Squatters+liens+drunken neighbors+100miles from home=$40K profit!
After hundreds of offers on the MLS I finally hit another gold mine. It was a short sale that was already in escrow due to close in 10 days. The agent said the buyer, an investor, had backed out at the last minute for unknown reasons. He had lost not only his deposit but all the time and effort he had put in waiting for the bank to approve of this sale and this price. The deal had been in the works for more than a year I heard. The price seemed to good to be true, especially in Southern California, so I told the agent that I wanted it.
Me: "All cash offer with no contingencies"
Agent: "Ok I'll give it to you, you have my word for it. But before I do, there's a few things I need to let you know"
Me: "Sure, what's that?"
Agent: "First of all, have you seen the house yet?"
Me: "No"
Agent: "Ok. I suggest you go see it first, most likely drive-by only, as there are squatters in it, not one, but many."
Me: "Oh ok"
Agent: "The house has been vacant for a long time, it's been broken into several times, cops have been called by neighbors at least on a couple of occasions, and the city has a pending lien on it due to unsafe dwelling"
Me: "Oh..."
Agent: "The owner lives out of state and he doesn't want to deal with it. The last time I've been to the house was before the squatters moved in. Haven't seen the inside since then"
Me: "And when was that?"
Agent: "Like a long time ago.. I just strongly suggest you first go take a look, at least from the outside, then decide if you want to move forward"
Me: "Sounds like a good idea, thanks"
And so two months after our initial discussion, on October 25, we closed escrow and I became the new owner, with the squatters still in there. Four days after we closed, I was at the house with a uhaul truck getting the guys packing and moving. My contractor was ready to start working on the house at any instant and he needed it empty. It wasn't until well into the construction started that we were able to clean the house out of all the squatters and all their stuff and all the trash and debris that had been accumulating in the house for years. It was so much stuff, so much so that it took me one full day and the contractor two full days, two full 17-footer truckloads and 3 full dump trailer-loads to empty out the whole house. You may be asking why I went thru all the trouble rather than just simply evict them. Well, I'm glad I did what I did.
Anyways, construction began right the next day and we put our finishing touches by the end of the second week of December. My contractor, who has been in the business for over 30 years, had not seen anything like it before - a lot of things in the house didn't make sense until we found out what has been going on in there. The squatters, that have been living in there for quite some time, were not bad people. In fact, they were decent, trying-to-make-ends-meet people, who themselves got cheated by the real bad people. And I'll tell you I learned that there's all kinds of bad people that make money in strange and clever (with a bad connotation) ways. So yes, the squatters were paying rent to some real bad people who were not even the real owners.
The city inspector came and he loved it, of course, after his memory of the initial sight when the house was full of junk and people. Biggest concern I had from day one, when I went to see it before deciding to proceed with the purchase, was the next door neighbors. Really loud, drinking from sunrise till sunset, and always outside in the patio area which directly faces the house, which is not only audible but very visible. Many of them, mostly male, sometimes female and children too. So I was really worried it could have a potentially negative impact on the resale. Well, two days after listing the house we got multiple offers, some over asking, and I could not be happier and more grateful to God.
2017 was the year when I went through the lowest point of my flipping career (albeit a short 2-year one) after losing a significant amount of money and sleep and weight, hair, smile, relationships, self-confidence, and self-esteem. I lost all that but I gained more knowledge and experience, more patience and composure, more will and determination to never give up and keep pushing on. And I sincerely thank God for this blessing as I end the year humble and ready for more.