One man's trash is my treasure!

One man's trash is my treasure!

Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

I bought my very first hoarder house. It's a single-family in a "B" neighborhood that was occupied by hoarders. Let the tale begin!

This is a single-family with 856 square feet on the main floor and a full basement that is partially finished. The street is just one block long so there's no real through-traffic. The property is four houses away from a nice elementary school and just a few blocks from downtown.

My Ninja REALTOR skills value it at $150 - $170,000 after repairs. I snatched it for $57,000! I am putting about $10,000 into it immediately, along with a lot of blood, sweat and tears (more on that later). I manage 200+ rentals in the area and expect this one to rent for $900 a month.

The house is solid and dry. Old roof but no leaks. Filthy walls but no holes, cracks, or large dents. The carpet is filthy and probably 40+ years old but there is hardwood underneath. I found two broken window panes but all the windows operate and the storm windows and screens are in place. The appliances are disgustingly filthy but everything functions. Kitchen cabinets are filthy but are solid wood and can be recovered until we replace them in a year or two. The bathroom...let's just say I could lock 20 cats in there for a week and not notice the difference. The property is full of trash and neglected landscaping but it's a nice size, full fenced back yard, room for parking vehicles or toys, and surrounded by nice homes on both sides of the street. This is the pig of the neighborhood which only increases the value!

But you didn't come here for chit-chat; you want pictures! Let the show begin!

This is the front view. Not too shabby!

This is the living room. Again, not much to complain about so far. This picture was literally the first time I stepped foot in the house. I thought, "This isn't too bad!"

Bedroom #1. Things are starting to get worse.

Bedroom #2. Most hoarders seem to be elderly. This was actually a family with teenagers.

This is the dining room.

My personal favorite: the kitchen! I couldn't even see the floor because it was covered with trash and food. Can you believe people actually prepared food and ate in here?

I opened the fridge and food literally fell onto the floor. It was stuffed so full that the airflow was cut off and the fridge was almost room temperature. It did NOT smell like money.

The clothing was piled so thick in the basement that I had to duck to walk around.

It's plumbed for a bath but was being used as a work shop or something. And I get a funny feeling it may have doubled as storage space, but I'm not sure. ;)

Just a small sample of the cobwebs. It's like Spider-Man exploded in here.

A small sampling of the back yard.

I've seen worse hoarder houses but keep in mind, the occupants had already moved out.

What does a hoarder house smell like? MONEY!!! This deal was ripe for the picking with a guarantee of strong cash-flow, immediate equity, and a great ROI. I actually made an offer on it in January but it was rejected. I made the same offer again a month later and they accepted. I was so excited!

We've owned it for one week now and are starting the process of cleaning. I'll post follow-ups as we progress. I am already running into some "issues" and hope to learn from some fellow investors that have renovated a hoarder house in the past.

Thanks for reading!

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Charles A.Pro Member
Rental Property Investor · Jacksonville, FL · Member since 2015 · 208 posts · 282 votes
10y

My penultimate rehab was a super-hoarder house.

The poor man's remains was removed by the health department covered in like a million dragon flies.

He'd been dead for weeks.

The house is one of my cleanest now and the new tenant wrote me a letter after signing the lease that she didn't  ever plan to move out.

I hope she doesn't plan on dying there too...

That would be too much for one landlord.

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  • Charles A.Pro Member
    Rental Property Investor · Jacksonville, FL · Member since 2015 · 208 posts · 282 votes
    10y

    My penultimate rehab was a super-hoarder house.

    The poor man's remains was removed by the health department covered in like a million dragon flies.

    He'd been dead for weeks.

    The house is one of my cleanest now and the new tenant wrote me a letter after signing the lease that she didn't  ever plan to move out.

    I hope she doesn't plan on dying there too...

    That would be too much for one landlord.

  • Investor · Goldsboro, NC · Member since 2016 · 7 posts · 5 votes
    10y

    @Nathan Gesner My husband and I really enjoyed reading the article. Thank you for sharing.. I am looking forward to your follow-up post.. Best of luck, seems like you've made a great purchase. 

    Ron & Scarlet Wise

  • Real Estate Investor · Plumas county, CA · Member since 2011 · 150 posts · 88 votes
    10y

    Hoarder houses seem to be my specialty too. This looks like it will turn around nicely

  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    10y

    So the story continues...

