Pre food house was worth 500k.
owe 377
Hypothetical here on out
250k payout on structure to me (mortgage company has to endorse for me to cash)
Possible cash sale to investor of $250k

sale of $250k, payout of $250k = 500k minus 10k for demo, clean and drying to contractor.
$490 to me
377 to bank
113k to me walk away amount.

Obviously it can't be this simple because i would do this in a heartbeat.
Texags educate me.

They might release the funds to you if you had a contract on a house. If not, they're probably going to bade the of the funds on completion of repairs.

Also, legally, the funds must be used to repair the structure.

Thirdly, who the hell is going to buy a house for $250k, and then put $250k into it to end up with a house worth $500k? That's not an investment.

I'd through the trouble if rebuilding a house if I'd end up with $50-75k of equity for my trouble. There's no way I'm going to all that trouble to break even. If I'm in that position, I'm going to go spend $500k on a house that is move in ready...

That's a pipe dream, my friend... For a number of reasons...

A builder or investor isn't spending 250 to redo
They will spend 150k

My contractor who will rebuild my property could do this for 175 but obviously will do it for as much as the insurance will allow

Your math is fine but the numbers don't align with reality. Nobody is getting that money on that house or selling it for that much.

If this was how the world worked people would invest in homes they think would be destroyed to make huge bucks. Nobody profits bigly from having one of their biggest assets destroyed.

I'm not profiting
I bought the house for 491 and have added 20k or so. This would be flat
Actually less than flat considering I'm in for 511 and would only walk away with 490ish

If an investor thinks they can rebuild and sell and make 30k then great. If they can't then the math doesn't work out.
I didn't buy it for 377

Not saying reality or not. But if a flipper buys for 250 and thinks they can cheaply rebuild for 100 and be all in for 350 and sell for 420 minus fees when pre flood as is woukd have sold for 500 then it's pretty close to reality. 22% is average loss for flood so 400 post rebuild value is within Realistic range

Your mortgage company is going to hold the insurance check:

--And issue progress payments to your contractor or
--All repairs are complete and release of liens issued or
--Property sells and mortgage payoff is paid

TMoney2007 said:

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Also, legally, the funds must be used to repair the structure.

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Is this true?

We're planning on demo'ing our 3/1 (in 100 year flood plain) and building 4' or 5' off of the ground. The bank endorsed the advance check to us after a few phone calls and the girl just said they'll have to inspect the house once it's 90% complete. I don't think she knew what she was talking about because from what I understand, we'll get a construction loan that pays off the mortgage and that will roll into the new mortgage.

If we have to we can pay off the existing mortgage using the insurance payout + extra cash. The house would basically still be a teardown in our hood even fixed so putting $60K into restoring it doesn't make sense.

it is my understanding that the funds must be used to repair/rebuild. if you plan on selling without repair, the settlement is reduced to ACV (actual cash value).

RK said:

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it is my understanding that the funds must be used to repair/rebuild. if you plan on selling without repair, the settlement is reduced to ACV (actual cash value).

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Oh yeah, that's true. The payout is depreciated (cash value) at this point.

But....if instead of fixing the structure we demo and build a new house can we recover the depreciated amount just like if we fixed it?