Dangit! Why do folks being evicted from houses trash them???

[hippiechick]

I'm looking to buy a house within the next 6 months on a limited budget, and there are a TON of adorable HUD repo's around Indy, most less than 10 years old.

Problem is, over 2/3 of them have MAJOR damage - ie, the plumbing is trashed, walls are kicked/axed in, garage doors driven through, bathrooms are flooded, etc etc - in other words, additional major repair expenses before I could even move in.

Why do assholes do that ?? (rhetorical question :eyes: ) And has anyone here dealt with HUD properties before - can the price be negotatied down so I'd have enough left over to do the repairs, or can the repairs be agreed to upfront and included in the original purchase price ?


Thanks DU'ers!

[Stinky The Clown]

1. Put your hands in your pocket and back away from that HUD house

Several years ago we were in the market for an investment property. In the course of looking, we ran across a number of HUD houses. Each was a series of disasters - water damage, mold damage (lots of mold houses, it seems), post move-out vandalism, etc., etc.

Then there's the hassle of the HUD regs for buying them. And there's no negotiating on price, so far as we could find. You have to bid on them. Then you have to wait for the bids to be opened. In the time between the time you bid and the time they announce the award, you really can't do any other shopping or else you could wind up with the house you find later and the HUD house you bid on earlier. Once you place the bid, you're bound to pay if you win.

In my mind, HUD houses are best left to professional investors with lots of cash and experience at flipping.

That wasn't us, and I suspect it isn't you.

By the way, we just kept working with our (incredibly patient and really wonderful) realtors to keep looking. We eventually found a house that was in our price range and has since escalated to well over twice what we paid for it. When you consider how little we put down, our investment has so far returned well in excess of 400% payback ... in two and a half years.

on edit ....... one other thing. Until the repairs are done and approved by the building department, you can't get insurance easily. And banks are VERY relucent to finance the initial price. They'll happily do a mortgage after the repairs are done and approved. In short, you're on your own financially unil the house is again habitable.

[Warpy]

2. Put yourself in their place

They had a chance at the American Dream and were one damn paycheck away from losing it all and damned if the job didn't up and move to India. I know I'd be even less motivated to do upkeep if it happened to me. Plus, after foreclosure, that foreclosure sign on the front window is a "Squatters Welcome" sign to all the drug addicts in town, and that's where the vandalism comes in. I watched it happen to a house across the street from me a couple of years ago, but we managed to chase the squatters out in record time.

HUD paperwork is a real nightmare. You can find other distressed properties that don't involve major damage to plumbing and the structure itself for about the same money.

That's what I did, bought a real dump 10 years ago. It's quite liveable now but it was a real pain getting it that way.

[Stinky The Clown]

3. In all honesty, the vandalism we saw was very limited .....

It was only in a few of the houses (we looked at well over 50 houses, maybe a dozen or so being HUD houses), and what there was, wasn't all that bad. And this was in inner city Baltimore.

Much, much more common for us was mold. Some houses were completely (and disgustingly) covered with it on the insides

Mold remediation is a frighteningly expensive prospect. Sometimes it exceeds the value of the house, even after remediation. We looked at one house that, records show, had been a HUD home not long before we looked at it. It had been redone on the inside and looked very nice - clearly a flipper. But when I poked a flashlight behind the shower in the basement half bath, I saw it was completely filled with mold from the back of the shoower to the foundation - a distance of about 12". A solid web of mold. ::::shiver::::

Give me a trashed housed any day of the week. Mold is absolutely horrible. The first hint of it in any house is reason enough to run as fast and as far as you can from that deal.

[politicat]

4. In a lot of cases, that trashing isn't intentional.

I know it sounds crazy, but when the toilet goes postal and the landlord doesn't care or can't afford to fix the problem, the house may rot and die under the neglect. Electric lines burn out, and the plaster comes down to fix the electrical line, but replastering is expensive, so it doesn't get done. Then a water pipe breaks or a CRS moment happens and the garage door gets hit and the money can't be found... the owner can't rent it out, gets behind on the mortgage/taxes and boom... Repo flipped to HUD. Happens all the time in my neighborhood of old, little houses. Without gentrification, they'd have been torn down and replaced by huge, cookie cutter McMansions that overflow the lots. (There are times I hate Boulder County Yuppies, but this isn't one of them.)

