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

[Brian Burke]

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!

[Brian Burke]

Originally posted by @Terri Lewis:

What is your plan on disinfecting? I am curious as to the process you are going to do to find the origination of the smell, and how you are going to rectify. Are you going to spray the place down with a bleach mix before the cleaning begins?

I'll post some pics and you'll see.  There's not much you can do to disinfect other than replace material.  Stay tuned!  I'll try to get to that tonight.

[Brian Burke]

Originally posted by @Cory Mickler:

Would it be cheaper to demolish the building and rebuild or can this building still be refurbished?

There would have been a time when I would have thought this was unfixable.  I've done enough houses now to know that you can fix a lot of stuff...but this one was a challenge.  We figured it out though!  Wait until you see the finished product, it's a striking transformation.  It's almost done!

[Rick H.]

Brian - despite permanent damage to your olfactory senses, I'll bet you won't shy away from other opportunities like this one. I can't look at the pictures without my brain triggering false-smell senses in my nostrils from past projects.

This is actually on par with others that I've seen. In fact, I think I have one much like this now. You really have to wonder how someone's gradual level of acceptance of a declining living arrangements can be so blind.

I've told my own cat litter house stories on BP before. Aside from the nauseating odor, I'd be concerned with fleas and their eggs hatching when the weather warms up. They are not killed by normal termite fumigation, for instance.

Another problem is the urine smell permeating every porous material that it has come I contact with. I presume all drywall will go. Treating flooring, whether slab or wood subfloor, with diluted bleach solution is critical. Sealing with the oil-based version of Kilz is the only way to go, IMHO. I also think you'll get good use of ozone generator if the smell is especially stubborn (very likely).

It's great you're documenting your project so well here. I'll follow you'd progress and happy to contribute however I think you know what you're doing. Hope you make a ton of dough.

[Account Closed]

Originally posted by @Brian Burke:

@Account Closed on a human level these types of houses are tragic.  These homes need people with thick skin like you and I, to not only look past the human tragedy but see the potential and have a willingness to turn the situation around.  As the housing stock ages, I expect we will see more homes like this.  I'm proud to be part of the solution.  I'm sure you felt the same way after it was all said and done.  Thanks for telling your story, I knew I couldn't be the only one to do a house like this!

Stay tuned for an update on the smell removal, and I'll reveal what happens to the floor joists!!  By the way...the first floor isn't slab, it's joist/subfloor too.

Yup I still like working with sellers and their families, and I do consider it worthwhile.  The worst hoarder house I dealt with I didn't end up buying.  Floor to ceiling furniture and trash.  Looked the same your your house.  Same front door, similar floor plan. The seller had moved out 10 years ago to a  So Cal house she inherited and now is doing the same thing to that one.  We were in contract twice but she was incredibly manipulative.  She wanted a closing with all her stuff in the house and indeterminate months to empty to it.  The roof on the 2nd floor had failed so it was open to the elements, everything was rotting and there were rodents everywhere.  She had no physical resources or emotional ability to move any of it or to dispose of it.  Even her adult children told me to do what I needed to do to "protect" myself from her.  They told me that they would not be helping her deal with it as they had done all they could for her the last 20 years and were protecting themselves.

I just checked on it today.  It sold last month for 2.5 times my contract price to a cash buyer.  3 days after closing there was a major fire and now it's totally burned out.  Hmmm.  Hope the buyer had the right kind of insurance in place.  If so, they might come out ahead on that one.

[Brian Burke]

Thanks for commenting, @Rick H. don't you wonder sometimes what people are thinking? I'm not talking about the hoarder, I'm talking about the buyer who paid 2.5 times your offer! I could make all kinds of comments about the possibility of the buyer starting the fire for insurance proceeds, but that isn't necessarily the case. I could have been in that very same position. When I arrived at the house after the seller left, I discovered this:

Look next to the window, that's a lone table lamp...LIT!!  I didn't even want to try getting to it so I just went outside and killed the main breaker.  Had I decided to wait a day or two to go inside the house, I probably would have just been left with a large pile of smoldering ashes.  Perhaps that wouldn't have been the worst outcome, however.

[Account Closed]

Originally posted by @Brian Burke:

Thanks for commenting, @Rick H. don't you wonder sometimes what people are thinking? I'm not talking about the hoarder, I'm talking about the buyer who paid 2.5 times your offer! I could make all kinds of comments about the possibility of the buyer starting the fire for insurance proceeds, but that isn't necessarily the case. I could have been in that very same position. When I arrived at the house after the seller left, I discovered this:

Look next to the window, that's a lone table lamp...LIT!!  I didn't even want to try getting to it so I just went outside and killed the main breaker.  Had I decided to wait a day or two to go inside the house, I probably would have just been left with a large pile of smoldering ashes.  Perhaps that wouldn't have been the worst outcome, however.

