Ugly Houses

Serious foundation problems. They are very difficult and expensive problems to fix. I have seen estimates in the ~30K range! O.o

And they effect the entire integrity of the house.

A couple of other things are environmental hazards. (Not so common with residential but VERY common with say, ex-gas stations.)

Or plumbing leaks under the house. Again, very difficult to find and fix.

Roof is ~5K. Not a problem.
HVAC is 4-7K. Not a problem.
Carpentry is the same. You can budget for that pretty well.

I think the total cost of repairs would scare me away. I would think anything over $10,000 in total repairs is too much for your standard home unless it is a killer deal where you know you will make out.

Greg

I generally don't have anything that scares me completly. I look at it this way, it doesn't really matter how much money I put into it, as long as its profitable. Here's an example. There is a house in town that has been vacant for I know at least 5 years. There is absolutly no drywall, no insulation, etc. Now, it may take me $40,000 to get it livable, but who cares. If I can buy it for cheap enough, like $5,000, then it can be profitable. I can easily make $20,000 (estimated) on the project because I was able to purchase it cheap enough. It doesn't matter how much the repair costs are, as long as the total amount of money invested is worth it. There is one thing that scares me a little on a house in town that is an REO. From what I hear there is an old gas tank underground somewhere. It won't be that hard to remove the tank, but the problem is the environmental problems, like if the tank has leaked into the ground around it. Either way, when purchasing a home you will have a max amount of money that you will be able to put into the home, so who cares if its in purchasing the house, or in repairs. For me, if it'll take longer to work on it, then I better be able to make more in the long run. But everyone has got to love the "Handyman Specials!!!"

hazco: I looked at 2 homes in town that are the exact same. It hadn't rained in prolly two weeks and there was dripping water filling up 5 gallon buckets. My realtor even told me that he went into one were he came out running and stripping down naked in the street because he was covered in fleas from the house. The whole house was infested, that would be another thing that would scare me a little, but you can fog it to get rid of them.

The fleas, roaches, plumbing, because it can be very clostly, Boy! after reading about the fleas, I am going to be more careful when looking for houses bug are not my favorite thing to deal with. I know these thing can be fix, but I hate to even deal with them.

There's not much that would scare me from buying a property, if the numbers worked. However, not being familiar with other parts of the country, I would hesitate to buy somewhere else without looking into environmental or climate issues. Also, I know nothing of termites and other "creatures" we don't have up North. I would look into that as well. Other than that, like jd said, if the numbers work, it's worth it. And you learn something from each new challenge you take on.

I avoided offers on two properties when initially they looked profitable. One had water pipes break during the winter and I was worried about mold and the other one; the neighbors told me that the previous owners delt with severe sewer problems (bad enough to have an insurance claim that fixed the neighbors house) I avoiced that one also.

Being in the business four weeks, we now own two rentals, and have been turned down on six offers and still looking for that ugly house to flip.

Regards,
DeJor Properties, LLC

I agree with this. The only real problems are the ones where you just dont KNOW how much it will cost to fix ie they could be almost bottomless pits or problems that you fix over and over again.

If you can get an accurate handle on what the cost will be then just factor that into your offer.

i have an offer in on my first deal here in jersey - and i basically know i am just buying the lot and foundation. I have offered 150k and my general contractor has told me 100k soup to nuts to create a new 3bd 2bath home. i did all the comps and know i will be able to list for 325-350k. so...while i would rather have started on a smaller scale it is the first true opportunity out of tons of searching, so if they accept i'm goin for it! is it scary - yeah, somewhat - but its true - if you run the numbers, do the research, and use the formulas to calculate everything it makes it easier to believe you really CAN do it!

Am learning alot about ugly houses lately after 2 0f mine in Washington were damaged in the Dec 2007 flood. One was washed off its foundation and has to be sdemolished and the other one got mud up to 5 ft inside but is being redone. Interestingly the second one didn't have a foundation, but it didn't move. There are alot of houses up there that are damaged or that people would rather not rebuild. Everything in opportunity. SMJ

the mans got a point,rj i have to agree buddy, if it's got POSITIVE CASH FLOW possibilities roll with it...YOUR HERO,SULLY.

