Posted over 2 years ago

I Burned My House To The Ground.

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    I purchased this house at an auction. The owner had died and the house was auctioned by the estate. The house was in good condition. It was located across the street from an elementary school. The large lot backs to a stream. The house had some functional obsolescence. There were 4 bedrooms (all upstairs) and only one bathroom (also upstairs). My plan was to rent this for a while, then remodel it (add another bathroom and do some updating) at some point. Finding a tenant was easy. The first family I rented to had two kids attending the elementary school.

    However, I soon learned that the house would be more difficult to remodel than I had thought. The house had a staircase to the upper floor which was narrower than current code specified. That would be too expensive to remediate and make a decent profit. So, I rented the house, profitably, for several years.

    The house required little maintenance until…a crack formed in a large pipe which exited to the sewer. (This was an old house which originally had a septic field—this pipe was cast iron and was larger than any I had at any other house—I recall it was ~8 inches in diameter). This would be expensive to fix. It was time for plan C. (I try to buy properties that offer multiple backup plans).

    This house was on a lot which was large enough to be split according to the city zoning. Plan C was to knock the house down, split the lot and build 2 spec houses. My handyman at the time was an active firefighter. I jokingly asked him whether he and his friends would like to burn this down. His response was that they would. He explained that finding houses to train in was a problem for urban fire departments. Since my house was quite far from the neighboring houses it would be a good training location.

    My handyman worked for a different city. I contacted the local fire department and the Lt. was thrilled with the idea. I called my accountant to develop a plan to maximize the benefit. I decided to gift the house (just the house) to the fire department. I obtained an appraisal for the house to substantiate the value of the gift. (There are not many appraisers who can do this type of appraisal. It is more involved than just valuing the house and property and then subtracting the value of the lot. The appraisal was more expensive than a standard appraisal but well worth the expense. This appraisal was attached to my income tax return for that year and the deduction for the rather large gift was not questioned). There was prep that had to done before the fire department could burn the house (disconnecting utilities, asbestos survey, demo permit, etc). (The expenses associated with the prep were also deductible on my tax return.)

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     Firemen really understand fires. I visited when they were positioning the pallets and wadding up newspaper in preparation for the burn and they were happy to explain what they were doing and what to expect when they set and extinguished the fire. They appreciated my gift.

    The training exercises were scheduled for two different days. The garage was very large—it contained a workshop and a chicken coop. The garage was burned on the first day. It was set ablaze once and put out. Then a rescue operation was staged, the garage burned again, then put out again. Finally, the garage was set ablaze and burned to the ground.

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    The house was scheduled to be burned a couple days later. There was plenty of room across the street from the house for people to watch safely so I scheduled a house warming party. I invited several friends and business associates. The firemen involved in the exercises also invited their family and friends. (Firemen do not usually know where they will be working on a specific day.) It turned out to be quite an event. The house was burned, put out and burned several times over the better part of the day and into the night. There were rookies from five different fire houses (most of whom had never been in a fire before) who participated in the training. Two different fire chiefs thanked me for the donation.

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    In the end the fire was allowed to burn through the supports of the house while the outside walls of the house were kept cool with firehoses from different pumpers. All of the debris except for a few bricks from the chimney fell into the basement where it continued to burn and was almost entirely consumed. Did I mention that firemen really know how to build fires? Cleanup consisted of hiring a bulldozer to push the surrounding dirt into the basement and grade the area. I solved a problem, saved money on demo, received a significant tax deduction, and provided a service to my community. How’s that for a hot idea?

                Feel free to share this post. 

It would be great if more people donated houses to their local fire departments. I am happy to answer any questions you may have below.     

                                            Please subscribe to this blog with the button below.

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Comments (116)

  1. Tiny 1412692621 avatar camach21

    Great Article man ! 


    1. Tiny 1478795769 avatar pharmerjeff

      Thank you.


  2. Tiny 1408909074 avatar garett

    @Jeff Rabinowitz

    Thank you for all of the content you produce here on BP, as a beginning investor this proves to be invaluable.

    As part of my marketing plan I'm not only trying to buy homes, but also educate the homeowners of the options available to them, regardless if I'm the solution for them or not.

    Would you mind if I use some of your blog posts and/or portions of your posts in my marketing material?  Sources would of course be cited, and I would not imply any affiliation between yourself/your Damn The Recession page and I. Feel free to PM me to discuss more details if you would prefer. 


