While watching some hit TV shows like Hoarders and Hoarding: Buried Alive are enjoyable, very few people would actually consider purchasing a hoarder home. Who would want a property filled with mountains of junk, infestations, and other issues? In this episode of the Note Closers Show, Scott Carson discusses his first ever distressed homeowner appointment that turned out to be a hoarder house. One thing he learned from his friend is that the smell of poop and piss is the smell of money. Tune in to discover if you agree.
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The Hoarder House: An Appointment From Hell
This episode talks a little bit about one of the deals that I didn’t do that has stood out the most in my real estate experience. A lot of us go to workshops and seminars. We see pictures of properties that are flipped before and after. We’ve watched HGTV or Extreme Home Makeover, “Move that bus. We’ve got to pick it, paint, put a red door, make it feng shui, landscaping and do all these little things.” Staging the house, having the candle that smells like pumpkin pie or chocolate chip cookies to help us move in, that’s a great thing. There had been one quote that was instilled in me early in my real estate career that I heard from a guy that I got a chance to travel the country with and hear him speak almost every other weekend for about two years. I’m not talking about Bob Leonetti. I’ve heard Bob speak plenty of times about the note business.
I heard a guy by the name of Ron LeGrand. I would say he is the Godfather of real estate. He has been here for 40 years. He’s an ex-auto mechanic and going around doing mortgages for his clients. He used to always talk about how the smell of shit and piss in the house was the smell of money. That quote has always stuck with me. When I think about that quote, I have so many memories come rushing back. As I started in my real estate career before I got on the note business, as I was learning the note business and creative financing, I started marketing like many people, postcards, bandit signs and yellow letters out in the mortgage company. I talked about this in the previous episode about a little bit of how we found a property in Round Rock as my first rehab. It’s lessons learned from a hoarding house. This episode is all about it. It’s called The Hoarder House.
Let me set the mood here a little bit. It’s late October, early November and there’s ice out. It was cold in Texas. It’d been freezing the last couple of nights and I’d sent some letters out to people that were at World Savings, who didn’t have such a great relationship with World Savings as a mortgage can get people refinanced. I also sent letters out to people facing the foreclosure off of the Roddy list that we have here. The foreclosure listing service that many people are familiar with. I sent out a bunch of not postcards, not yellow letters, I print out letters and say, “I’d like to help you stay in your house. We have opportunities.”
I said in a previous episode that I would put my picture at the bottom that says, “PS I put my photo at the bottom so you know I’m a real person with real solutions,” just in case I had to meet somebody. If you backtrack it a few years when I was in trouble, I got bombarded with letters from real estate investors when I was facing foreclosure. I always liked it when they put a picture because then I could identify that person. I could talk with that person. If I had to meet him at a Starbucks or meet him somewhere, I had a picture so it wasn’t that nervousness if you ever go to meet somebody and you don’t know who you’re looking for. It’s like a blind date without a photo. You don’t want that. Lo and behold, I send these letters out and come Sunday night about 4:00 or 5:00. I’m in the house and my phone rings and it pops up on the caller ID, Walmart Leander.
I’m like, “Walmart payphone? What the heck?” I answered the phone and this lady on the other line asked, “Is this Scott Carson?” I’m like, “Yes ma’am, it is.” “I got one of your letters.” I’m like, “Great. They’re calling me.” I’m thinking they called within the first couple of days. She was, “Can you come to my house later tonight and talk? I don’t have a lot of time here on the payphone.” I’m like, “Let me get a pen and paper.” She gave me her address which is in Leander, Texas. I was living in Round Rock at that time. Leander is on the Northside of Austin and she was like, “It’s blank with blank. When you come to the address, when you come to the house, when you ring a doorbell, stand by the garage door. Don’t stand by the door, go and stand by the garage door because I’ve got a couple of dogs.”
I’m like, “I understand. I’ll ring the doorbell. It makes sense.” I’m all excited. I hang up with her. She’s like, “I’ll see you at 7:00.” I’m like, “Perfect.” It’s 6:00. I have a couple of hours. I’m like, “What do I do? I get out my checklist. I’m on a one-page checklist. I pull up the address in the County records to see who the owner’s name was. It matched up to who I talked to. I pulled up and it was a house. It’s a two-story, a Kaufman & Broad-built home, a KB home. For those that know KB home, it was a big builder of square homes. It has big square footage. This is on over about a half-acre backyard. I saw it because it’s at the end of a cul-de-sac. It’s a five-bedroom, four-bath, good size house with a two-car garage in a nice area of North Austin.
I’m doing the due diligence and I’m like, “I can figure out what she owes based on looking at the deed records fast.” I was excited and I’m like, “Awesome.” I get in my car and I go over. It’s cold. I dressed in jeans and a regular polo shirt. I go and I ring the doorbell and I hear several dogs barking. I’m like, “Those are some big dogs.” I stand by the garage and that is where stuff got real. Suddenly, I hear the garage door start to open up and it’s something out of like a sci-fi movie where the door starts to inch up and stuff starts coming out of the bottom. It’s not quite smoke or fog. It’s yellowish tint stuff and then I get hit by this wave as a garage door opens because there’s this car. It’s a little older late-year model. I think it’s a Lincoln or Mercury in there.