    We weren't able to fully evaluate the condition because the home was so packed. We gave the sellers a full month to remove as much as possible and then we inspected. The home is definitely in good condition (under the grime) and we are still pleased with the purchase. Here's the bad news:

    1. The insulation is very old and minimal, probably an R-12. Easy to fix down the line.
    2. The roof is T-lock but it's dry as a bone. Easy to fix down the line.
    3. Cabinets are filthy, have a cheap counter top, and some boards are rotted off inside. We are evaluating whether to repair them for now or just replace them. More on this later.
    4. Bathroom floor is soft in a few spots. I'm actually looking forward to learning how to replace sub-flooring!
    5. The electrical is outdated. No grounding, very few outlets, lots of amateurish wiring in the basement, exposed wires, breaker panels are old, etc. I manage a lot of older rentals and know this isn't an emergency but I would prefer updating this sooner rather than later.
    6. Furnace was keeping the house warm, but our inspection revealed only two of the six burners were functional. The CO2 meter was literally off the charts and the plumber said he had never seen a furnace register so high. It's over 30 years old and very large so we'll use this opportunity to bring in an efficient, safe system.

    Our #1 priority is to replace the furnace. We'll get rid of the old duct work because it was very obtrusive and wrapped in asbestos tape.

    Our #2 priority is to upgrade all the electrical. This is a big expense and not really necessary since many old homes in the area still do fine with old electrical. However, it will have to be done sooner or later so I might as well do it before there is an emergency and while I already have it vacant.

    That's not too shabby! Of course, we still have to finish emptying the house, cleaning, and making some minor repairs inside and out. Then there's the landscaping to deal with...

    All told, we spent $13,000 to purchase and will invest another $10,000-ish in the furnace and electrical. We expect to be into this for less than $25,000 and my estimated value is $155,000.

    OK, enough background! We've been working on the house for the past few weeks so I'll start documenting the different jobs and how they are progressing. I'd love to hear some feedback from those that have dealt with stinky hoarder houses in the past, particularly when it comes to removing the stench! It's getting better, but there is a long way to go!

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    10y

    The first thing to do with a hoarder house is remove all the junk. I am honestly blessed because the sellers removed about 90% of their stuff or piled it up in the back yard. We ordered a 30-yard dumpster (the largest available) and filled it to the top with what was left. There was still more! We made a lot of trips to the dumpsters, one wheelbarrow at a time.

    We've since mowed and it's starting to look respectable. I'll post more pictures once we cut out the dead trees and remove the shoots. That will be another 30-yard dumpster, at least!

    The good news is, the house is empty and we can get to work. I have to admit I am excited to get started but a little frustrated at the amount to be done around my work schedule, summer break, visiting relatives, etc. Here goes!

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  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    10y

    This stinks! Literally, this house stinks. I could try to describe it to you, but it wouldn't do it justice. Keep in mind I used to work for Department of Family Services and I've been managing 200+ rentals for the last six years. I've been in some pretty smelly places.

    This one takes the cake!

    We suspect the majority of the smell comes from the carpet. It appears to be at least 30 years old, heavily stained, moldy, and about 200 pounds of dirt locked in. We know there are hardwood floors underneath so we hope to recover them.

    First comes the tear-out. We all have to wear masks because it is no filthy I don't want anyone inhaling the dust. I cut the carpet into strips to make removal easier.

    It was a really, really disgusting job but it didn't take too long because the carpet was only in two rooms. I think we had it all out within 30 minutes. But that's when things got ugly!

    The carpet pad was stapled to the hardwood floor. I'm estimating about 1,000 staples and that's not a joke. Just to give you an idea, I pulled over 100 staples from the 3 x 6 hallway. We pulled the pad up as best we could...only to discover the staples were the least of our problems.

    I started by scraping it with this large scraping tool that enabled me to stand up and put some real speed/force behind it. That worked for about 75% of the job. It was very time consuming and tiring. I took it in bouts of about five minutes then would go work on something else for a half hour before coming back. We also used a putty knife but it was better for the smaller, more detailed scraping.

    After we got the pad up, we discovered this:

    This is where the carpet pad had the heaviest traffic patter, and probably the most spills. This stuff was as hard as a rock and sometimes a 1/4" thick. I started out trying to scrape it by hand but it would take five minutes to make a few inches. Then it dawned on me that we might make more progress if we softened it up first. I had my wife soak it with a mop and a bleach solution. We let it sit for about five minutes and then started scraping. It was soooo much easier! I finished more in five minutes than I had done in the previous hour!

    WARNING: the stench was really locked into this carpet and pad. As we scraped, the stench would increase. But when we put water on it (even a bleach solution) the stench became much, much worse! Be prepared if you have to go this route.

