All Forum Posts by: Derreck Wells

Okay, so yesterday I went to town hall and spoke to the tax collector. It appears there's somewhere in the vicinity of $20,000 in liens for the cleanup, taxes, and sewer. Possibly a little left on a mortgage, but the bank hasn't filed for anything, so it may have been discharged and they didn't update the records. The mortgage was set to discharge in '09, and it started at $52,000 in '89, so there can't be much there if it still exists.

She told me that the daughter has paid some taxes. (So now I know the daughter is aware of the house.) She said when she talked to the daughter this past spring, she mentioned wanting to just sell the house and be done with the headache. Tax collector is going to call the daughter and give her my name and number. 

Looking at the numbers for negotiations I'm going to estimate $30,000 in liens/back taxes. (I'd rather assume high and be pleasantly surprised when it comes in lower.)

• Liens: $30,000
• Rehab: $100,000
• Holding costs: $6,000

It looks like I'm looking at $136,000 before any amount the daughter wants, so that leaves maybe $4,000 to offer to her. If I'm all in at $140,000 and sell it for $200,000 for a quick sale, that's $60,000 to split between me and a money investor (yet to be found).

I'll keep you posted as this develops.

Derreck

Hey all,

I was riding the motorcycle today (getting in every minute I can before the cold gets here) and came across an abandoned property. I must have driven past this house hundreds of times in the last few years, but never noticed it until today. 

I stopped and knocked on the door, no answer. Read the note from the city that the water was shut off a couple of weeks ago for non-payment. Total owed about $500. Went around to the front door, fought through the trees, brush, and thorns to knock on that one; no answer. You literally can't see the front of the house from the street 10 feet away, the brush is so thick. 

Walked around the house and entered through the open bulkhead into the basement and took a self guided tour. Looks like the house has been vacant for many years, no real water damage, but horsehair plaster is falling in some places from temp changes. The kitchen and a greenhouse were added as an addition on a  slab and is destroyed. Roof gone (hole right through), walls rotted, etc. That section would be a total demo/rebuild. The main structure is solid, it's just the addition that needs to go. 

I spoke to the neighbor and she told me the house has been vacant and the addition was covered with a tarp for the 4 years she's been living there. It was tarped before she moved in. The tarp is shredded and dangling in strings from years of exposure with no maintenance. 

So, I got home and looked it up on the assessors database. The listed owner is the one on the letter from the town. The address on the letter is to a mailboxes etc in MA. I searched the name and found the owners obituary. I dug a bit deeper and found his wife's obituary a year later. Both listed as owners in the assessors database. Both obits were from Maine. An intellius search confirms that they lived at all three addresses, the house in NH, the mailbox in MA and the house in Maine. It also points me at a daughter that has been married twice and lives in a different city in MA. 

Knowns:

• Both listed owners died 8-9 years ago.
• They bought the house in 1971, last mortgage I could find was discharged in 2002.
• The property has been vacant at least 4 years.
• Property needs about $75,000-$100,000 worth of work (if I hired it out, I can do it much less myself). Will be valued about $250,000 when done. 
• It's currently a 4 bed, 1 bath, no kitchen house. (Would add a bath with the kitchen build) sitting on about a quarter acre in a desirable southern NH town.
• The town filed a lis pendens and has a $5000 lien on the house from 2011 over a removal of collapse room off the kitchen. That would be when they tarped it. (Court paperwork lists the owners as "(deceased)". 

Unknowns:

• Why hasn't the daughter claimed ownership? Didn't she get the memo? Mail not forwarding from the mailbox due to not keeping up with the payment?
• How far into back taxes is the house? ($3000 per year) I found a tax lien from 2005 for $2000. 
• Is the property stuck in probate? (For 9 years? Seems impossible, but I have no experience with it.)

Basically, I'm not sure how to get this property into my possession. Should I try the daughter? Maybe she did rent it out till the roof went, then just let it rot, but never actually transferred the deed? Figured she'd wash her hands of it and let the town have it. Since it's not in her name, maybe I leave her out of it completely? Should I go to the town? Is there a way I could get the to give it to me to save them the expense of dealing with it? Is there a way they can sell it to me if not outright give it to me?

I'm open to suggestions. This would make a great winter flip for me. I'd like to get it. I'm going to the town hall tomorrow and see what else I can dig up. I didn't stop there today because I was in my bike gear, didn't look very professional. ;)

Thanks for your suggestions. 

Derreck

Depending on the amount of lead in the unit, the entire process can be done in less then 2 weeks with a waiver on the 10 day notification process. Since the owner would be the only tenant in the building, it shouldn't be a problem to get the waiver. Again, that depends on the amount of lead in the unit. If every window has to be replaced, for example, that could be time consuming if there are 20 windows in the unit.