    1. Tiny 1478795769 avatar pharmerjeff

      @Garett H., I am pleased that you find the posts helpful. I am happy to have you use them with proper accreditation.


  3. No avatar

    very cool story. sounds like it was a win-win for all parties!


    1. Tiny 1478795769 avatar pharmerjeff

      @Trip McNeely, it was. Thanks for stopping by.


      1. No avatar

        Just listened to the full story on the story time with Jeff podcast. Very cool. The whiskey talk was just as interesting as burning a house down!


      2. Tiny 1478795769 avatar pharmerjeff

        @Trip McNeely, I am glad you liked the whisky and real estate podcasts. That was an idea that emerged from a rambling phone conversation and Jeremy held me to it. I had quite a learning curve to be able to pull them off. We recorded a 16 episode season. They can all be found on BP through this blog. All of them have "Story Time With Jeff" in the title. 


  4. No avatar

    oh,fantastic story 


    1. Tiny 1478795769 avatar pharmerjeff

      @Tim Sundt, I am glad you enjoyed it. Feel free to share it if you wish. Thanks for your comment.


  5. Tiny 1448387771 avatar ncarey

    The best part was them all posing for a photo while the house burned behind them. If someone didn't know the story they might take that picture the wrong way. LOL


    1. Tiny 1478795769 avatar pharmerjeff

      @Ned Carey, the firemen truly appreciated this. This was the first house fire for many of them. There was a lot of family in the audience. Even the veterans were in good spirits as most had never been able to invite family to see them work before. 


  6. Tiny 1441734088 avatar andrejp

    What a great example of the many ways to get creative with this industry.  Love how most of the time there are several beneficiaries when it comes to real estate investing.  The podcast was a great listen too ! 


    1. Tiny 1478795769 avatar pharmerjeff

      @Andrej Petrovski, the podcasts were an adventure for me. It is easier for me to write a story than tell one. Combining the telling of the story with my appreciation of whisky made it more fun. I also love the variety in real estate. If you can find the story behind a property, especially if others can't, you can do well. Thanks for stopping by and leaving your comment. 


  7. Tiny 1461685553 avatar kerimiddaugh

    As someone who just lost a dear neighbor to a house fire just 17 days ago, I was very hesitant to read this post and see the pics.  But now I understand the creativity, forethought, and safety that went into this solution.  I think of how many lives will be saved because of the training that the firefighters received.


    1. Tiny 1478795769 avatar pharmerjeff

      @Keri Middaugh, I am sorry to hear of your loss. I don't think this was as significant as you state but the firemen and, especially, the chiefs appreciated the training opportunity. Thank you for your comment.


  8. Tiny 1478795769 avatar pharmerjeff

    @Michael Ristom, actually, the firemen burned the house. I might have got into a bit of trouble if I did it myself. I am glad this story is getting some attention. I hope others will consider making a similar donation if the occasion should arise. Thanks for your comment. The comments help keep the story alive.


  9. Tiny 1485101239 avatar michaelr291

    I thought this was going to be "click bait" or something not directly related to the subject. Well, I was wrong. You literally burned your house to the ground! My dad's a fire fighter/EMT and has been for almost 30 years. Good on you for thinking outside the box and arranging a mutually beneficial arrangement! That was awesome.


  10. Tiny 1454766834 avatar prcarson

    Awesome story! Both educational and entertaining.  This is a prime example real estate is more than flipping, wholesaling, and rentals.  There is a lot of room for creativity and this is one strategy and story that will be hard to top! Thanks for the story and all the great podcasts


    1. Tiny 1478795769 avatar pharmerjeff

      @Carson M., thanks for stopping by and for your support of the podcast. I recorded the season finale for "Story Time With Jeff". I expect it will be released today. This has been an interesting experience. There are no plans to resume the podcast at the moment. 


  11. Tiny 1442426546 avatar nickg500

    I enjoyed hearing you speak about this on Story Time With Jeff.  Talk about an exit strategy!  Thanks for sharing and I'm looking forward to some more stories!


    1. Tiny 1478795769 avatar pharmerjeff

      @Nick G., thanks for posting this comment here. "Story Time" has been a challenge for me. I share some of the history of how the podcast came to be and why it has been a difficult journey in episode 15. (I believe that episode will be released tomorrow but I am not positive--the Holidays affected the schedule a bit.) It helps to know that people are listening and find some value in it.