On the walls, there are all these bookshelves with all these paperback romance novels. I’m not joking. It’s a 6-foot-tall bookshelf, paperbacks are on the wall, and there are black trash bags, full of trash bags lining the sides of the garage and also where you get the car, and there’s a path and that’s about it. You can see some other stuff in there. This lady who walked out who’s maybe 4.5-foot tall. She is not quite that wide, but this little lady comes out and she’s like, “Are you Scott?” I’m like, “Yes, ma’am.” “You match your photo.” She’s talking to me and I’m like, “We’re going to go inside.” She’s like, “I’ve got four dogs inside. It’s cold out. I came in the backyard because they’d run off.”
I’m like, “Let’s talk to you for a little bit.” She starts telling me a little bit about her troubles and it’s cold and I was like, “I’m cold. Let’s go inside.” She turns around and she’d been wearing these khaki jeans or culottes I guess you could call them. When she turned around, the wind blew and you could see that the culottes were split all the way down to the middle. Luckily, she was wearing granny panties. I’m sitting there, I’m like, “This stinks. I smell crap. It doesn’t smell good. This is going to get interesting.” We walk in the house and as soon as I walk in, I’m hit with this smell again, the smell of piss and excrement. I sit down and I’m looking around and there are flies everywhere. The downstairs had piles of crap everywhere. She’s got these two big couches and she pulls off this big pile of clothes that was on the couch. It looked like it had been there forever. She plops it down and sits down in her chair and then offers me the couch.
As I’m walking around, I’m walking on the carpet and I can hear a squish a little bit. If you haven’t vomited yet, I almost did when I was walking through it. As I’m looking around, I see the bottom 18 inches of the wall had a yellow tint to it and there was a lot of dog shit. There are piles of dog crap everywhere and she had four big dogs. It’s two German Shepherds, a Lab mix, and something else and they came up to smell me. I’m sitting there and not touching them. As I see them rolling around, look at each other and then glanced around the kitchen, I can see all these plates in the sink. She had a big kitchen, nice big cabinets, but there was stuff everywhere. She proceeds to tell me that the water had been turned off at the house for at least four months so she couldn’t wash the dishes.
She got all this money in several other homes and lost all because of her bad roommates and drugs and things like that. She had warrants out on her for driving with an expired license. She hated the cops there in Leander and Cedar Park in North Austin because she was constantly driving to get food but didn’t have a license because of parking tickets, speeding tickets. She didn’t have a phone on. She had the power on but it needs some work. The thing that was the most disgusting was seeing these big dogs walking through. They’re doing their business. She’s like, “I don’t take my dogs outside because I don’t want them to run off.” I’m like, “Don’t they have a leash?” “They’re too strong for me.” I’m like, “That’s an excuse. Get a rope to hold on to the dogs so as not to kill anybody.”
I’m sitting there and it is just the smell of the house. It stunk. It’s not as bad as cat piss. The only thing that would have been worse is it would have been five cats running crazy throughout the house, pissing and crapping everywhere. We all know cat piss is a different type of scent. Don’t get me wrong. Dog piss is bad when it’s done, but it was horrible. The worst thing is these dogs are playing. They’re coming up to her and they’re licking her face. She kissed them on the lips. It’s very nasty. I almost vomited 2 or 3 times. Luckily, I hadn’t eaten dinner before I came out or I would have thrown up. I see the stack of postcards and a pack of letters. I said, “Why did you call me?” She was like, “I got your letter about refinancing. Do you think I could get refinanced?” I’m like, “There’s no way in heck you’re going to get refinanced. You don’t have a job.” She’s like, “What can you do?”
I said, “Honestly, you probably owe more than the house and it’s worth at a time with the market being where it’s at. It’s going to need some work. What about if we negotiate a short sale and sell a property?” She’s like, “I’ve got some friends I could move in. I could try to get a job.” She said she’d been out of work for a year and hadn’t been trying because she’s been living on money or savings. I said, “I’m going to have to take photos of the property. I’ve got to take photos of each room so I can send this in my report to the bank to do this in a short sale. I need you to sign off on this authorization lease information.” Sure enough, she did and she was very hesitant to share and I’m like, “I’ve seen it all,” which was a flat out lie because this is my first in-person appointment off of letters. I was baptized in the deep end. God threw me into the deep end of real estate.
I pull out my camera and I start taking photos and making sure here’s a big pile of food. Here’s the stuff that’s sitting there. She’d want me to go to the bathrooms. This place had four bathrooms. I mentioned that the water had been turned off for four months. She probably hadn’t taken a shower. She said she would go to the YMC to take a shower once a week. Her neighbors didn’t like her because she was stealing water from them at night to run off, get some water for her dogs, try to bathe even if it’s cold outside. That wasn’t happening because it was cold. We get to the bathroom and she’s like, “I don’t want to show you the bathroom.” I’m like, “I’ve got to see it.” What she had been doing is when the water ran out, she would use one toilet and couldn’t flush. She will still be using it until all the waste was up at the top and then she would put the dirty toilet paper in a five-gallon bucket. Each bathroom smelled like a sewer.
