sale. 🏷️

Brock's newsletter | January 31, 2025

🌳 Lots For Sale. 🏷️

We just listed a lot for sale in Altadena. I think it’s the first.

The owner never lived at the house. We represented her when she purchased it a couple of years ago, and immediately rented it out. The tenants evacuated early, and thankfully, no one was hurt.

Luckily, the owner had a good insurance policy - replacement value, which means the insurance company just cuts you a check for the lost structures (as opposed to the less desired option, actual cash value).

Because she is selling, she may lose her lost rent coverage, but the policy (complicated like all policies) covers other items, and at the end of the day her payout will make her almost whole before she sells her lot.

We had an insurance agent in our office yesterday to educate our team on the state of insurance. He said that when the house is a “grounder” (insurance term for a total loss), and it’s a well-publicized natural disaster, the insurance companies will often just cut checks for the full value of the policies, whatever they are.

This is good news for her.

Of course, the tenants (her friends) lost everything, but this week, they also got some good news.

They each get a free house.

Well, not entirely free, but it's close. Anyone “who owned or rented a home in a Presidentially declared disaster area…that was deemed a complete loss” can get an FHA 203(h) Disaster Relief loan.

That means they can buy a house for up to a $1,209,000 purchase price (price, not loan amount), with no money down, with no location restrictions, for up to a year after the disaster.

No money down. Instead of 20% down, which would be $240,000 on a purchase like this. This is an absolutely incredible opportunity for anyone displaced by the fire. No-money-down loans have been non-existent for 15 years, except for VA loans.

I have really missed them. My real estate portfolio was built on these sorts of loans 20+ years ago. To get into a home for nothing, let me tell you…it’s a nice feeling. And I strongly suggest to those reeling from this devastating loss to take advantage of this opportunity while figuring out your next step.

These loans have conditions, of course, but jump through the hoops if you qualify - you’ll never get an opportunity like this again.

Back to the lot story. The owner decided to sell and move on. She doesn’t want to rebuild, and I don’t blame her. She’s not a homebuilder and doesn’t want to spend the next five years (minimum) yelling at contractors and dealing with the red tape of building and safety.

There are a lot of promises about expedited permitting and waiving of restrictions, but anyone who has ever dealt with a city or county permitting office knows that frankly, it won't help. Rebuilding will take way longer than anyone thinks.

Just do the math. The Army Corp of Engineers says clearing the debris will take a year. Per my architect friend, “nothing can be done until the lots are cleared.” So then surveys are done, plans are drawn, and the first house in Altadena breaks ground (optimistically) six months later and takes 18 months to build. That's three years, for the first one.

Then, let’s be really optimistic and assume one house is completed every day. That’s 365 houses coming online a year, which would be an incredible pace of rebuilding.