All Forum Posts by: Nathan Gesner

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 The electrical is outdated.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!

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!

Most real estate agents will complete a market analysis for free. If you are relying on Zillow or the sales price of your neighbor's house to determine what your home is worth, you are missing a lot of data. You can ask a couple real estate agents to provide you with a market analysis and see what they think it would sell for, how long it should take to sell, comparable homes on the market, etc. Knowledge is power and you are under no obligation to use their services. If you have trouble selling it, you can always go back to one of the agents and hire them.

I'm not saying you don't know what your home is worth. You may have it nailed to the penny. But does it hurt to investigate? You may save yourself a lot of trouble and make more money.

I have a 5,000 sq.ft. house I'm trying to rent. It's huge, three fireplaces, half-acre lot with a beautiful lawn over-looking the river, one of the nicest neighborhoods in town. It has five really big bedrooms but the three bathrooms are small and dated. The kitchen is huge but dated. It would be a $500,000 property and rent for $3,000 or better if renovated but as it sits, I'm having a hard time finding tenants at $1800 a month and that includes the landscaping!

I digress. If your dated home is comparable for the neighborhood, I wouldn't spend too much on updating it. Replacing carpet and paint would not be unreasonable. Gutting the bath and kitchen may be over-kill for the neighborhood and difficult to recoup the funds.

Jay, there is some truth to the idea that an early offer is often the best offer, but there is also truth in the fact that many homes sell fast because they are underpriced. Neither of us have any facts on his home, so we can't say what his market supports. I'm just suggesting he consider other options. As a REALTOR, you should be familiar with studies that show FSBO listings take longer to sell and the seller nets less money.

If the neighboring house sold for full price in one day, it wouldn't hurt him to check his options.

If the neighboring home sold in one day it was probably under-priced for the market. Why not talk to a REALTOR (or three) and see what they think it would list for? 

I sold FSBO once and sold the house in 24 hours. I thought it proved how savvy I was and how useless a REALTOR can be. Then I discovered the market was hotter than I thought and my house should have been listed for 20% higher than I had it. I could have hired a REALTOR that knew the market and I would have made more after paying the fees. Most FSBO listings sell below market, take longer to market, and have to deal with a ton of unqualified buyers. Something to consider.

I will be closing on a hoarder house May 4th and will share with everyone.  I'm buying it for $57,000 and it will appraise for twice that with the cleaning and cosmetics. After I'm completely done, it should be three times the purchase price. 

I'm so glad others can't look past the trash to see the money!

In my state of Wyoming, auctioneers ways sell "as is, where is." However, I have never seen an occupied home sold and the auctioneers ALWAYS provide an open house for interested parties to tour the home. How else will you get a decent price on an 8o-year-old house without a basic walk through? Who pays $460k on a house not knowing if n it is gutted, flooded, or destroyed by termites.

Caveat emptor: buyer beware.

1. I hate to be blunt but you aren't ready to be a Landlord. You may survive but you are setting yourself up for a difficult time and financial losses, not long-term wealth. 

2. Get rid of them. Stop talking to them in person and communicate only in writing. I can't remember the Oregon requirements but I think you can give them 30 days notice since they are on a month to month. Write.up thenotice and hand it to them as soon as they pay the rent (assuming they pay with cash or money order. If it is a personal check then wait until clears). Keep it short and professional without reasons, excuses, etc. Include a statement that if they move our early you will refund any unused portion of the rent with their security deposit refund. This doesn't mean you will give the deposit back. It means you will if they deserve a refund.

If they are out by 30 days, apply their deposit and move on. Of not, proceed with eviction. My guess.is they will leave once you demonstrate some fortitude.

In the meantime, find a property manager to takeover until you learn the ropes. Can't afford one? The fact is, you can't afford not to! A good PM will get good tenants, rent for top value, and at least reduce the amount of losses which should pay for their services.

I believe auctioneers have to be licensed to sell real estatestate and are required to provide certain disclosures. Most auctions have a period of time for viewing the property. I'm surprised to hear otherwise.