And HUD houses aren't bargains. There are so many regs and financial issues above and beyond what H2S mentioned.... At least in this area, once a HUD house goes HUD, it must remain a low income property for several years, meaning that when you get the incredible job offer that makes moving to X city worth every bit of the pain of moving, you can't sell it unless it's to someone else who meets the income restrictions (and if no one who meets the restrictions can get financing - very common - you're SOL, buddy. Pay two mortgages until you do get a buyer who meets an insane set of unrealistic guidelines.) And you can't live in it until it's up to code, and ... Habitat for Humanity does not rehabilitate these houses; it's a more efficient use of their funds to build new, so you can't get non-profit assistance. If you don't have a contractor's license and you do something wrong and it turns out to cause a fire or a flood or mold or someone to look sallow, you're liable 15 years after you sell it. What you don't pay up front, you pay in the long run.

(on edit: is this one out of your budget? http://www.realtor.com/Prop/1053373035?lnksrc=00045 )

Here's a couple of ideas that would get you in a house for under $50K if you're willing to change your lifestyle dramatically: Look at either a Tiny House or a Grow House and buy one of the really dreadful, non-HUD properties and bulldoze. I have no idea about Indy neighborhoods anymore (from what I hear, the ones we lived in while my dad was in school have been gentrified beyond belief) but I assume that there have to be horrible houses on okay lots in decent neighborhoods. But a lot of the houses in Indy were built to last 30 or 40 years. A century later, they're just worn out. There's a lot to be said for sentiment, but not so much when you're standing outside at three in the morning watching everything you love burn to a crisp because the wiring was 90 years old. Believe me, you have many better things to do with your time.

So... If I had a budget of $300 a month for housing, and about 120 days, I'd look for a nice large lot with mature, healthy trees and a small footprint on the house. Spend $10K for the land, $4000 for the tear-down and disposal, and then between $20 and $35K on a very small, efficiently spaced house and some outdoor storage. (And I'd have a huge yard sale.) I'd probably go for the Tumbleweed B-52 Bungalow or a Concord Loft with a desk instead of a booth, because I love gabled rooms and books are my weakness. (www.newurbanguild.org or www.tumbleweedhouses.com)

The Grow House is a concept that came from the New Urban Guild to serve as better transitional housing after Katrina. The point of a Grow House is that it is a small house that can be built in a factory and trucked to location (like the horrible, disposable FEMA trailers), but is more stable in severe weather, is more visually part of the neighborhood, is meant to be a part of a neighborhood, costs about half what it costs to build an inefficient, disposable FEMA trailer and the Grow House is intended to become part of the permanent community, as part of the total house or as a small rental house, a granny flat, an office, or a small shop. Grow Houses start as 450 to 800 square foot houses, and as time, money, materials and energy become available, additions or additional buildings are added to the lot. Grow Houses are big on porch space and windows, but they're not the house for a big screen TV and an overstuffed sectional with duelling Lazyboy recliners. (And yes, they do retain value. http://www.cottagecompany.com/)

Here's the thing I've seen with people I've known who have bought houses: once one's in, one wants to nest. I know several people who have bought houses then turned around and done drastic things with their furniture within the first year, pulled up flooring, changed kitchens... So if that's likely to happen ANYWAY (i.e. if you aren't already living with your great-grandmother's very expensive antique furniture, but are living with mass manufactured stuff that's not your childhood dream) then get rid of it and get what's appropriate for the space you're going to be living in.

And yeah, I've lived in tiny houses. One of the best places I ever lived was a big room that was about 15x20 with a 6.5 foot high loft under the ceiling (I think it had 12 or 14 foot ceilings, which helped enormously.) It had a balcony that was shared with a couple of other residents, and it was just a fabulous place to live. I've also lived in a house that was just shy of 1000 square feet, and was laid out so utterly poorly that it felt smaller than my little flat had been. And my current house is 1400 square feet, and my husband and I realistically use about a third of that. (The cats own the rest.)

If you've got kids or are planning to have them in the next 2 years, you have different requirements, but kids can't live in a construction zone, anyway. Sometimes, renting is a better option - because you will not love writing the check to the plumber when the boiler goes kerflooey at 2 in the morning on a sub-zero Christmas morning. Having been on all three sides of that fence - renter, homeowner and landlord - there are benefits to all three.