We went through everything. We get to the master bedroom and there are to-go containers all over the place. She had carved out a spot in her king-size bed. The dogs slept with her at night too. You could tell dog hair was everywhere. The same thing with dog food, not the dry kind, but the wet kind that had been spilled over. She didn’t take care of the property at all. I take these photos, get in the car and then I’m heading home. I call the wife and I say. “Can you put some soap and shampoo, a towel, and a clean set of clothes in the garage?” She’s like, “Yes. What’s going on?” I told her and she’s like, “Oh my gosh.” I drove with the windows down in case the stench that gets into my clothes didn’t permeate into the Trailblazer that I had at that time. I get home, I go in the garage, I close the garage, the hose was brought in, I stripped down all my clothes. I threw them all in the trash can.
The tennis shoes are luckily were my best shoes. What Ron LeGrand was saying, “Don’t go over in your Sunday best. They’ll think that you can pay more for the property. Go over in regular clothes a lot of times. Don’t go over in your nice car, go on your second one,” and we had a Trailblazer. I go in there and strip down, throw my clothes away, and I proceeded to go to work. She can only check your email once a week at the library. It was like touch and go. I got whatever documents I could from her. She didn’t have a job, the World Savings photos, and I went back and forth with World Savings for about six months trying to negotiate a short sale. They didn’t want to budge. Finally, after six months, they’re like, “We’re not going to accept the short sale. We’re not going to do that.” I think partially, it’s because she’d been on the hook for a couple of their mortgages and those had gone awry.
I called and I finally got on the phone because we would play phone tag as she would go to Walmart. I’ll make the phone call once a week because I didn’t want to go back over to the house. I went over to the house one time to get some of her documents that she had available and that was it. I didn’t want to go back inside. We did it outside. Unfortunately, I could not do it. I learned a lot from that house. I’m not afraid of anything now. I grew up in a hardware store. I’ve dug septic tanks. I’ve cleaned out septic tanks in South Texas. I’ve been around dairy farms. I’ve done a lot. I built houses from the ground up before. I’m not afraid of work. I’m not afraid of a little crap and stench. I’ve had animals.
Real estate is not always perfect, everything smells like roses aspect of things. Anytime I’ve come across a hoarder house like that, there are a couple of things. Something has gone dramatically wrong in that person’s life. You always try to do the best that you could. It was started before Wachovia bought World Savings. I got a phone call about 2 or 3 months later from the asset manager that held this loan. It was Mr. Diaz or Mr. Gonzales. I said, “No. This is a Scott Carson and I was trying to negotiate the short sale.” “We’re trying to track the buyer down of this property so we can proceed.” I said, “What do you mean proceed?” “The borrower passed away in the property.”
It’s an unfortunate situation. We’ve seen plenty of other deals. I’ve walked through quartered houses in Kansas City that had horrible flea infestations on inventories. I’ve rehabbed the ugliest and biggest roach-infested property in Salt Lake City years ago. It all started with this. It is not pretty. If I could have made a deal happen, great. A lot of people were like, “If anybody else had gone on the first time, it would have scared most people off from real estate.” I have to thank Mr. Ron LeGrand for that quote because that was the thing that stuck through my head the entire time, “The smell of shit and piss is the smell of money,” if you could make it work.
This one, I didn’t make it work but I learned so much. It started me down the path of doing short sales and trying to help people out there. Eventually, the property sold. They didn’t have probate and foreclosed. The person who bought it rehabbed it. They had to strip it down to the studs. When you have something as extreme as this like a meth house, you have to strip it down to the studs, put a coating on it, pull it down to the slab, recoat the slab, and then rehab from the inside out. Unfortunately, photos aren’t scratch and sniff. World Savings did not want to have a video. I had a video filmed on my camera. They didn’t want to accept that. They wanted regular photos. It took them another 6 to 8 months to sell the property.
If they would accept my offer on the front end side, they got a little bit more than what they got in the long run. You never know what you’re going to run into in real estate. Most of the time, it’s good solid people. You have to realize especially in the note space. If somebody’s fallen behind their mortgage, it’s because they’re out of work or they’ve gotten sick. They’ve gotten divorced or something bad has happened to them. There are issues that have happened. Sometimes it is. You run into where people have drugs, alcohol, and other things that can happen. I’m proud to say that we helped a lot of people who have gone through financial hiccups, staying in their house to get back on track with life or bring a batch and let them move on with their lives.
You never know what you’re going to find when you walk into that front door or what’s behind it. As I’ve always said, notes in real estate investing is like a Country Western song. It’s one story at a time. Here are dogs, animals, and hoarders. They’re one chapter in this crazy book we call real estate investing. I would love to hear your stories. If you’ve got a horror story like this too, if you’ve got one you rehabbed or a friend, I’d love for them to reach out to me. Scott@WeCloseNotes.com is my email. You can always schedule a quick phone call at TalkWithScottCarson.com. As always, please take the opportunity, subscribe, rate and review the show, and feel free to share it with somebody else. Thanks for reading everybody out there in the Note Nation. Take some action and we’ll see you all at the top.
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