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Real Estate Deal Analysis & Advice

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Brian Burke
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Cat Litter House: Flip # 653 and it could be the worst one yet. Look at the pics and you decide.

Brian Burke
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#1 Multi-Family and Apartment Investing Contributor
  • Investor
  • Santa Rosa, CA
Posted Jun 15 2014, 15:21

Some flips are easy...paint, carpet, clean, and list.  Then there are the hard ones. 

I've never posted a diary of a flip before.  With over 600 flips under my belt I sometimes think that I've seen it all.  Then I see something I haven't seen before.  This time, It's so outrageous that I couldn't resist sharing.  I'll share the visuals, but fortunately for you I can't share the smells.  This is kind of a diary and kind of not...I bought it in January so you don't get the day-by-day play-by-play, but it's not done yet so this isn't old news either.

I came across this deal from a wholesaler who I met on BP (thanks yet again BP for making me money).  He hadn't seen the house in person but he had heard it was in bad shape.

I sent my acquisitions guy down there to look at the house. When he came back he said, "that's the worst house I've ever seen." At first I thought "Come on, really? You've looked at over a thousand houses for me!" Ultimately, I took his word for it. We threw a number at the rehab and ARV and made an offer. It was accepted.

Here are the numbers:

ARV $400,000 (probably a little more, I hope)

Rehab $175,000 (probably a little less, I hope)

Since there were some unknowns I had to make a conservative offer.  It would take a while to fix this place up, so I had to add some margin to cover the carrying costs. 

My offer: $125,000.

Closing was about a month later.  The seller agreed to move out and leave the key at the title company.  On move-out day, I went down to the house to see it for myself for the first time.  When I opened the front door, this is what I saw.

Ok, so now I knew that my acquisitions guy was right!  We were in for it!

Have you ever seen anything like it?  Wait, it gets worse.  More to follow!

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Tiffany Plovie
  • Bellevue, WA
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Tiffany Plovie
  • Bellevue, WA
Replied Jun 15 2014, 22:29

Wow! I am truly amazed... And speechless!!! It makes me wonder how anybody can live like this!

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Brian Burke
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Brian Burke
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Replied Jun 15 2014, 22:34

@Kenneth Huddleston these pics were taken on closing day.  The hold up has been with me finding the time to post this at a time where I could respond to replies!  More pics to follow showing events as they unfold. Rehab will complete this week, you'll get to see the project in fast forward over the next few days as I get time to post more pics.  Stay tuned.  :)

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J. Martin
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J. Martin
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Replied Jun 15 2014, 22:44

@Brian Burke ,

Thanks for sharing the pics! Makes the urine-soaked, matted rug in my 4plex that some people couldn't bear, look like child's play! lol

http://beta.biggerpockets.com/forums/223/topics/132989-deal-success-story-in-process-cash-flow-in-the-sf-bay-area

And just my 2 cents on your new property with the acre full of car/bodies. Try a local junk yard, and depending on the condition and type of car (any "classics"?), you can hopefully get paid somewhere from scrap metal to junk yard parts prices paid TO YOU, PICKED UP. Or at least picked up for free so you don't have to come cash out of pocket. Worse comes to worse "junker/recycler" trucks on Craigslist will usually come buy and pick up any metal and take care of it for you..

@Jay Hinrichs ,

A lot of the people that came to my meetup couldn't believe the stench coming from the carpet, but that smelled like cash when I first saw it! Big discount, and mostly cosmetic! One man's trash is another man's treasure! Almost literally, in this sense.. Hope Brian comes out clean on it!

Looking forward to the pics!

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Kenneth Huddleston
  • Real Estate Investor
  • Troutdale, OR
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Kenneth Huddleston
  • Real Estate Investor
  • Troutdale, OR
Replied Jun 15 2014, 22:46

Got it, makes a little more sense. But i still have to ask, do properties like this typically take 5 months to rehab? If you had given this thing your undivided attention how long would it have taken you? I am curious because i intend to get into rehabbing eventually and 5 months still seems a bit long to me, even with the property being in shambles. I understand that expecting to finish rehabs in weeks like seen on TV is unrealistic, but is 5 months how long it would take you to do a rehab like this or has something slowed you down?