If I ever see the buyer I'll be asking her what she was thinking.  She's a financial advisor here in Santa Barbara.  It's looks like her first RE investment.  The house is in area with known soil shifting and foundation problems.  The slab on this house is cracked in half with one side lifting, resulting in major cracks from every door and window.  Not to mention the 18" diameter tree growing out of the chimney.  After the fire clean out, there's still the foundation.  I had a plan for foundation, but I'm not too disappointed I didn't get to follow through on it.  

And you're right, a fire could happen to anyone.  Especially to empty houses with trash. 

[Brian Burke]

@Account Closed That's a crazy story!  I'd love to hear the explanation, if you ever get one. 

Similar story, I got outbid on a house by $50K at the trustee's sale and the newbie buyer later realized their mistake and listed the heavy fixer on the market as-is at a ridiculously high price.  Next thing I know, a wholesaler is trying to sell me the deal at a $20K markup from the list price which is 100K higher than my highest bid.  I'm not sure where some people come up with their valuation. 

[Brian Burke]

Smell abatement update

It's time to start getting rid of the smell!  The cat urine penetrated about 1/3 to 1/2 of the floor which means cutting out and replacing subfloor in a lot of the areas.  Surprisingly, some areas of the subfloor were unscathed. 

The bottom of the sheetrock was penetrated in a lot of areas so we elected to remove the bottom four feet of sheetrock throughout the house.

The fiberglass insulation mostly survived, but why chance it?  We removed it too.  Fortunately, the electrical wiring and plumbing that was inside the walls was in good shape.  The wiring inside the boxes didn't fare as well but replacing some boxes solved the problem.

The kitchen didn't survive.  Neither did the windows and doors.

Check out the area under the window in the center of the picture.  Amazingly, this was the only area where rot penetrated through the entire wall.  All other rot was isolated to either subfloor or exterior siding but didn't affect the studs.  Lucky break.

Remember the really nasty half bath?  I'd rather leave it like this than the way it was before.

[Matt R.]

I heard of one investor who went through some hoarders boxes and end up selling items on ebay - 103k worth of collectible toys/comics/disney paraphernalia and a couple months of work. Check those boxes Brian:) We might see you on Pawn Stars!

thanks, 

Matt

[Matt R.]

It is insane how dirty the windows are. How many years was this again?

[Brian Burke]

Downstairs, about one third of the wood subfloor was replaced.  Somehow, the underlying joists were unaffected by the cat urine.  My guess is either the mountains of cat sand or the garbage provided a barrier.  If the cats had clean access to the carpet, it would probably have been a different story.  So the sand that dogged us so badly during trash out probably saved us in the reconstruction phase.  Here, you see the new insulation, and then after new subfloor and insulation, the whole area was hit with oil based Killz primer.

Upstairs, on the other hand, had less cat sand.  the floor here didn't fare as well.  We replaced over half of the upstairs subfloor.  Next, the entire area was primed with Killz, new wood or not.

New windows and doors helped with the smell, too.  Yes, even those smelled bad.

The next challenge:  We could not start closing in the walls until we were certain that all of the smell was gone.  But it wasn't.  Even after all of this.  Time to investigate further.

At this point we discovered that the cats had somehow found a pathway into the attic.  The blown-in attic insulation was soaked in parts, in some cases all the way through the ceiling sheetrock.  This means that parts of the upstairs ceiling had to come down, and all of the blown-in insulation was removed.  Next, oil based Killz primer was applied to all of the ceiling rafters.

Finally, the house was sealed up and we rented two ozone generators.  We let the ozone generators run for a few days in the house, then for a few more days in the attic.  Now, the smell was 90% gone.  A little more "nosing around" and we found some of the staircase wood members that we hadn't treated yet.  Treat those, and...the smell is gone!!!!

[Brian Burke]

Originally posted by @Matt R.:

It is insane how dirty the windows are. How many years was this again?

The house was built in 1982.  These were the original owners.  My guess:  never cleaned once.  You couldn't even see through some of the windows at all. 

[Brian Burke]

Originally posted by @Matt R.:

I heard of one investor who went through some hoarders boxes and end up selling items on ebay - 103k worth of collectible toys/comics/disney paraphernalia and a couple months of work. Check those boxes Brian:) We might see you on Pawn Stars!

Matt

The guys were thinking the same thing so they opened a box.  Dead cat inside.  That was the end of their American Pickers aspirations.  They stopped looking into boxes.

