Would you buy a neighbor's home who's facing hardships?

Question

A retired neighbor of mine in his mid-60's has been having financial issues for years, is now having health problems. He's mentioned to me recently that he wants to fix his house to sell as he's on a fixed income. I gave him the name of contractors I've worked with but he never called them, I'm thinking it's likely due to not having the funds to make repairs.

Neighbor's profile: Him being an open misogynist, he's managed to tick off all the wives on the street. He's got quite the large ego as well. All the neighbors have some stories on him. He is "that neighbor". Over the last 7 years he's become a recluse. Another neighbor who lives next to him, (when they were on friendlier terms) has been inside his house & said he is a hoarder. He only puts out recyclables on trash day, never seen a trash bin. He's a former sales manager.

Neighbor's Property: ARV 330k, paid 195k in 2003. I haven't yet asked what is owed. Repairs TBD.

He considers me a friend since I was his only neighbor not to stop talking to him. I feel sorry for him as he lives alone & stays alone during the holidays. My gut tells me to pass because he's likely to get difficult when his ego steps in, but I like the challenge of this.

Hoping someone can suggest a win-win solution when it's a distressed (& difficult) seller who you've known for over 10 years.

Patricia Steiner · Answer

What starts out crazy ends up crazier.  If he really wanted to sell, he would have taken some action. Hoarders are not big on moving because there are issues with moving all their possessions and finding a landlord who will allow ALL OF THAT to be housed on the property is also a challenge.  If you absolutely want the house, you should put an offer in writing - not a contract but a letter - with the price, offer good through date, and that the property has to convey free of liens, code enforcement issues, and stuff.  Don't be surprised if he accuses you of ripping him off and taking advantage of him.  Most of these situations are resolved through foreclosure or family interventions.  Trust your judgement on the situation.  I do.

Brett Goldsmith · Answer

Have you considered offering to purchase it as-is so he doesn't need to spend money fixing it up, or the hassle of cleaning or showing the property. Sounds like a good opportunity to try to do an off market deal. Find out what his needs and desires truly are. Unfortunately some of the best deals are from difficult or quirky people. I've purchased a few from hoarders over the years.

Theresa Harris · Answer

@Jerry Castillo  Why not find out what he wants and what is a fair price for the house in the current condition and go from there?  If he sells and can get enough money back to pay off his bills, he might be willing to rent it back from you...or move somewhere else.

Brett Goldsmith · Answer

@Jerry Castillo Well you'd need to ask them what they will be taking and do a walk through beforehand but typically they don't take everything. Most distressed sellers leave stuff behind from my experience. Always budget to clean up.

Clifford Paul · Answer

My last hoarder house took 17, 30 yard dumpsters and 2 large box trucks from goodwill. Plus I filled up 3 city 5 yard dumpsters about 150 times. Hired an auction company for what could be sold. Hauled 2 loads of junk to the junkyard.

Purchase: $20,000

$4,000 to seller

$16,000 back taxes

Closing costs: $600

Remodel: $78,000 includes cost of dumpsters, new everything.  Taken to the studs.

Cash invested: $98,600 subtract $2,300 I recieved from auction and $1,200 from 2 trips to the junk yard.

All in: $95,100

Current market value: $287,500

This house is solid B neighborhood only rents for $1295 a month because house is pretty unique because it's 1430 sq ft but only 1 bedroom 1.5 bathroom. Has a second 700 sq ft house that we let my brother in law live in. He does maintenance and yardwork for rent.

Rent: $1,295

PM: - $129

Insurance: $80

Property taxes: $125

Water bill: $65

Capex, maintenance, vaccines: 15%: $195

Cash flow: $701

This lady was the craziest person I ever met. Find out what your neighbor needs and make an offer. Worst case scenario he never talks to you again.

Jerry Castillo · Answer

All, thanks for your responses.

@Clifford Paul, $20k purchase price for your last hoarder house is amazing considering its current value.  You killed it!

Jerry Castillo · Answer

Brett, my intention is to buy as-is.  On the ones you've bought from hoarders, do they remove most of their possessions?

Jerry Castillo · Answer

Patricia, I agree it's likely to get crazier. Thanks for your suggestion on putting an offer in writing.

Would you buy a neighbor's home who's facing hardships?

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