It doesn't need to be brought down to bare wood, there are different techniques for different components. It just needs to be "made safe" using the right method for that component. Example, if a flat wall with no outside corners has lead paint, it needs to be made intact with no holes in it. The lead paint can stay if it's not loose (cracked, peeling, etc.) and not mouthable. Meaning a kid can't bite it, like on an outside corner. Covering it with a thin sheet of sheetrock is preferable, then it can never be an issue in the future, but usually we just repair and repaint to save the customer money. 

If you have lead paint and get a lead certificate, the smart move is to preform a "post compliance lead inspection" (PCLI) every time you flip tenants. You don't have to hire a licensed deleader every time, the state usually gives landlords 30 days to fix any issues discovered during the PCLI themselves. There are exceptions, if the tenants destroyed entire walls for instance, but the State really does want to work with landlords to make these units safe.

There's the "shady" you said you wouldn't do. ↑

MA Lead Law states that you cannot rent a unit to a family with kids under 7 unless you have a Lead Certificate. MA anti-discrimination laws state that you can't discriminate against families with children under 7 (I'm paraphrasing). Basically, you need to have the unit and any common areas that will be accessed by the tenant deleaded to comply with the laws. This isn't as scary as it seems, there are programs where your sister can get a loan to delead and not have to pay a dime of it back until she sells the house, then repayment comes out of that money. Also, if she pays out of pocket, there are tax credits she can get. MA may have made it mandatory to delead, but they also made it as easy as possible. 

You can have your sister contact me and I can get her in touch with an inspector. An inspection is the first step in the process. 

Derreck

No, you need to have a Lead Certificate to rent Section 8 or any other "federal money" agency. Probably State money too. By MA law, you also need to have a Lead Certificate just to rent to a family with children under 7. Since you can't discriminate against families, you basically have to get any rental in MA (bigger than a 1 bedroom) deleaded. 

However, that just means that it needs to pass a Lead Inspection, not have all the Lead removed. It can be made safe by a licensed deleader and then get a lead cert. 

The tax rate here in Pelham is obnoxious, and only going up. They've been trying to build a new high school to compete with Windham for years, and we keep voting it down. They did an end run around the voting to put in the new fire station where they would only raise taxes to raise 1mil and take the rest out of a fund that they didn't need a vote to pull from. Now they're going to keep the increase in place to replenish the fund they pulled from. There are already increases in the books coming for the next few years, I don't remember the exact numbers.

The 2014 tax rate is $22.87 per $1000 value and going up a couple bucks per year for the next few years. They're also currently reassessing all the houses right now, so I'm sure that the home values are about to jump, thus increasing the taxes yet again. 

If the sale price of $359,000 is the assessed value, the taxes are already $8200 per year ($683 per month) and going up quick!

Welcome Kristin!

First I want to say that I'm versed in MA lead laws, so you need to verify with your state laws that what I'm saying applies down there too. There are EPA rules and State laws that need to be adhered to. 

You can't really "just cover with paint" and be good. Outside corners, baseboards, windows. doors, shelves, shelf supports, built in cabinets, etc. all have different rules. By outside corners, I don't mean the exterior of the house, though there are different rules for the exterior.

The laws basically state that if you are renovating, not deleading, its okay for you to deal with the paint yourself, however, you still need to follow the EPA  RRP rules. For example, let's say you want to replace the windows with vinyl windows, but the old ones have lead paint on them. You can do it because you're replacing the windows because they're old and useless, you're not replacing them with the intent of passing a lead inspection. Same goes for painting. You're painting because the paint is peeling, not to try to pass a lead inspection and get a lead cert. 

The different rules for different components in your house pretty much guarantee that a homeowner that isn't trained will fail the inspection if they try to delead themselves. Then there's evidence of "unauthorized deleading" (UD) and the property gets flagged for life. You don't want that. If it's you that did the work, there's big fines involved. If the work was done prior to you buying the house, there's additional paperwork that you have to go through to get a lead cert. 

Here's a link to the EPA site about lead paint. There is a section for "do-it-yourselfers", but I suspect this will not apply to you as you're planning on renting out the properties. If you're planning on working on the units yourself, I'd consider yourself a "property manager" as you're doing the work for profit.  EPA Lead Rules

Here's a link to VA lead paint info... VA Lead Paint

The site backs up what I mentioned about renovating vs deleading... 

"Permanent Removal of Lead-Based Paint Hazards or Lead Abatement

If the main purpose of the project is to make the house lead-safe, and not just as part of an overall renovation project, then you should use a licensed lead abatement firm. Virginia law (CVA 54.1, Chapter 5) requires lead contractors and certain individuals to be licensed before conducting activities that disturb lead based paint."

It also mentions "certain individuals", so potentially as a property manager, you may need to licensed. I didn't read through the entire page, but you definitely should!

Let me know if you have any more questions and I'll do my best to answer them.

Derreck

@Jeffrey Borstell The same goes for you. Any questions, feel free to ask.

Derreck