I was just reading Anita's journal entry from today about the house with the mold & rot. It makes me sick how many houses are ruined by neglect. I looked at an REO last month that had been "winterized" and it was just a shame. It had NOT been winterized, the pipes had frozen & buckled up out of the floor. Water had leaked,and mold was growing all over, the walls, the cabinets, evrything. Plus, it hadn't even been cleaned out! I don't know if it was the fault of the bank or the people they hired to do the work. but that house would have been worth $140,000. Was in a great neighborhood. It was listed at $24,500. I don't think anyone's bought it yet. Someone will have to rip the whole thing down, I think, at least gut it. It might still be worth it, but a TON of work. It's just sad when a perfectly good house could be saved, but because of neglect or someone lying it's just ruined.

I agree with you. I've been in over a dozen homes in the last few days and there are a huge number of these homes in the area that have had the same problems. I went into one yesterday that was a 4 bed/2.5 bath. They kept the inside in decent shape, but left the outside untouched. The roof, siding, and 2 rooms on the side of the house are shot because they didn't keep it up. The realtor that is listing it must not be thinking to deep because she stapeled a tarp to part of the roof. Instead of stapleing or nailing it so that water couldn't get underneath, ie over the peak, they nailed it in the center of the roof. When it rains it gets underneath the tarp and leaks into the house, not only that, after it does that it has no way to dry, can anyone say mold. Sorry, I'm getting off my soap box now. Some people don't think of things like investors do. Instead of fixing their roof, or keeping general maintence up they purchase toys like flat screen tv's. But, thats where people like me come in because I can fix those problems providing it's cost efficient. Anyway, these things also get on my nerves. Good luck everyone and keep up the great work!

well, regarding my previous post - a big developer came in and scooped it up from under me. I was wondering why that had not already happened! Anyway - others in the works. Its just really hard to find a place where the numbers add up to profit. Just gonna keep looking but it sure is frustrating once your fired up and ready to go!

I understand what you mean by not getting the deal to work out. I had about the same thing happen to me several months ago. I had a home in a good neighbor hood, listed at a good price. I was going to make an offer but I didn't want to because I didn't have the money. A lady came in and purchased it before I could lock up some cash and now she should be able to make around $15K, and it was a handyman special. You don't have to let it bother you though. I suggest that you NOT get emotionally attached to the properties that you look at because you may make a mistake that you'll want to kick yourself for later on. I started to get attached to homes when I first started, and I'm glad I didn't snatch them up because I would of kicked myself now. You will continue to make so many offers that you will get used to it. I've put in 9 offers this week and didn't get one accepted, but thats ok. When one gets accepted I will make money that I'm happy with. The more offers you make the more you will get better at calcuating offers and repair costs and everything else. Good job with taking a chance, it will happen as long as you keep it up. Don't give up, and don't be afraid of failure. Failure is the first step to success. "Nothing great becomes great without overcoming great resistance" - Brian Klemmer

That is ok, you didn't get this one, you will get another chance and maybe this one will be for you, Maybe God got just the right deal for you. I got very frustrated with the realtors I was dealing with, so I decided to go solo and try some of the things Dean have taught us in his book. So I am going to have faith in you to continue to look for another project. their are a lot of real estate investors out their and they have the money and credit to get what they want, so I just decided to look for the house in the sub-burbs area of CA. So I won't get discourage and if possible I do not know how you feel about grant money and their programs, because I am using a couple of them to purchase, some are restricted, and some are not. Do not give up!!!!! You will get what is yours. The World is yours for the taking go out and get that house. I know exactly how you feel.

It great to be able to come here and get encouragement and support - thanks! I have 2 more places I'm working on the numbers...i know its just a matter of time and playing the odds. My only question is if a realtor is putting that many offers in for you a week or are you doing it on your own? I sometimes feel quilty having my realtor take me to so many houses and then I know they arent worth it or the numbers just dont make it. But I guess thats their job and they know eventually they will make money on the sale and the resale.
Good luck everyone and thanks again!

It's exciting to see all the encouragement flying in here! We can do anything we set our minds to!