[NMDemDist2]

5. from your keyboard to Mr K's heart

he wants more space (we have about 1200 SF now) and I don't

our Calif bungelow was 950 and I loved it

we'll see.......

[Warpy]

9. Look into manufactured housing

Yeah, I know, but put it onto a permanent foundation and it will retain its value. Manufactured housing is intentionally designed with every inch of space well thought out. My 768 square foot single wide trailer felt a lot larger than my 1300 square foot (converted attached single car garage added to a 900 square foot) house. I am contemplating a temporary move to a trailer while this place is being worked on. I just wonder if I'll want to leave!

The problem with these 1950s houses is that the designers didn't consider much but board foot cost. People didn't own the kind of clothing the average working couple does, and the tiny closets were spacious to people used to nails in a cupboard.

My place has decent bones but it needs a lot of work to bring it 50 years forward. With more attention paid to work areas and storage it will be a fine little house. I'll enjoy doing the project.

[NMDemDist2]

13. i fully expect to be in a manf home on a couple acres

fits our budget and our lifestyle

[hippiechick]

6. Thanks for all the feedback!

That house you linked is gorgeous and not out of my budget, but alas - in a very, very bad part of the city. And heating something that vast is probably going to run $300-500/mo.

Ideally, I'd love a bungalow since its just me and the dogs. 1000 sq ft is quite enough, and I do prefer older houses with character to the new copy n' paste houses sprouting up everywhere.

The HUD houses I'm finding are practically new - all built within the last 7-10 years. Not McMansions, more like McRanch's. So I'm not sure what the problems are with them.

I'll continue to look ...


Thanks again ! :hi:

[wildeyed]

7. Our first home was a small 1920's cottage.

It was actually in a very nice part of town, but small, on a busy street and needing an almost endless amount of cosmetic work. But it was structurally sound and a great bargain, so being young and optimistic, we went for it. Four years later we sold it, all bright and shiny, for nearly twice what we paid. And the housing market isn't crazy here either, like it is in DC or SF or something. It was allllll sweat equity. It was a ton of work, much more than we anticipated, but doing the work ourselves really gave us a great home equity base to work off of, allowing us to live in a much nicer house than we could afford on our salary alone.

Try to find a good buyer's agent, one who specializes in the area you like, and start looking. Eventually what you want will present itself.

[politicat]

12. Ah....

Here's the probable progression.

House built by original owner.
House sold by original owner to pro-flipper or investor.
House rented.
Flipper or investor gets over extended.
House goes vacant for a couple of months and owner gets in a tight space.
Rents house.
Disaster happens.
House goes up for foreclosure.
Renters evicted because of foreclosure.
A) Renters take revenge (understandably) or
B) renters vacate and squatters move in or
C) children with bad attitudes decide that empty house needs "improvements".
Foreclosure types don't want to deal with damage, so discount the property and turn over to HUD.

[troubleinwinter]

8. I differ on this point:

"kids can't live in a construction zone". Our daughter (now 27) lived in a construction zone from the time she was zero til she moved out at 20, in several homes we renovated.

Poor thing was stuck in a rolling walker, rather than crawling, because we had removed the living/dining room sheet rock and bottom 18" of exterior siding!

At 17, she was a very good backhoe driver, knows exactly how to prep for painting, handles all sorts of tools, and knows not to step on boards that may have nails in them.

She and her husband are in escrow for their first house. She selected one that needs NOTHING done to it (saying, "I lived in a construction zone my whole life!"), but a few geraniums in the yard. However, if anything goes wrong and needs work, she has a pretty good clue what to do.

[politicat]

11. In today's paranoid CPS environment, it can be really risky.

One of the nastier things I saw when working for the state were cases where children were taken from their homes because the houses were considered dangerous. At least a couple of the cases were children who had professional flippers for parents.

It's not fair and right, but all it takes is a nosy neighbor with a bad attitude and a social worker who doesn't understand construction.

I know I wouldn't do half the things I do if I had to worry about a kid and my neighbors around the corner (who don't like me because I'm not a fundy Republican).

[hippiechick]

10. I hope this link works ...

http://public.propertylinx.com/scripts/PrintableReport_MLNum.asp?DetailKey=2490471&Prp=Res


There's no damage to this house. It's a HUD/repo. Should I still be anxious?