  12. Tiny 1478795769 avatar pharmerjeff

    @Jeremy Burgess, I am pleased that people are listening to Story Time With Jeff and taking the time to comment. Thanks. I recorded a couple episodes yesterday. I expect #15 to be available soon.


  13. Tiny 1439917475 avatar jeremyb11

    I was just listening to this on Story Time With Jeff again. Great pics and great story!


  14. Tiny 1477015540 avatar robg32

    Great story. Keep up the good work Jeff.


    1. Tiny 1478795769 avatar pharmerjeff

      @Rob Gish, thanks for stopping by and leaving your note.


  15. Tiny 1448386160 avatar michaelaatl

  16. Tiny 1448386160 avatar michaelaatl

    Awesome! I've been playing with the idea, since I own a house that is part of an assemblage that I've created. I own a triple lot next to it and a duplex next to that and a duplex backing up to the triple lot. 

    Since the house has been torn apart by vandals, who are actually living it it and who I can't keep out, regardless of how well I board it up (they're squatting in the house next door and they're always watching), and since the city is giving me trouble for not keeping it boarded up, I've been looking at demoing it or donating structure to the fire dept. But it's very close to the neighbor's house (40' wide lot), so I don't know if it's feasible. 

    I need to go to the fire dept and see what they think. I have called them before and they wanted to see a demolition permit before they'd actually come out and look at the possibility, so, I've sort of done nothing ;-)


    1. Tiny 1478795769 avatar pharmerjeff

      @Michaela G., if you get the demo permit before you make the gift to the fire department it might affect the tax deductibility of the gift. It may be worth speaking with an accountant first. I am pleased you are exploring this. I am surprised the fire department is not willing to give their assessment before pulling the permit. If you can locate the person who has primary responsibility for training you may get a different response. In my City that was a Lieutenant and he was very interested when I called.


  17. No avatar

    This is a great story and a wonderful example of doing well while doing good (or however that goes).  Thanks for sharing here and on the Renegade Detroit Investors / Storytime With Jeff podcst.  The tale only gets better with good whiskey!!


    1. Tiny 1478795769 avatar pharmerjeff

      @Doug Parker, thank you for commenting here and listening in to my podcast. The whisky certainly makes telling the tales more enjoyable I am glad it doesn't make listening too difficult.


  18. Tiny 1474047364 avatar bsr316

    What a great story, and great way to give back to your community while also getting something in return! This is a wonderful example of one of the many exit strategies that can be utilized with real estate investing. I am shocked there aren't more comments on this post! I am here because of the #StoryTimeWithJeff Podcast, and I can see very few help up to their part of the bargain.. Great work and please keep the stories coming :)


    1. Tiny 1478795769 avatar pharmerjeff

      @Brandon Rader, I am thrilled that you are listening to the podcast and appreciate it enough to stop by and leave a comment. Thank you.


  19. Tiny 1439917475 avatar jeremyb11

    I'm here because of Story Time with Jeff Podcast! Love the story and keep more coming.


    1. Tiny 1478795769 avatar pharmerjeff

      @Jeremy Burgess, I think I have enough material for a few more episodes. Thanks for your encouragement.


  20. Tiny 1481170107 avatar toddv3

    Nothing like real live training!!! Love the photos!


    1. Tiny 1478795769 avatar pharmerjeff

      @Todd Vernon C., the opportunity was deeply appreciated and it was great to be able to provide it. Thanks for your comment.


  21. Tiny 1408909074 avatar garett

    @Jeff Rabinowitz, Over Thanksgiving I was home in Pennsylvania taking a look at some newly purchased property and I mentioned this strategy to my father. We may be in a position to do something similar with a property we picked up at the tax auction. The home is in pretty bad shape and was purchased strictly to give us more options on a connecting property we own. 

    It's one of many options we're looking into, if we decide to go that route I'll be sure to put some pictures up. 

    Also, still enjoying the weekly podcast you're doing with the Renegade Detroit group. You and Jeremy's other guests made the 6hr drive go by in a flash.

    See you around.


    1. Tiny 1478795769 avatar pharmerjeff

      @Garett H., it is great that your father is considering donating his house. Even if the fire department cannot use it for practice burns they may be able to use it for search and rescue training. If the gift is accepted make sure it is properly documented. I hope both the fire department and your father can benefit. I am very interested in what happens.

