What’s That Smell? Not Cat Piss ─ It’s Opportunity.

     My latest purchase is a hoarder house. Not bad enough to make a television episode but it is quite full. This is a 3,600 sq. ft. house. If all this stuff were in a 1,000 sq. ft. house there would be no way to walk around—it would be a TV episode. It is actually organized. Clothes, roomfuls of clothes. We will not be able to enter one bedroom before removing a lot of stuff. It isn’t just thrown around. It is organized. Much of the clothes are hanging on rods constructed from wall to wall. Most of the hanging clothes are covered in dry cleaning bags. Much of it has never been worn. The price tags are still attached. Canned goods, walls full of them. (There are A & P store brand cans; some are completely rusted through. A & P closed their stores in Michigan a couple decades ago.) Books, a thousand or two, all on shelves. Boxes of sweaters, purses, socks, etc.. Did I mention clothes? The kitchen is full of glasses, dishes, utensils, etc. Most of it has little to no value. (There are some interesting items, vintage games from the 70’s and 80’s.) There is a chance we will find some things of value as access is cleared to some rooms but the house has been well picked over by the family. It is just as likely that anything of value will be discarded as it is that it will be saved. I simply do not have time to sort through this stuff.

     Upon entering this house, before putting one’s foot upon the marble floor at the entrance, one is assaulted with the odor of cat urine. Up until last week, there was still a cat living in the house. There still may be one—one cat was captured in a live trap a few days ago. The smell is not quite overwhelming but it is pretty bad. There is not much evidence of spraying on the walls and in the room where the carpet has been removed there are no visible stains. The hardwood floors exposed so far are nice. There is also ample evidence that there have been mice at one time or there are still some. (Maybe we shouldn’t have removed that cat.) To me this doesn’t really smell like cat piss—it smells like opportunity.

      The house is in SE Michigan. West Bloomfield. Near my home. It will be a project for me but the closest heir lives on the west side of the State. This house was a major problem for the heirs. It was put under contract by a wholesaler and I purchased it. Why? Price, of course, but also because it presents multiple exit strategies. If you have read some of my BP blogs you may recall that I often buy houses that present multiple exit strategies. (Here is a link to one blog where I discuss this: Multiple Exit Strategies May Multiply Your Profits .) This house offers three:

1. 1.     Flip (wholesale) to a rehabber. It just so happens that I am quite busy at the moment. I have funds committed on 5 projects right now. That is more than usual for me. I am also working out some issues on a note I hold as well as updating a rental house. There may be another rental prep in the near future as one tenant is at the lawyer stage of an eviction. (Do you find that opportunities present in bunches, that when you are busy you tend to get busier? That happens to me a lot.) I could have passed this one by but it is a good deal and good deals are not as easy to come by as they were 3 or 4 years ago (I was tripping over them at the bottom of the meltdown.)

          West Bloomfield is a fairly affluent City in one of the more affluent Counties in the Country. I could offer this to a rehabber for <$50/sq. ft. At that price there is enough room for a rehabber to completely update the house, sell it for less than a newly constructed house, and put a nice profit in their pocket.

2.     Wholetail to an owner occupant. The landscaping is completely overgrown. (I am a bit surprised W. Bloomfield allowed it to get to this point.) You can easily drive by without noticing the house. I did and I was looking for it. The first job is to clear the jungle. The second is to clear the junk. The third is to kill the smell. This can all be accomplished very quickly.

        The kitchen and baths function but are very dated. It offers a lot of space. It would be possible to construct a couple extra bedrooms. A six bedroom house would be unusual in this area. I would never do that myself but if a large family were looking for a 5 or 6 bedroom house it would not be easy to find. If a buyer had specific ideas for updating the kitchen and baths and was not finding what they were looking for…this house could become just about anything. After we do a quick mop and glow (more like haul half a dozen dumpsters of crap away, rip decrepit carpet, and run an ozonator for a week or so) I could put this house on the market for ~$55 sq. ft.. It will, most likely, be the least expensive house in terms of price per sq. ft. on the market and it will gather attention. Granted, there are not many buyers with the vision or need to take on this house as a project but, then again, I only need one.

3.      Full rehab (retail). Demo the kitchen and the baths. Expand them where appropriate (both the kitchen and master bath offer lots of possibilities) and install current features and finishes. There is a great room (maybe 750 sq. ft.). The ceiling could be opened to the rafters and it would be dramatic, to say the least. This would take a while but would probably be completed around the middle of February. Assuming the housing market doesn’t experience any major shocks, coming to market at the end of winter or beginning of spring in Michigan is just about perfect. This house could be made stunning and could still be offered for <$100 sq. ft. That is a compelling price point in W. Bloomfield and there are no shortage of comps that support that price.

Would you take on a project like this? If so, how would you approach it?

                                            Please subscribe to this blog with the button below.