If I can get up in the morning and not only prevent my clients from losing money on a junky property, but help them make more than they even imagined then my day was well spent and I go to bed very, very satisfied. I had a wonderful opportunity to do this two summers ago. I know an investor in Harrisburg, PA who purchased a townhouse on State Street, not far from the Capitol building for $21,500 back in 2016. It was a 1571sq. ft. 4 bedroom home 1 bath house in fairly good shape. The kitchen and bathroom were bit dated but very clean. There were a few cracks in the plaster and the house needed a full repaint but all in all, the potential was pretty amazing. It’s a rare occasion to find a solid, brick, livable property for $14/sq.ft. That’s cheap housing.
My client lived in it for a couple of years and then moved out with the plan of making improvements and getting it back onto the market. But as we all know, sometimes the best plans just never materialize for a plethora of reasons so the house sat empty for several years. The downside about the property was that is was not situated in the greatest neighborhood which increased the risk of break ins and squatters. We’re not sure exactly of the scenario that played out, probably several, but whoever got in, did a real number on the place over the course of several years. The worst part was that animals had also gotten in so the smell of urine was so strong that being in the house without the doors and windows fully open was an impossibility. It was bad.
My client just wanted to dump the place at that point and had gotten several offers from house flippers, the highest being $15,000. It would have obviously been a loss, but not a big one in the grand scheme of things seeing that he had only put about $8000 into the bathroom and some plumbing upgrades over the course of 7 years. But hey, it’s no fun to lose money and there’s really no reason to.
My client and I went over some ideas, one being doing a total renovation on the house. The average home price sale for similar renovated townhouses in the area was between $121,000-127,000. The problem was that my client didn’t have $80,000+ to put into it. The roof needed replacing. Big huge chucks of plaster had fallen from a few of the ceilings and the walls were in terrible shape. All the floors needed to be pulled up due to the pet urine. The kitchen needed a remodel and the bathroom as well, as the previous improvements added nothing at this point.
I floated the idea of pulling in some investors to raise the capital for the work, but after I ran the numbers, the real winners with that scenario would be me, the investors, and the realtors. My client would have only walked away from the closing table with about $35,000. Okay, so that is $20,000 more than his highest offer and then you might say, well, he only had $29,500 in the property. That’s not true though as he had been paying $2,500 a year on property taxes plus the utilities which probably averaged at $100/month. That’s $3,700 a year. It would be really nice to recoup some of that money.
I thought about things for a while and came up with an idea I thought may bring a higher payday for my client so once I arrived in Harrisburg to start some work, I contacted the realtor who had sold the property to my client in 2016. I asked him come out and take a look and give me his opinion on a few things. I wanted to know what he thought we could get for the property if I prepared it well enough to sell to a property flipper. He said he could easily move it for $60,000 but only if I could totally eliminate the strong smell of urine that just permeated the downstairs. Luckily, the upstairs didn’t have the same problem. I assured him I could and he chuckled. Then he asked me about my crew and how long it would take. I informed him that it would be just me doing the work and I’d be done in a week. I think he thought I was joking. Nope.
Once I started the work, my main goal was to tear up the hardwood floors which were holding the urine and then Kilz the heck out of the subfloor. Then lightly repair some of the damage to the downstairs walls, prime and paint. I wanted to take the ugly and smelly out of the equation so a house flipper could focus on the finishing. I did achieve it within the week although it probably was one of my most exhausting weeks and most intense jobs. It looked so good we raised the price to $65,000. After my invoice was paid as well as the realtors commission my client walked away from the closing table with $58,000. Mission accomplished. That was a very satisfying job for me. Cheers!
PS: I take on projects outside of the Cincinnati area if it’s interesting enough and I can drive there within 8 hours. Call me 513-410-8969