More than two months since Hurricane Harvey made landfall in Texas and historic flooding damaged tens of thousands of houses in the Houston area, many homeowners who got hit are in a bind. Their now-gutted homes are financial drains.
That’s bringing out investors who are eager to pick up damaged houses at low prices.
Call it a post-Harvey frenzy for flooded homes.
Corey Boyer, an investor based in Cypress, Texas, has been putting in more than a handful of offers – many site unseen.
“I’ve seen plenty of flood houses at this point, so I had a pretty good idea what we were walking into,” he says before unlocking a gate outside a rose-brick rambler in Humble, Texas, just north of Houston.
Inside, water dripping from an exposed bathroom pipe echoes through this skeleton of a home. The water-soaked insulation and drywall have been ripped out. What used to be the kitchen and living room is now mostly just wooden studs and copper wiring.
“As unfortunate as this situation is, this is one of the best situations for somebody like myself because you see everything,” he explains.
For a house that could have been worth as much as $350,000 before Harvey, Boyer says he has it under contract at $135,000 and estimates it needs at least $60,000 in repairs. He wants to make sure this flooded home can come back to life and become marketable again.
But the risk is how long it will take to find a new buyer once it’s fixed up. Will anyone want to live in a neighborhood that flooded after Harvey?
Boyer is betting they will — as long as the price is right. Plenty of other investors are also taking the gamble, combing through neighborhoods in and around what was already one of the hottest real estate markets in the U.S.
Flooded homeowners, Boyer says, can benefit from his business plan too.
“This isn’t something that they’re being feasted upon by vultures,” he says. “They don’t have an easy out. They’re facing one bad decision or another really tough decision.”
About four out of five homes damaged by flooding from Harvey were not covered by flood insurance, according to an estimate by the Consumer Federation of America. Many homeowners who did buy insurance are still waiting for their insurance checks while still paying for utilities, taxes and a mortgage — all for an inhabitable house.
For Jimmie Sue Mayes, selling her flooded home is a matter of safety. She and her husband own a mid-century rancher in Houston’s Meyerland neighborhood, parts of which have flooded three times in the past three years. As the water rose in their one-story home in August, they escaped with their three young children to a neighbor’s second floor across the cul-de-sac.
“Rebuilding is not an option for us because it was really like grab our kids and go,” Mayes says. “It was really, really scary.”
Mayes says she and her husband can’t afford to elevate the house. Instead, they hope that selling their home for essentially the value of the land will help pay off their mortgage.
Still, she says there’s another cost of selling — a disappearing neighborhood.
“It’s already a ghost town,” says Cynthia Buckley, who sheltered Mayes’ family on her second floor while they waited for rescue. “We already don’t feel safe here, especially on the weekends or after dark.”
Buckley’s first floor was flooded after Harvey, but she says her family’s decided to rebuild. She’s worried, though, that neighbors who have left their flooded homes won’t be returning.
“Most of us here in the cul-de-sac, you know, wanted to stay,” she says. “But this last flood was a game changer.”
That’s why real estate investors like Eddie Gant say they’re preparing for a housing turnover in the Houston area that could last for a couple years.
“We’re still in the what I call the embryo stage of what’s going on,” says Gant, who owns Advantage House Buyers, part of the franchise known for their slogan “We Buy Ugly Houses.”
He says the next wave of sellers may include owners of homes that were under water in more ways than one.
“That’s where it’s going to get a little hairy around here and maybe a little ugly,” he adds. Many homeowners who owe a lot of money on their homes, he believes, will just walk away from them.