OK, this is a 1st for me... seller reached out to me regarding her home and come to find out, it's a hoarder house. The area where the property is located is pretty ok. Kennesaw, Ga. close to golf course and next to the historical district. Average value in this sub division in $150ish and she is asking for $80k. Not a slamdunk but I see potential profits around $25 -$30k at the end of the day. So, after doing a walkthrough and witnessing up close what a hoarder house looks and feels like, I decided to give it a shot. However, I'm now a bit uneasy and awaiting title to clear before I make any kind of moves.
Has anyone experienced a hoarder house? And if so, I would love to hear your input about what I should be afraid of or not.
Usually the hoarder houses are the best deal. Nobody will buy one for their primary residence so only investors are looking at them. I've bought a few.
Biggest downside can be assessing the condition of the property. If it is too filled with junk you may me not be able to see all the problems. Bake in extra funds for things you don't know about.
Buy anything that makes money! Keep your eyes open and double check even triple check your numbers and don't be greedy.
We purchased a hoarder house in Arkansas last year. Because the house was not maintained, after having all stuff removed we ended up ripping out existing fixtures such as cabinets, tubs, toilets, etc. We hoped to save dry wall, but under the piles of stuff was mildew that softened the walls/ceilings. So overall, we went down to the studs inside the house and replaced wood rot in some areas. For us, it ended up being a wash financially because the cost to bring it back up to livable would've outweighed the rent potential in that particular area. We ended up selling it as is before fixing it up and made about $3k. Not the greatest deal, but we were happy to not lose money after all the issues we found.
However, you mentioned it's near downtown Kennesaw. We have a rental property in Kennesaw. Nice area for the most part. Even after the problem we had with above mentioned hoarder house, we would jump on board to purchase a hoarder house in Kennesaw. The city is growing nicely and I see upward potential. If the layout is like most in Kennesaw (split level 2,000sqft with garage under livingroom?) it'll get pricey with square footage and stairs. Our particular Kennesaw rental cost us about $15k to only replace carpet, clean, and do fresh paint throughout (trim, ceilings, walls, doors, and cabinets). However that house rented quickly (6 days of marketing while under "construction " and 1 weekend open house after completed). We had mostly college students looking btw. We ended up allowing 3 students to rent it at $1400 total. From what we understand, we could've gotten a little more in rent. But we wanted it to rent quicker than the market.
I hope this helps!
Yep downsides are:
- Harder to asses condition depending on how full it is.
- Usually there is an emotional attachment to home/items which means longer/harder negotiation.
- Owner has no idea what to do b/c they don't know how to get rid of all the stuff, and its more possible for you to get a great price if you take care of all their issues for them.
- If you're an agent you could find them a new place and make commission on that sale or pass it to another agent and make referral.
- Hold an estate sale or yard sale before you start demo and make some beer money!
@John Powell next time you turnover that property call me first! $15K for carpet/paint/cleaning?!
@Carl Brown I love any type property that has problems because average buyers don't like buying problems so I usually have little to no competition. Just make sure you have factored in a large "unknown" factor into your numbers and you'll probably be fine.
Had to foreclose on a hoarder house in Cincinnati. Had to take it down to the studs. The only good thing was there was a fireplace in the living room that added to the value of the rehabbed house. Still lost about $10k. Advise buying very cheap. There is no way to run the numbers if you can't assess the damage.
Great input guys! Thanks, I will most likely will sell the property. I can't even get a clear estimate on damages because it's sooo much stuff in the house. #geez
@Terry Burger Decision is made. Just way to much for my 1st flip.
I am in the process of clearing out everything from the in and out. Dumpsters are in and are filling up fast! I've had a few fellow investors come by but couldn't get a good look inside because of all the stuff stacked up. Something I learned about dealing with this house, is the code enforcement, Building official and local law enforcement had to give me clearance to enter the home on certain days and times or they would fine everyone on the property! #geez However, after sitting down with them all, I felt confident and much more relaxed to learn that they are on my side to the fullest. On top of that, I got several additional leads that I'm now working and will have contracts on next week. Now, me and my team are happy and confident that we will be able to get this deal done at last! Not as bad inside as I thought.
Hoarder house update: After cleaning it out and getting clearance from the city to proceed, I sold my $60k contract to a buy and hold investor for $83k. Everything happens for a reason and so for a quick flip, the numbers did't work so I waited patiently for a seasoned buy and hold company to take it down and they did just that.
13 trucks of hauling. Junk, junk, checked out 100s of library tapes under sun. Someone's junk is other people's treasure.