Hoarder house first deal

6 Replies

Hey everyone! It’s been a long time since I’ve posted on the forums. I’m wrapping up my first deal to put on the market. How I found this deal: I posted an ad on Craigslist targeting a local area for back taxes, foreclosures etc. I got a reply from a distressed seller who was about to lose his house in 10-14 days due to back property taxes. The sellers owned their house outright. They had bad credit and couldn’t just get a loan to pay off their taxes. The sellers said they had the title in hand but weren’t able to find it. So now a title had to be built which can take up to 7-14 days or so depending on different scenarios (I’m not an attorney or a title company, so check your local regulations) So now I had to get creative to buy time. I have a hard money loan for this deal. I talked to my lender about lending them enough money to pay their taxes to buy us time to complete the transaction. He agreed that would be possible so he had his attorney draw up paperwork and paid the back taxes and made the loan subject to the house being sold to me. Title came back after a couple weeks and then we went to closing at my hard money lenders attorney office. The sellers were having a hard time finding a new place to live in such short notice that I offered them ten days after closing to be able to move. I took possession of the house. OMG! They left everything! Let the cleaning begin! This house was packed full in some rooms that you couldn’t open doors. I started on Day 1 by myself. It was overwhelming! So this house is in a smaller town in Iowa. (It’s about a 40 minute commute for me one way to drive here. ) I called around to the waste management company’s and none of them had a big dumpster (40 cubic yard)for at least a week or two. So I had a smaller one (4 cubic yard) delivered to get started on tackling this mess. That took no time to fill. I hired Craigslist help to help clear the mess. Until the dumpster arrived I told them to pile it in the back yard (p.s this won’t make your city happy, but if you’re nice to them, they will play nice back) I filled up the 40 cubic yard dumpster easily and kept the smaller dumpster and have had that emptied several times. Eventually with enough help from friends and Craigslist help I got it cleaned up. Next I put in a new Electrical panel. I’m an electrician. So I pulled permits with the city. Then I removed all the knob and tube and reran everything in Romex. That task wasn’t very easy. As you might guess, this house is old. 1914 old. Plaster and lathe still everywhere. I wall fished a lot of romex and coax. I subbed out some things. Flooring in the kitchen is LVP. Painting is a must to sub out. I didn’t sub out drywall for the ceilings. I hung 30 sheets of drywall (4’x8’x 1/2”) on the main floor ceiling with a drywall lift by myself. I mudded, taped and textured everything. I can do it but this was the first time doing it at this scale. I reran a lot of plumbing with pex for the main floor through the basement. Throughout the house is small strips of oak flooring. Main floor has quartersawn oak and upstairs has regular oak. I used a drum sander and sanded what I could. All the boards were cupped. Old Shellac and wax finish that I sanded off. Lots of hours sanding. Then I distressed the floors using vinegar/ steel wool mixture. Take one gallon vinegar and some heavy gauge steel wool and mix them together. Let them react for overnight. It really depend on how dark you want the distressed to be. I let it sit for 8 hours or so before I wiped it on the floors. When it dries it gave a greyish tint. If you let the mixture set for 3 days then you will have a charcoal color of flooring. Then polyurethane. 2 coats of polyurethane. I have spend many hours working on this house. I have put a ton of sweat equity into this property. I have tons of pictures uploaded to my Facebook- Kharmarelic Investments. Please check them out. I haven’t updated my website in awhile. So I will get a blog posted on there. Start updating stories. Purchase price is $38,500 Rehab is $35,000 Hard money loan points Insurance is $1600 for the year Electric, gas, water bill was $1000+ Property taxes- $2,600 Arv $160,000 Profit- TO be determined Lessons learned- priceless My first deal is about to be under my belt.

Hey Jesse. Congratulations on coming to an end for your first deal! Way to go! I am also working on my first deal, although across the country in New Hampshire. The house I actually bought is a live in flip and the previous owner was a hoarder! I have been doing all the work myself with the help of many friends. They only thing I have contracted out was putting in a 18' steel beam. That was just too heavy for me to lift. The place was so bad the floors were actually sloped in, so I had to deal with structure issues as well as termites. Being an engineer, I felt confident in all my structure reapirs and worked with my local building inspectors. I felt overwhelmed at times so I got quotes from contractors and they were going to do what I was planning, but charging me an arm and a leg. I replaced the subfloor for first floor, replaced rim joists, sill plates, had the house on jacks with temp support beams, moved a bathroom, electrical work, plumbing, kitchen redesign, wood floor. The future is renovating the master bath. I picked it up for 325k using the VA loan. Reno budget of 40k. ARV 425k, hoping for a 60k profit. I'm looking to get into a market with a smaller barrier for entry, thinking about the midwest so I loved hearing about your first deal. Thanks for sharing. When are you looking to do your next deal?

@Ryan Ridgley I had the same thing with contractors. I live in Iowa City, IA which is a hot market around here. All the contractors around here are always busy. So trying to get them to travel to a smaller market, 40 minutes away, was hard and any contractor around wanted a lot of money. I had a couple bids for plumbing (rerun supply lines in pex from copper as mentioned above and set fixtures) for $6,000 to $8,000. I did it for a fraction of the cost but it cost me more time. The Midwest is a hugely growing market. And I predict that it will continue to grow. Recently the Midwest was named the best part of the country to live in.
Congratulations on your first deal. I’m mainly focusing on wholesale and flipping. I will have rental properties and look to build properties too. What are your goals?

Congrats @Jesse Carlson !

It sounds like you are quite handy! We have never done something that extensive. Is your hard money lender local? It sounds like they were pretty flexible. We are looking to get into some flips and more buy and holds as well. We are mostly focused on buy and hold for the long term. Just lost a four way bid for a property here in waterloo that would have been a great flip or rental candidate. We went above asking price, with no closing costs but someone outbid us. I am working on building out a motivated sellers website to try to get off market deals. Let me know how the listing goes!

@Jesse Carlson You hit it on the head about taking more time. Everything I am doing though I am learning new skills and I can apply them moving forward. Not just for doing to the work myself but recognizing what will work and what won't in certain layouts or situations. I am actually looking into getting into the  midwest myself,  you are correct that it is expanding greatly. I would love to chat via PM regarding your market and I'll be happy to share what I have here in New England. 

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