      Also, I am thrilled you are enjoying "Story Time With Jeff". It happens I have a recording session tomorrow and this story will be the topic. If you have any questions, please do not hesitate to contact me and I will be happy to let you know exactly what I did. Obviously, my adventure will not be identical to your father's but I will be happy to let you know how my accountant, lawyer, and I navigated the process. Best wishes.


  22. Tiny 1478795769 avatar pharmerjeff

    @Garett H., I was thrilled to see this blog entry on the front page--your comment put it there. This is a story I would like to spread to as many people as possible. I know there will not be many opportunities for people to use this strategy but it can do a lot of good for the firemen if the opportunity comes up.

    Also, thank you for your kind words. Just remember, you have to be careful who you take advice from. Double check that what they say is appropriate for your situation.

    "Story Time With Jeff" is going to be recorded at a farm around a bonfire tonight. I just learned that last night so I have to come up with something completely different--now. I love that I have friends and partners who are constantly testing my strategy of limited planning but keeping myself open to possibilities.


  23. Tiny 1408909074 avatar garett

    Great story Jeff, definitely a creative way to make a win all around! 

    I would be lying if I said I haven't learned a lot from all of your blogs, podcasts, and posts, the insight is much appreciated. 


  24. Tiny 1399724342 avatar lipple84

    @Jeff Rabinowitz wow what a cool experience to be a part of.  I hope to be lucky enough to buy a house that I can burn to ground one day.  What an event!


    1. Tiny 1478795769 avatar pharmerjeff

      @Jeff Lipple, it was quite an event. I learned quite a bit about fires and how they spread. Firemen are experts in fire--setting them and putting them out. Also learned lots about construction--it was interesting seeing what collapsed first--where the load bearing points were. Thanks for your comment.


  25. Tiny 1457295941 avatar bobm39

    Wow! @Jeff Rabinowitz this post is awesome! Great job on the donation & really great work on thinking outside the box to solve some of your problems. So what is/was your next step with this property? Are you going to build a new home on it? 

    Thanks for sharing this post. 


    1. Tiny 1478795769 avatar pharmerjeff

      @Bob Mastroianni, thanks for the vote of confidence. The crash put the construction on hold but I spoke with someone just yesterday who is considering building new construction homes and shared info about this lot. If we fire the project up it would probably be a minimum of 2 new homes since this lot is splittable and the preliminary approval has been granted for the lot split. This could expand to 4 new homes. I do not own the house next door but I already own the one next to that. I do have some plans for a nice Victorian style home with a wraparound porch that would look great in this neighborhood.


  26. Tiny 1463834164 avatar rayn8

    We've run across a few that I wish we would have burned instead of rehabbing.  I like the out of the box thinking!  


    1. Tiny 1478795769 avatar pharmerjeff

      @Ray Nemeckay, I know you meant this as a joke but that really is something I think about when I look at properties now. Not always burning them down but certainly tearing them down and building new on the lot. I have participated in a couple successful projects where we did just that. Once a strategy becomes part of one's arsenal it is always there and is more likely to be applied when the right situation presents. Thanks for your comment.


  27. Tiny 1399289709 avatar blackhawk99

    This is a brilliant idea to capitalize on a unique deduction!  In the end everyone wins.  Good work!  I'm looking forward to hearing many more of your success stories!


    1. Tiny 1478795769 avatar pharmerjeff

      Thanks @Mark Yuschak. That is high praise, indeed, coming from one with as many successes as you. 


  28. Tiny 1424998529 avatar granto324

    Thanks for sharing this story @Jeff Rabinowitz!  This has to be the most interesting story I've read.  The only thing better is hearing you tell it in person.  Thanks again for sharing!


    1. Tiny 1478795769 avatar pharmerjeff

      @Grant Warrington, thank you. I look at RE as a series of puzzles--they are fun to work and you get paid when you solve them. I expect to close on one this week that has more moving parts than any deal I have done to date. I am inspecting a property today that is not as complex a deal but had a twist on the negotiation that helped to close it. I look forward to telling both stories soon. 

      It is time you start writing up some of your stories. I know you have some good ones.


