Nearly a decade a go an author and screenplay writer purchased a full time residence from me. A few years later while our real estate market was in the dumps he decided it was a good time to buy an investment property. I showed him a soon-to-be-listed little duplex which he instantly fell for. He purchased the above pictured cute little duplex located on a lovely Key West lane before anybody else got to see it. The place was in good condition such that the new owner was not required to make any repairs. In fact is was tenant occupied when the buyer took possession.
A few months later I received a telephone call from the owner. He said he had just arrived in San Francisco to teach a writing class when he received a phone call advising him the duplex had been severely damaged in a fire very early that morning hours. He asked me to take a look, take some photos, and let him know what I thought. Someone from the Key West Fire Department had contacted him and advised that both tenants were okay but that the woman tenant's dog died in the fire from smoke inhalation.
As I drove over to the property I expected to see the place burned down to the ground. When I got there I thought my buyer had exaggerated the magnitude of the event. The place had a crime scene tape out front. I couldn't see any fire damage from the street. It wasn't until I entered the side yard and walked to the rear when I saw some charred wood over the rear patio deck.
However, all of my assumptions about exaggeration abruptly ended when I looked inside the burned out windows to the interior. The place must have been a raging inferno. The building was so severely damaged that the city condemned the property which made it possible for the owner to take down the structure and build new duplex. Our Historic Architectural Review Commission required the owner to retain the three front walls and front roof line as shown in the two photos above. An entirely new house was built in the space using building impact windows and doors and Hardiboard siding which in turn made the house less expensive to insure and also less expensive to cool. Most owners in Old Town are not permitted to use these construction materials as they are not approved by the historic commission. .
The owner built a new duplex on the lot, added a second story which was a new and larger master bedroom with en-suite bath. The front three walls were incorporated into a totally new studio apartment. The few people who had seen the duplex both before the fire and after rebuilding were amazed at the difference. I sold the place the next year. I think the two humans who lived in this place were very lucky to have made it out alive.
I was told the lady tenant in the rear came home very late on Friday night or early Saturday morning, lit a cigarette, and and may have fallen asleep. She and the young man who lived in the front apartment made it out without injury. He had just moved into the front apartment on Friday. He lost everything he had. The lady lost all of her property but more importantly lost her pooch. In the end that was the biggest loss for all three parties involved.
The owner sold the duplex the next year. He sort of broke even in the transaction. Even so, there is a huge emotional cost one incurs in going through something this devastating. I am not a firm believer in wind insurance or flood insurance in most cases, but I absolutely believe in fire and liability insurance. Every investor and every homeowner must have fire and liability insurance sufficient to cover a loss of property and or life.
2 comments:
Hi Gary, What are your thoughts regarding wind insurance and flood insurance in Key West? Thank you.
Dear Anon, Most of the houses in the historic district were built to withstand the elements or our specific environment - the wind, the heat, the rain. And most were also built in recognition of where the houses were located with regard to elevation. Those houses survived the elements for over a hundred years because of how well they were built. It was not until recent years that lenders required flood and windstorm insurance.
I know certain elevations are more risky than others to be flooded. A cash buyer can decide for himself whether to purchase flood insurance for homes located in more "risky" locations. Similarly, a cash buyer can decide whether to assume the risk of a houses being damaged during a windstorm. Buyers who finance are stuck with having to pay outrageous premiums.
I cannot understand why buyers here must purchase both flood and wind insurance while buyers in Colorado for example are not. I remember a huge flood in Colorado in 1965 that devastated much of the Denver area including western suburbs and the near downtown area where Cherry Creek and the Platte River meet. Today the federal government requires flood insurance for new home purchases, but this is not enforced in areas across the country like the downtown Denver area which is still at risk as it was in 1965. But lenders in Key West enforce the flood insurance mandate here.
In the July 1990 we had a horrendous hailstorm in Denver that caused over a Billion dollars in damage. I owned four apartment buildings that incurred over $30,000 in damage to the roofs and interiors. My regular fire and liability insurance paid for my damages. These types of policies still cover owners today across most of the US including areas in the Midwest were there are tornadoes. I do not understand why the Keys area treated differently than tornado alley as to being required to have a windstorm insurance as well as a general policy. I know there must be a "reason" other than the know "risk", but I do not understand why one area is required to have a special policy when most of the US is not.
I used to travel to the Phoenix area on a weekly basis. I experienced one huge flooding event and remember another dust storm event that was beyond imagination. Both caused tremendous damage. I bet that lenders do not require windstorm insurance in Arizona even though there is a very known risk. Every few years we see sudden mass flooding in Phoenix. I will be that lenders do not enforce federal flood insurance mandates after the homeowner's initial policy expires.
Gary
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