[Brian Burke]

The sheetrock was replaced wherever it had been removed.  The popcorn was scraped from all ceilings.  Any original sheetrock was skim coated.  Next, which you can't see in these pictures, all of the walls were sprayed with oil based Killz primer one last time just to make sure no smell could re-emerge, then the walls and ceiling were textured and painted.

On the outside, you can see new windows, new roof and gutters, new entry door, and new garage doors.  Not that you could see any of the original stuff...it was all blocked by overgrown trees.  Now you can actually see the house!

All right...that's all you get.  My next pics will be the after pictures.  You are caught up to real time now...the house will be done this weekend.  I'll have after pictures to show next week.

What will the listing price be?  How much did it cost to rehab?  Will this deal make a profit?  You'll have to check back to find out.  :)  Any guesses?

[Matt R.]

listing 449,000

rehab 160k

[Account Closed]

Man, I was breathing easy.  The pictures of new subfloors and sheet rock (and Kilz!) somehow made the place smell OK and I was no longer holding my breath.  And then: "The blown-in attic insulation was soaked in parts"....and I was back down.  Nauseous, eyes burning, depressed.  

As for costs and profits. I'm a pretty good sleuth and consider myself somewhat of a real estate intuitive.  But I have no idea where that house is.  Novato?  Fairfax?  Santa Rosa? Do you work the other direction?  Livermore? Dublin?  Way too many variables in both listing price and rehab costs for me.  

Can't wait to hear the details.  

[Kenneth Huddleston]

Hate to say it but compared to what it was the place is actually starting to look live-able. Looking forward to the after pictures.

[Account Closed]

OK.  I figured out where the house is.  My intuition did lead me in the right direction.  I think I know how to buy right, but your buy price on that house was AMAZING.  Truly.  

Without disclosing the buy, my guess is $125K on rehab.  Listing price to be $539K.  

[Fred Sams]

@Brian Burke Wow you have a trained eye to be able to see the forest from the trees!

[Huy N.]

This is amazing @Brian Burke !

 You are inspiring lot of people 

[Sam Craven]

I had the pleasure of touring this property with Brian after the sheet rock was cut out, before the killz was sprayed and before they had to do the attic work.  I was told the smell was better, but it was still pretty pungent!  

I'm sure its going to come out looking great, Brian runs a great business.

[Brian Burke]

Originally posted by @Account Closed:

Man, I was breathing easy.  The pictures of new subfloors and sheet rock (and Kilz!) somehow made the place smell OK and I was no longer holding my breath.  And then: "The blown-in attic insulation was soaked in parts"....and I was back down.  Nauseous, eyes burning, depressed.  

Without disclosing the buy, my guess is $125K on rehab. Listing price to be $539K.

 

Can't wait to hear the details.  

Wow, you're good! My ARV was conservative at $400K, I was hoping for $450K but I didn't have good comps to support it. About half way through the fix up, a model match came on the market for over $500K. I thought there was no way it would sell, but it did. Listing price is undecided but I'll have to come up with something in the next day or two. Close guess on rehab but I think it's higher than that...but under my $175K budget.

Sorry for the sensory roller-coaster!  :)  I'll post the after pics next week so you can breath easier, for good.

[Account Closed]

Originally posted by @Brian Burke:

Originally posted by @Account Closed:

Man, I was breathing easy.  The pictures of new subfloors and sheet rock (and Kilz!) somehow made the place smell OK and I was no longer holding my breath.  And then: "The blown-in attic insulation was soaked in parts"....and I was back down.  Nauseous, eyes burning, depressed.  

Without disclosing the buy, my guess is $125K on rehab. Listing price to be $539K.

Can't wait to hear the details.  

Wow, you're good! My ARV was conservative at $400K, I was hoping for $450K but I didn't have good comps to support it. About half way through the fix up, a model match came on the market for over $500K. I thought there was no way it would sell, but it did. Listing price is undecided but I'll have to come up with something in the next day or two. Close guess on rehab but I think it's higher than that...but under my $175K budget.

Sorry for the sensory roller-coaster!  :)  I'll post the after pics next week so you can breath easier, for good.

I used what I am assuming are solid comps (recently sold and very nearby) in the $250/sf range, so I used $255/sf and rounded up to $539K. But maybe square footage is skewing the number as the house is two story and larger than the comps?  I didn't study them that closely.......

I know the rehab will look great and looking forward to the pictures.  But now I REALLY want the back story on the buy lead and negotiations.

[Steve Babiak]

@Brian Burke 's previous post with photos shows the toilet drain pipe opening exposed; normally that is a no-no since you want to cover the toilet drain pipe to prevent sewer gases from entering the room. Of course, Brian's crew was dealing with other odors anyway ...

[Brian Burke]

@Steve Babiak good catch, but you are right, you never would have smelled it anyway.  :)