  29. Tiny 1452118554 avatar slondeau

    This is an amazing story told in an entertaining way! I really enjoyed his post @Jeff Rabinowitz! You have a ton of great stories and I'm happy to be involved in several. (Well, maybe not that ONE deal!) 

    Keep the great blog posts comin and hope to do many more deals together over the years. 


    1. Tiny 1478795769 avatar pharmerjeff

      @Steve Londeau, you are not just involved in several stories. You are the one who located some of the properties, put them under contract, and brought them to my attention. I think the next one on the St. Clair River will be blog worthy. It may warrant a blog for the deal structure and the rehab/marketing. That one should be fun and profitable. Thanks for stopping by and posting.


  30. Tiny 1463755378 avatar chrism238

    As an insurance man I still cringe when I see the title of this blog even though I know Jeff and the full story.


    1. Tiny 1478795769 avatar pharmerjeff

      @Chris Moshier, you are among the best insurance agents around SE MIchigan. It  is too bad I didn't know you when we did this. I bet I would have been able to make you comfortable at the house warming party.


  31. No avatar

    Jeff, thats a great idea, and a great post. Nicely done!  

    Lee


    1. Tiny 1478795769 avatar pharmerjeff

      @Lee Van Every, thanks for stopping by and for leaving your comment.


  32. Tiny 1399338272 avatar tom mi

    @Jeff Rabinowitz, great story and great idea! There are a lot of exit strategies that investors use, some common and some more specialized, but this is rare. I loved hearing about it.


    1. Tiny 1478795769 avatar pharmerjeff

      @Tom A., there will not be many situations where this is feasible but it is worth inquiring when there is a possibility. How often do we get opportunities to do well by doing good? We shouldn't let them pass us by when they present. 


  33. Tiny 1438298821 avatar markt242

    Great story Jeff!  I've heard of this happening 20 or so years ago but thought it had gone away because of liability.  Seems like a great way to train and demo!  Thank you for sharing.  


    1. Tiny 1478795769 avatar pharmerjeff

      @Mark Tomes, there are some hoops to jump through because of OSHA, etc., but it can be done and is worth the effort. The fire departments appreciate the opportunity for conducting realistic simulations.


  34. Tiny 1487883772 avatar miguela10

    this is such an interesting way to solve a challenge. What a wonderful way to think outside the box. Awesome.


    1. Tiny 1478795769 avatar pharmerjeff

      I like to think real estate is not just a job but can be an adventure. Thanks for your feedback @Miguel Alfredo barrios.


  35. No avatar

    Jeff

    I am local here in MI as well (Canton).  I am looking to purchase a home locally as well specifically for a tear down opportunity.  My CPA said that I couldn't donate 'just the home' I had to donate the entire property in order to get the tax deduction.  My CPA is very conservative and I am concerned that I might be missing out on a good opportunity for a significant write off to off set the purchase price of the home.  A) Did you have any issues with your tax deduction?  B) Any special considerations with donating to the fire department you recommend? C) Who is your CPA?  I am open to switching and would like someone well versed in this area as this will be make a significant impact on my current and future tax returns.  Thanks for your insight!  

    Mike


    1. Tiny 1478795769 avatar pharmerjeff

      Mike, The IRS did not raise a single question. The CPA I currently use is different than the one I used when I made the donation. I drew up a donation letter to the fire department which specified the donation was for the structure only and the Fire Chief signed it. I obtained 2 appraisals. One was for the house with the land and the other was for just the land. I attached the donation letter and both appraisals to my tax return for that year.


  36. Tiny 1437352727 avatar michaelh78

    Jeff, I just read this post and have to say that I am impressed.  I will file this tip away for the future.  Thank you!


    1. Tiny 1478795769 avatar pharmerjeff

      Thanks, Michael:

      I am happy to answer any questions that arise. I hope this is a viable option for you and the fire rescue teams in your area.


  37. Tiny 1435638398 avatar investeddad

    That's incredible. No wonder this blog post is in the best of the year category.  It pays to speak your mind. 


    1. Tiny 1478795769 avatar pharmerjeff

      @Scott Christensen, I have been quite surprised at the response to this post but am certainly pleased. We can all learn from each other's experiences. Thanks for posting your comment.


  38. Tiny 1398791391 avatar weaves

    @Jeff Rabinowitz It's great to learn different ideas from other people's experiences.  I have a similar situation where my rental sits in the middle of 2 lots.  I will definitely research further in my city when the time comes for me to build 2 spec homes.  