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Brian Burke
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Brian Burke
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Replied Jun 15 2014, 23:03

@J. Martin it could take less time. I had a couple of weeks delay in getting started while waiting for a crew to become available. I had to decide between waiting for another job to finish or working with a new crew. On a tough project like this one, I wanted to go with a known quantity so I decided to wait. The rest of the delay was permitting and all of the hidden problems that caused further delays.  If I really tried hard and didn't have a lot of other projects going on, I could have pushed this one in three months instead of five.

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Steve Babiak
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Steve Babiak
  • Real Estate Investor
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Replied Jun 16 2014, 04:20

@Brian Burke as a CYA, given that the oldest stuff is on the bottom of the piles and thus any "valuable heirlooms" would be buried, do you draw up a catch-all agreement of sale for the personal property too?

Just curious as I had been advised to do so and have done so.

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Ann Bellamy
  • Lender
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Ann Bellamy
  • Lender
  • Tyngsboro, MA
Replied Jun 16 2014, 04:32

I did have an extended family member who lived in something this bad.  There was no running water in the house including the toilets, except for the kitchen sink.  The police had to go in through the back door because the front was blocked with trash.  The trash was so high that you had to bend over to walk through the house on top of the trash, and the light switches were at about knee height because the trash was so high.  Because she was a smoker, the cobwebs were like yours except they were black and tarry.  

Very sad.  

You have your work cut out for you, but you are removing a hazard, I'll be interested to watch this one!

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Cal C.
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Cal C.
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Replied Jun 16 2014, 04:50

The next time I'm in TJ's I'm going to be looking around trying to figure out if one of the other shoppers is a hoarder?  maybe I should just follow my nose? :)  

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Kathleen Leary
  • Princeton, KS
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Kathleen Leary
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Replied Jun 16 2014, 05:21

I'm going to go mop my kitchen floor now! I'm not the world's greatest housekeeper (that's an understatement!) & have an amazing tolerance for grubbiness in my own home, but that's TOO MUCH even by my very lax standards. Ugh. Maybe I'll clean the bathroom, too.

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Charmaine M.
  • Queens NY, NY
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Charmaine M.
  • Queens NY, NY
Replied Jun 16 2014, 06:56

Wow!!...cannot believe someone was living there.  

Cannot wait to see how this turned out.

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Pat L.
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Pat L.
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Replied Jun 16 2014, 07:12

@Brian Burke

It never amazes me how some people close to live.

Just think one day you may be lucky enough to find one like this!!!!

http://mred-miller-carcollector.blogspot.com

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William Avery
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William Avery
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Replied Jun 16 2014, 07:59

I'm working on a 2 dumpster version of this now and my wife is working on a 4 dumpster version. I think 12 dumpsters wins the prize. Going in to these I thought there might be something of value under all this but alas, nothing but dumpster fodder.

Can't wait to see the results.

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Scott Isley
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Scott Isley
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Replied Jun 16 2014, 08:16

@Brian Burke those cobwebs are unreal!  At least they previous owner had the good taste to shop at trader joes

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David J.
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David J.
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Replied Jun 16 2014, 09:30

Looks like you can at least save the cabinets and micorwave.  :)

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Brian Burke
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  • Investor
  • Santa Rosa, CA
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Brian Burke
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  • Investor
  • Santa Rosa, CA
Replied Jun 16 2014, 12:04

@Steve Babiak The sellers said that they just wanted to gather some clothes and walk out the front door, so I wrote the purchase agreement to include all remaining personal property.  When they moved, I had them sign a "Release of Possession" that released all right to not only the house, but to all remaining personal property.  I always try to do that whenever possible, just in case I find great grandma's diamond ring (which I'd give back if I knew how to find them!).

