I got a call from a young man, Mr. Anthony, who was interested in selling his house. His mother had passed three years prior, and he had inherited the house, remodeled it, and rented it out to a couple he had met.
We agreed to meet and take a look at the house. Mr. Anthony hadn’t seen the house since he rented it out. He explained the tenants were always late paying the rent, and he had not received a penny for the last three months.
When we arrived at the house, the first thing we noticed was that the large bay window facing the street was boarded up. When the tenant opened the door, we were overwhelmed with a foul smell coming from inside the house, and there were animals running around the living room.
Mr. Anthony was shocked. “What have you done to my house?” Unfortunately, that wasn’t all. The gray carpet that was installed two years ago looked brown and was covered in stains. The once bright house was dark with paneling on the walls.
The bedrooms were worse. The bedroom walls had holes, and the closet door mirrors were shattered. Most of the rooms only had one working electrical outlet so there were extension cords all over every room. Large spiderwebs lined the ceilings and took over the bedroom closets. Mr. Anthony looked like he was going to cry.
“I want you out of this house”, Mr. Anthony told the tenants, “I want you out by tomorrow or else I’ll sue you for your past due rent and all of these damages.”
We walked out of the house and Mr. Anthony noticed that the roof eves were termite damaged and most of the windows cracked. That was what became of his childhood home and he was heartbroken.
“I feel sick. I don’t know how I’ll come up with the money to repair this, not to mention prepare it to sell.” Mr. Anthony said. “Can you please collect all the keys tomorrow?”
The tenants were on their way out when I went to pick up the keys. They left broken furniture and large bags of trash in the house and garage. I found a water leak in the bathroom.
I turned off the main water valve and left a message with Mr. Anthony that I had the keys and that there was a leak. I took some pictures of the house and the damages and sent copies to Mr. Anthony.
About a week later, Mr. Anthony started talking to contractors about getting estimates to repair damages, and because of the costs, it would take a long time to begin repairs.
I took my wife for a look at the house. She had gotten curious after I told her about what I had seen.
Once again, we were overwhelmed with the smell and the costly damages, but while I was pinching my nose closed, my wife had a smile on her face.
“You know, I bet this house looked nice before the tenants messed it up “She said taking another look around. “If we take out the carpet, remove the wall paneling and remove the wall, that’s hiding the kitchen. Add some new paint and new flooring. It would be nice again.”
I admit, I had not thought about any of that. I asked her if she would like to make an offer in “as is” condition. She said maybe.
Next thing I know we are talking to a loan agent. He explained there was a 3% down loan program available if we were going to occupy the house, but warned us, the house might not pass the appraiser’s inspection in its current condition.
I explained to Mr. Anthony that I wanted to make an offer in “as is” condition, without charging any commission. I gave him an amount and he told me he would let me know the following week. I asked if I could clean up the house while he thought about my offer. Over the next couple days, my wife and I got the carpet outside and got rid of the clutter and waited for Mr. Anthony’s decision.
Mr. Anthony called me saying “we got a deal.” Now I had to worry about passing the appraiser’s inspection. As we got the loan process going, I called my brother, who is a contractor, to look at our investment. We showed him the house and talked about the repairs and changes we wanted to make.
A couple days later my brother showed up with his tools. He gave me a large sledge hammer and told me to remove all the living room and bedroom drywall. My wife and I removed all the drywall and found a leak in the bathroom wall. We wanted to remove the whole wall that separated the living room and the kitchen, but my brother told us it was a load-bearing wall, so we removed the wall except for one post.
We removed all the paneling and replaced the big bay window. My brother fixed the leak in the bathroom and replaced all the electrical wiring, adding multiple electrical outlets in every room.
We were ready for the loan company’s appraiser now. The appraisal went through, escrow closed, and we owned our first, very unexpected, real estate investment property.
It costed us a small fortune to fix up this home. Of course, my brother gave us a family discount, and we were blessed that real estate values went up plenty that year.
Even though this purchase was very unexpected, it was a challenge worth pursuing our first fixer upper!