    Thanks for sharing your story!


    1. Tiny 1478795769 avatar pharmerjeff

      That's great @Wes Eaves. Please spread the idea around. It would be wonderful if more people did this.


  39. Tiny 1479850266 avatar divlink

    We just called the city before seeing this to see if we could do it to a tax deed property - unfortunately our house was too close to the trees but I am so excited to see you do this successfully!  Not only helping the local firefighters but a great way to clean up a house!   Great Photos too!


    1. Tiny 1478795769 avatar pharmerjeff

      @Alexa Michna, I am thrilled if this post encouraged you to call the city to see if this was a possibility for you. I hope others will do so also.

      The fire department removed several trees that were around my property before the burn at no cost to me for safety reasons. They wanted to remove the large maple tree to the rear but I asked them to try to save it. They dedicated a pumper truck just to keeping water on that tree during the exercises and did save it. It got a little scorched on one side but recovered well. In retrospect, I may have made a mistake as the tree will interfere a bit with the new construction but it is a beautiful old tree.


  40. Tiny 1424998529 avatar granto324

    Thanks for sharing Jeff!  What a great idea, and a fun story to read!   What a great way to help your community!


    1. Tiny 1478795769 avatar pharmerjeff

      @Grant Warrington, Thank you for stopping by and for your comment.


  41. No avatar

    This is AWESOME!!! I'm going to check local codes and fire depts. to see if this is an option. Sure better than paying 10K to bulldoze an existing house!


    1. Tiny 1478795769 avatar pharmerjeff

      Sometimes you really can do well by doing good.


  42. Tiny 1478795769 avatar pharmerjeff

    @Roy N., yup. I'm also certain the firemen would not have been comfortable allowing the fire to burn itself out and consume almost all of the material that was the house if they did not have all of their equipment in place. In one of the photos the power lines can be seen. They were close to the house and a major concern. There was one water hose on those lines for much of the exercise. There were also hoses used on each of the neighbor's roofs frequently. I probably made a mistake by asking the firemen to save the large maple to the rear and left of the house (it can be seen behind the wishing well in the photo of the rubble) but they put a hose on that tree the entire time and, though it did get a little scorched, it survived. It is a beautiful tree but it may pose some problems when the new homes are constructed.


  43. Tiny 1448579709 avatar nattydread

    @Jeff Rabinowitz

    When I was in the Navy we carried out damage control and fire-fighting exercises in sections of decommissioned ships for the same reasons.  Though models are good, nothing beats the real thing to gain experience.

    Tax deductions aside, it was community minded gesture on your part.


    1. Tiny 1478795769 avatar pharmerjeff

      @Roy N., most of the credit for the idea must go to my handyman who was a fireman. It was a bit of a hassle dealing with the inspections necessary but it was truly appreciated. It is almost laughable that because this became a training site that we had to meet OSHA regs. If the house had just caught fire no inspections would have been needed for the fire department to respond.


      1. Tiny 1448579709 avatar nattydread

        True ... but it would then be arson and whole new hassle ;-) 


  44. Tiny 1399523748 avatar oldandwise

    I planned to do just this about 12 yrs ago after reading about a local couple that did donated a house to the fire dept and got a sweet tax deduction.  I contacted the fire Chief and he was gung ho.  I then got an appraisal basically following the county assessment for "improvements".  All good so far...

    Then I read an IRS Letter Ruling (correct term?) that stated that a deduction would be disallowed as the house had no value to the taxpayer.  It went on to say that the taxpayer would actually be getting a benefit in reducing demo and clearing costs.  The value to the FD was irrelevant.

    I can only guess that the IRS has come out with a different opinion or there was a Court Case.  I should have re-checked as we knocked down a house just last year.

    Anyway - Good score!


    1. Tiny 1478795769 avatar pharmerjeff

      @Cheryl C., now you're scaring me. I did this 8 years ago. My accountant was convinced it was fine and directed me to the appraiser. There wasn't even a question from the IRS. Anyone know the statute of limitations for an audit?


  45. Tiny 1509941143 avatar tradetalents

    The best house warming party story I have ever heard!