@Ann Bellamy this had running water, but the hot water heater broke five years ago. The HVAC broke ten years ago.

@Pat L. I've never been that lucky, but you have inspired me to hope for finding a buried treasure someday.

@David J. Sure, I'll save them.  What's your address?  I'll ship them to you.  Whoops, too late, they're in the landfill already with 480 yards of the rest of the trash.

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Brian Burke
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Brian Burke
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  • Santa Rosa, CA
Replied Jun 16 2014, 12:21

Now for the UPDATE!  It's time to reveal why this post is titled the "Cat Litter House".

Debris removal didn't quite go as planned.  I should have seen this coming because the clues were all there.  I actually knew this floor plan well because the house I grew up in was the same floor plan.  You enter the house through the front door on an elevated foyer, then step down six inches into the living room.  I noticed that I didn't actually "step down" when walking over the trash from the foyer to the living room.  I just thought it was because of the trash.  Boy, was I wrong!

These folks liked cats.  Or at least they HAD cats, whether they liked them or not is debatable.  After stripping off the top layers of trash it was revealed that the house was a 2,000 square foot cat litter box!  That's right, I didn't step down into the living room because there was six inches of cat litter sand throughout the majority of the first floor, and a good part of the second floor.

In this picture of the kitchen, you can see what I'm talking about.  Yes, that's cat litter in the foreground, and no, it's not clean cat litter either.  It's all used.

How does this get started?  Do you just put the litter box in the corner, and instead of emptying it you just keep adding sand to it until it overflows...then start throwing sand next to it...and the next thing you know, the whole house is full of sand?!

Someone asked earlier why this house took so long to fix up.  Here is one reason, the house had to be emptied by shoveling sand into wheelbarrows for days.  Running a wheelbarrow from the second floor, down the stairs, and into the dumpster in the street is a logistical nightmare.  And people ask me if I do my own fix-up work?  Now you see why not.

Can it get any worse?  Yes.  Stay tuned.

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John Hixon
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John Hixon
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Replied Jun 16 2014, 12:23

I feel like I need to take a shower and then clean my entire house.  

Cant wait to see the finished product.

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Ben Leybovich
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Ben Leybovich
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Replied Jun 16 2014, 12:27

Hahahahahaha - you are so bored...

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Anthony Gayden
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Anthony Gayden
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Replied Jun 16 2014, 12:27
Originally posted by @Brian Burke:

Can it get any worse?  Yes.  Stay tuned.

You have just won the prize. I have watched a lot of episodes of Hoarders, and Hoarding: Buried Alive, yet I have never seen anything like that. That is the most horrible thing ever. You say worse is to come, and I am expecting that you will show us what happened to the cats that used to live in that house.

Account Closed
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Account Closed
  • CA
Replied Jun 16 2014, 12:54

@Brian Burke 

Have you gotten to the part yet where you have to replace the lower part of the wood framing because the cats peed on the walls and it soaked into not only the sheetrock but also the studs? A friend of mine had to replace the lower part of the studs throughout the house because of cats.

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Shawn Thom
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Shawn Thom
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Replied Jun 16 2014, 13:03

Did you find any dead animals?  That was the grosest thing I've found.  3 full cat skeletons.

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Brian Burke
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Brian Burke
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Replied Jun 16 2014, 13:04

@Account Closed you might be on to something.

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Trela Bird
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Trela Bird
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Replied Jun 16 2014, 13:26

Wow, I think they may have had a hoarding problem :)

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Jonathan M.
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Jonathan M.
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Replied Jun 16 2014, 13:52

Gross.

Like others have commented, I think I'm going to have to clean something when I get home from work.

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Scott E.
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Scott E.
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Replied Jun 16 2014, 14:23

Wow... I actually feel nauseous after looking at those pics! Keep them coming Brian. I'm looking forward to the before / after transformation shots.