My realtor is putting in all of the offers for me. I told them upfront what I'm doing so that they aren't always wondering. They understand the situation and why I'm doing so many. The more that you are intouch with the people you are working with the better the relationship will be and the more successful the both of you will be. Make it a win win situation with people and the more that they will want to work with you. I suggest you be open and honest with people, in a calm assertive way, trust me, they will be more receptive. I don't want my realtor, team members or homeowners I talk to not trust me so I strive to communicate this way. Good luck everyone and keep up the great work!

Treat people like you would want to be treated.

Very true words...I have always worked with and continue to work with honesty and integrity! From day one I told everyone I contacted to be on my 'team' what i was doing. With all Deans invaluable advice on how to speak to people with confidence (even if I was faking it ha) they have all been incredibly receptive and excited to help. I was just feeling a little guilty for all the time my realtor was putting in. I said that to her tonight after seeing 4 houses (all duds) and she put those feelings to rest immediately...shes very happy to to be part of my team - yes she used those words. Turns out my mortgage broker stopped in her office to introduce herself today, and to assure her that for any needs while working with me to call her directly anytime! I am so excited how after less than a month of really studying and working hard that people are connecting on their own to help us all be successful! Its so cool!!! Without even making my first deal my life is changing and I'm SO excited for the future! I can only imagine how it will feel when I finally make that first deal! omg! Everyone here is an inspiration - thanks!

Thanks for sharing, Laura!

Thank you for your words, and thank you for sharing with all of us!!!

Serious Foundation problems is the chief reason why I've walked away from physically distressed properties. Especially if there is a documented history of such problem(s). Once it is recorded in the county records, a future buyer can pull it up and then get cold feet even if it appears you have amended the issue.

Welcome, Susannavh!

You are truly welcome, also if you find that it is more than your budget will allow,I would not take on such a problem.

Hazco and Jdman, you had me rofl (rolling on floor laughing) as my kids say. Just the thought of a grown man running down the street stripping his clothes off because of fleas will have me laughing all week! I've been in houses like that and I think it took me a week to stop scratching!

Thanks Rina for the info on the "winterized". I'm going to see one of those tomorrow and will pay particular attention to the pipes. It's an REO and the outside has not been taken care of at all so I can bet the inside has not been cared for much either.
I think my two biggest fears when purchasing would probably be foundation and mold. Those are two big money issues and if they're not done right you could have serious problems. The mold I could probably deal with(if I had a trustworthy contractor to do clean up), but I'm afraid the foundation problems may come back to haunt me even if I did have a trustworth contractor to do the repairs.

I understand that some people may be scared of mold, and who shouldn't be. Funny story. There is a lady that my fiance works around at the hospital that is a cleaning lady in short. She has never owned a home and had a chance. A house was for sale several months ago at $6200, and just dropped to $4800 and either cash or on contract 4 400 a month no interest. She jumped on and once I heard I just let her have it. She pretty much bought in site unseen and now it is killing her budget. After tearing some of the drywall off they've discovered that there is mold everywhere in the walls and the beams aren't in very good shape. She jumped on it in an emotional fashion and it will ruin her budget. It is going to be very expensive on her part to get liveable, but she is happy about owning a home. Back to my original part of the story, the mold. I know that you can rent equipement to remove the mold at a cheap price so don't be completly scared of mold if you find one that has it. Just do your research and calcuate your offers accordingly and you should be fine. Just be extremely carefull working with property like this because it can be dangerous and expensive. Good luck everyone and keep up the great work!

We looked at this house it was posted for 24,900. The roof was falling in, it had NO walls or floor, the porch is falling in, all the windows need to be repaired, the foundation is good though. It sits in prominent neighborhood. But my husband wont let me offer for it. It is a 2 story house with a wrap around porch, the living room it rounded on one side. It was once a gorgeous house, almost victorian, but not that old. Should we offer for it, or not?

Figure out the numbers first. Get estimates on repair costs and your numbers on the comps. You don't want to get in over your head. Only if the numbers make sense. There will be other people in here that can help you better with that part. (I've always gone by my gut, but I'm really trying to do it the "right" way.) I'll be watching to see what you come up with and rooting for you along the way. It sounds like it could be a gem in disguise, but get some more details.

Good luck,
Rina