    1. Tiny 1478795769 avatar pharmerjeff
      Mine too. It was an adventure. It received positive feedback from almost everyone except the daughter of the of the previous owner and one of the neighbors across the street. They thought I was horrible for doing this, that I was being disrespectful to the memory of the former owner (from whose estate I bought the property ~4 years earlier) and needed to tell me so. They then wanted me to give them the little wishing well. (I refused because it would have left a hole into the former well. It just fell apart when my crew tried to move it in order to fill the well with dirt.) You can't please everyone.

  46. Tiny 1430691310 avatar brendan m

    What a great, unconventional kind of story for BP. Thanks for sharing!


    1. Tiny 1478795769 avatar pharmerjeff

      I appreciate everyone taking the time to comment. 


  47. Tiny 1409943367 avatar producejoe

    Brilliant!  Talk about a Win-Win situation.  I'll keep this idea in by pocket for the future.  Thanks!


    1. Tiny 1478795769 avatar pharmerjeff

      @Jonathan Roylance, I am thrilled that this is reaching so many people. This is truly important for the firemen.


  48. Tiny 1436851240 avatar bruceolsen

    The last photo is priceless--a group portrait of the firefighters casually posing in front of a house on fire. 

    I hope we get the chance to do this some time during our REI careers.


    1. Tiny 1478795769 avatar pharmerjeff

      @Bruce Olsen, the firemen were posing frequently over both days of the burn. Many of their family and friends were there taking pictures. Most had never seen their family members at a fire before and may never get the chance again. There was a brief story in the local newspaper but it wasn't very well written and I didn't save it.


  49. No avatar

    At first, reading the title of the blog, I thought this was a strategy of collecting insurance money...I have friend's who own multifamily in Texas where tenants started fires by accident and burn down their building.  They collected insurance proceeds for more than the building was worth.  

    You turn this into a clear win-win.  Thanks for sharing.

    Did you ever subdivide and build the spec houses?  If so, please feel free to share a photo.  

    Where is this located?

    Thanks,

    jon.


    1. Tiny 1478795769 avatar pharmerjeff

      @Jon Strishak, that reminds me of a story where 3 real estate investors at an exclusive resort were talking about how they got the money for the vacation. The first one owned an apartment building that burned down, the second owned a commercial building that burned down, the third had a group of houses that flooded. All received huge insurance payments. The first guy asked the third: "How did you arrange for the flood?"

      The houses have not yet been built. I  had a dispute with the City over how to connect to the sewer. There is a gap in the sewer in front of the property. The original house was tied in to the rear and that should be sufficient for the new houses. The City wants me to construct the sewer in the front. (The County drain commissioner agrees with me but the City has the final say.) So, I am paying minimal taxes on a vacant field until prices rise enough to offset the cost of constructing the sewer. Apparently, no good deed goes unpunished.


  50. No avatar

    At first, reading the title of the blog, I thought this was a strategy of collecting insurance money...I have friend's who own multifamily in Texas where tenants started fires by accident and burn down their building.  They collected insurance proceeds for more than the building was worth.  

    You turn this into a clear win-win.  Thanks for sharing.

    Did you ever subdivide and build the spec houses?  If so, please feel free to share a photo.  

    Where is this located?

    Thanks,

    jon.


  51. Tiny 1434132561 avatar offmarketmiami

    Thank you for sharing!


    1. Tiny 1478795769 avatar pharmerjeff

      It was my pleasure, @Meirah Bookman.


  52. Tiny 1415167675 avatar realticor

    Thanks, Jeff for sharing this.


    1. Tiny 1478795769 avatar pharmerjeff

      @Calvin Lee, it was fun writing this up. Thanks for your comment.


  53. Tiny 1429830000 avatar karlpala

    Awesome idea! For a home in a less-populated area this is a wonderful option!


    1. Tiny 1478795769 avatar pharmerjeff

      @Karl B., this house was in a suburb of Detroit that is mature and well populated. The lot was barely large enough to qualify for a split--it is only 126 feet wide. Donating to the fire department would be a valid option for many people. They might be able to use the house even if they don't burn it.


  54. Tiny 1446500017 avatar troym1

    Without a doubt the most interesting story I've read on BP!  What a win-win for everyone involved.


    1. Tiny 1478795769 avatar pharmerjeff

      @Troy M. I am glad that you enjoyed this but there is a lot of interesting material available on BP.


  55. Tiny 1399609717 avatar karin819

    Brilliant! Thanks for a great story and a really unique idea for tax deduction combined with community goodwill. Love it.