    This is what it looked like after scraping. It's still wet and has a lot of remnant but we were making progress. Must I remind you that this STUNK?!?

    This task took place almost a month ago and the difference in smell is amazing! There is a minor stink but we haven't washed down the walls yet. Once that's done, I suspect the smell will be gone completely. It appears about 3/4 of the stench came from the carpet.

    I also pulled the vinyl tile out of the kitchen. This was not a fun job. I originally went in with a scraper and just started trying to scrape them up. Most of the tiles were old and would break into a bunch of pieces rather than peel up as a single piece.

    As with the carpet, the stench was ridiculous. I managed to get almost half of it done in an hour. An hour! I went home and soaked my weary bones in a rum and coke. The next day I was talking to a friend about the task and he recommended using a heat gun to loosen the glue. YES! I should have thought of that. I went back with a heat gun and one of my trusty helpers and had the rest of the floor clean in less than 30 minutes!

    One last thing. My wife was running late so I decided to tackle the fridge. Here is how it started:

    This picture really doesn't do it justice. It was so filthy that my wife wanted to throw it out. Also of note, the freezer was very cold but the fridge was warm. For those that don't know, this is a common problem when a fridge is overloaded with food. The cold air is produced in the freezer compartment and then circulates down into the fridge. In the case of this unit, the vents were completely frozen over and no cold air could make it into the fridge. I unplugged the fridge and melted the ice with hot water (I didn't have a blow dryer and the hot water would help loosen all the stuck food). Once that was done, I set about cleaning it.

    The fridge is now as clean as a whistle and looks almost new. It also keeps food cold! I spent two hours fixing/cleaning and saved us from buying a new $600 fridge.

    That's it for tonight, folks. I hope this was somewhat entertaining or educational for you!

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  • Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes
    10y

    @Nathan Gesner I'm loving the updates. I can't wait to see more progress and the after pictures!

  • Real Estate Agent · Doylestown, PA · Member since 2016 · 47 posts · 8 votes
    10y

     @Nathan Gesner how did the home turn out? Any after pics?

  • Nathan GesnerBusiness Member
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    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    10y

    @Luc Boiron @Jim Stevenson

    Thanks for checking in. We're still working on the home. It's hard to renovate in a timely fashion with three young children on summer break, visiting families, and a full-time business to run. So we're still plugging away!

    One of the first projects involved replacing the furnace and duct work. You can see the original setup in the pictures above. The furnace had six burners, only four of which worked. The CO2 levels were off the charts and it's a wonder nobody was poisoned. We put in a new high-efficiency furnace with a much smaller footprint and replaced all the duct work. The ceilings are very low in the basement so we needed to get back as much head space as possible.

    This is the original furnace and duct work. The white tape is asbestos.

    We've removed the old furnace and duct work:

    Here it is with the new furnace installed:

    See that big opening? That was previously blocked by the old furnace. The new system has a much smaller footprint and most of the duct work is tucked into the ceiling to save head room. THe only piece that sits low is in this picture but it's still up high enough that anyone under 6' can walk under it.

    The new air intake and filter is upstairs. I prefer to keep the filter upstairs because it stops dirt and such from getting into the duct work.

    And this is another improvement. The old furnace didn't have any ducts to heat the basement. I guess they thought the carbon monoxide would kill people off before they had a chance to feel cold!

    Next up: electric and the back yard!

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  • NYC, NY · Member since 2016 · 617 posts · 456 votes
    10y

    Thanks for the play by play.  

  • Jerry W.Pro Member
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    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    9y

    @Nathan Gesner, time for an update please.

  • William MurrellPro Member
    Investor · Wilmington, NC · Member since 2013 · 276 posts · 169 votes
    9y

    Wow. Solid work!  Good job seeing value where others had missed it!  Keep us updated.

  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    Sorry, all! I haven't been working on it or updating because a family member is ill and our focus is on them. I hope to wrap things up this month and will update then.

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  • Investor · Wilmington, NC · Member since 2016 · 211 posts · 262 votes
    9y

    @Nathan Gesner

    Awesome pictures and descriptions.  I'm always interested in seeing hoarder house renovations.  Any updates?

  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    @William Walker I should have the house done in a week or so and will provide a final update. It's been tough due to some family health issues and I've been ignoring my updates. Very soon, I promise!

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  • Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    9y

    @Nathan Gesner

    Well done! I am amazed that the comps are 170k in Cody! We could not sell a house like that for more than 100-110k up our way here in billings area.  Values must be much higher there. 