    1. Tiny 1478795769 avatar pharmerjeff

      Thanks, @Karin DiMauro.


  56. Tiny 1426955783 avatar cpp

    The pyromaniac in me can't help but appreciate this story. I've always loved campfires. And what a great way to give back to the community and provide hands on training for those firefighters. Who knows, one of them may save your life someday. 


    1. Tiny 1478795769 avatar pharmerjeff

      This was the best house warming party I have ever attended. One of the firemen had his parents visiting from out of state. They were supposed to go back home a couple days before the burn but they changed their flight because they had never seen their son at work before. 


  57. Tiny 1399467447 avatar kimball

    Hi, could you be more specific on the actual numbers in the tax deduction.  I know of two people who have done this and it seems they don't want to disclose this.  This is not illegal so I don't really understand the reservation.. after all real estate is a numbers game.

    Thanks for donating! I have a long line of relatives in  Chicago  who are fireman and this type of training is crucial to their skill.  

    Best, 

    Elizabeth Blazina


    1. Tiny 1478795769 avatar pharmerjeff

      @Elizabeth Blazina, I can see the reservation. Most people don't like discussing their finances in public. I recall that my tax deduction was approximately $80K. That included the value of the property (as determined by the appraisal) and the expenses (the cost of the appraisal, the charge to disconnect the utilities, the asbestos inspection, the demo permit, etc.). This was a large deduction for me so I attached a copy of the appraisal to my tax return when I filed and the IRS never questioned it.


  58. Tiny 1448386579 avatar qualityc

    That is a fantastic idea and really great way to offset a lot of taxes. That alone had to be worth part of the investment.


    1. Tiny 1478795769 avatar pharmerjeff

      @Colin Smith this provided a significant tax deduction. The deduction allowed me to jump start my self-directed IRA by transferring money from my SEP IRA. That transfer would have been a taxable event but the deduction from the donation covered the taxes which would have been due.


  59. Tiny 1399764506 avatar k t

    Glad you put this option out there for the BP community.  Not something most people would know about or consider.

    My parents sold one of their rental houses years ago when they were retiring and moving out of state.  A few years later, it was to get demoed for commercial construction (it was at the corner of a busy street, so when combined with the other lot behind it, it was to become a large medical center).  The fire department was given the same opportunity you describe here, where they used it for training purposes and burned it down.  I'm sure they were grateful as well.


    1. Tiny 1478795769 avatar pharmerjeff
      This is among my favorite real estate stories. Most of the people in my circles have heard it already and I hadn't thought about it for a while. Many urban firemen train on models, essentially sheds, and don't get any opportunity to to train under controlled conditions. (This was a safe site-- the street was blocked off and there were 5 pumpers and an EMS vehicle actively participating or available.) There were veteran firemen conducting the exercises for the trainees. It felt like I was giving back a little to my community but I also profited financially. This is a great option. I would be pleased if more people would contact their fire departments when they have a home to demo to see if there is a possibility of them being able to use the house. Even if they can't burn it they may be able to hold search and rescue exercises in it.

  60. No avatar

    Jeff,

    I'm curious- how did the gift appraisal for the house alone compare to what the full appraisal would have been?

    I'm in the process of a long term gift right now, where I am allowing a ministry to rent the house and then will gift the appreciated asset after I've collected the income from it.


    1. Tiny 1478795769 avatar pharmerjeff

      @Mills Snell, this was a while ago but I recall that the house alone was valued at ~75% of the total value of the property. In this area there were not very many vacant lots (it is in the city) and finding a comp sale for the lot was very difficult. It was also a bit difficult finding an appraiser who would take the job. The appraiser I used was recommended by my accountant. I didn't like him but ended up using him anyway because it was hard to find someone else who even understood what I needed.


  61. Tiny 1399381110 avatar bilgefisher

    Jeff,

    This is amazing.  Thank you for sharing.  What an opportunity for the fire department.  They were probably like kids in a candy store.

    Jason


    1. Tiny 1478795769 avatar pharmerjeff

      @Jason Miller, one of the fire chiefs told me it was the nicest house they had ever burned. Besides the plumbing issue it was a nice house. They were able to stage different types of exercises in different parts of the house. (The other chief offered to buy it for $1 just before he ordered the fire set.) Everyone was in a great mood. This was a good thing to do and, besides, I like to watch fires.