    Great too see pics. 

  • Jerry W.Pro Member
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    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    9y

    @Nathan Gesner, I hope all is going well with your family.  My thoughts and prayers are with you and your family.  Let me know if there is anything I can do to help out.  There is nothing more precious than family.

  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    Well, my apologies to anyone that was waiting for a progress report. Our lives fell apart in September when my father-in-law had a stroke and everything was put on hold. He passed a few weeks ago and we're still trying to catch up.

    I was trying to provide updates as we progressed but were too busy to maintain the documentation. I'll show the final shots and then maybe come back later and fill in the blanks.

    KITCHEN

    DINING ROOM

    LIVING ROOM

    BEDROOM #1

    BEDROOM #2

    BATHROOM

    Sorry about the bathroom pictures but my computer flips them automatically and I can't get them to stay.

    We still have some exterior work to do. The yard is clean and green (when the weather is nice) but 1/3 of it was covered with junk and rocks so we'll level it and seed it this summer. We're also going to paint the exterior a different color with white trim, add some decorative rock and shrubs, etc.

    We're in the process of purchasing an 11-plex so I won't be doing any more major renovations on this home for a few years unless it is required.

    This home was purchased for $57,000. We put another $24,000 into it and it is currently valued at $145,000 - $155,000. Market rent on this home is $800 - $850 but we are renting it for $700 to an employee/friend. (WARNING: I normally don't recommend renting to friends, family, or employees but these are fantastic, mature people in their 50's. I would trust them to raise my children)

    All told, it took a little longer than we originally anticipated but we were almost spot on with the cost and the final value. I still have a few months to go before owning it for a year then we will cash out the equity and be looking for the next deal.

    I hope you've enjoyed reading and appreciate your patience!

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  • Realtor · Boonsboro, MD · Member since 2017 · 26 posts · 8 votes
    9y

    wow really good job! The pictures are great its almost like looking at twins and one is incredibly ugly and the other looks like they will be on the cover of vogue. How did you find the experience from start to finish? Did you go over budget at all on the refurb? What are your future plans with this property? 

    Congrats on the 11 plex too!! 

  • Real Estate Broker · Wilmington, NC · Member since 2016 · 236 posts · 126 votes
    9y

    I can't believe you cleaned that fridge, OP. I'm speechless. You take the word "hustler" and give it a whole new meaning.

  • Charleston, WV · Member since 2015 · 32 posts · 7 votes
    9y

    Step #1 I would have thrown that fridge out! That had to take hours to clean alone. I've done it before also, but my take would be to buy a used one for $200 and move on! You are a legend.

  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    @Adam Walter it wasn't too bad, in general. Our problem is that we were doing the work ourselves but we run a very busy office, are raising three young kids, and we had a family health issue that sucked up a large majority of our spare time. I would have been better off hiring everything out, getting it done in a month, and then paying for the work with the extra income.

    We stayed within budget, but we actually lost money because it took four months longer than I anticipated. Overall, we spent about 10% more than expected which I think is pretty common.

    @Teddy Smith this is a fairly new fridge and in excellent condition. I spent two hours cleaning it and it looks almost new. Even at $50 an hour I only spent $100 and a basic fridge would cost nearly $500 or a comparable used one for $200+. It was worth it AND I didn't have to try and pull it out of the house to replace it!

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  • Los Angeles, CA · Member since 2015 · 176 posts · 48 votes
    9y
    Nice work! Serious question, why not sell this instead of renting it? If you purchased for ~60K with an ARV of $150K+, and it only rents for $900, this seems like a pretty clear sell? If the goal is cash flow, you can buy a better cash-flowing property with the profits.
  • Nathan GesnerBusiness Member
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    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    9y

    We're renting it for less than $900 but it cashflows about $400 a month. If I sell it, I have to do a 1031 exchange to avoid taxes. If I own it for a year, I can refinance it and cash out the equity for another purchase. I will get less cash compared to an outright sale, but I won't have to deal with the 1031 Exchange restrictions.

    I'm in my acquisition phase. I want to buy properties as quickly as possible until I reach my magic number. Then I'll start paying them off and working towards 100% cash flow and 100% financial freedom.

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  • Member since 2016 · 13k+ posts · 12k+ votes
    9y

    Have to agree with Rohan, too much equity in property and rent is way too low based on value of property especially supplementing the present tenants rent at $700. Equity alone is valued at a return of $750/month.

    I would be selling to invest in positive cash flow.

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