A hoarder is someone who acquires or purchases things with an inability or unwillingness to remove or throw away all of their unneeded or unused items. This is usually in large quantities and the best storage location they find is every room in the house. This type of property has been found abandoned, under foreclosure or for sale by the family. In all cases the current owners will not be cleaning the items out of the house so its up to you.
If the flipper can organize the cleanup and removal of all of the “junk” the house could be repaired and sold like any other fix and flip. The issues faced are the time and cost to remove everything.
Another concern is that the clutter and junk is covering the walls, floors and anywhere else where there may be considerable damage that needs to be repaired before sale.
- Can you sell the junk to someone, can this be done quickly?
- Were there animals that were not taken care of properly?
- Could there be animal stains and severe damage to the hardwood floors?
- Is there water damage behind a stack of boxes that the owner didn’t even know was there?
It’s more common to run into this type of house when the owner passes on and the family is unable or unwilling to cleanup the house before sale. They could also stage an intervention where the family is attempting to help the hoarder and might be moving them to a facility for this purpose. In any case as a flipper there is an opportunity to purchase the home for less as long as we can deal with the materials and damage left behind. There are many challenges with a hoarders house that can end up dipping into the flip profits heavily.
Hoarding House Challenges
Basically hoarding is accumulating stuff that piles up in the average home living space to the point where you cannot use the room as designed. The collection of clutter and junk can affect the owners mental state and physical living space in what would be an otherwise healthy environment. In some cases this can be a compulsive person that buys things they don’t need or someone that garbage picks and never throws anything away. In one of the TV shows dedicated to hoarding there were delivered packages stacked on the floor in unopened boxes up to the ceiling.
The typical foreclosure has something left behind whether its old furniture or ragged clothing on the bedroom floors. The hoarder is an extreme case where the living room will have a path carved between stacks of boxes to the other rooms where there is more stuff stacked high. Every room is typically loaded to ceiling with stuff like unopened boxes, books, clothing, furniture, boxes upon boxes, even trash.
This provides a broad challenge to the investor who cannot see the walls or floors and cannot access the water heater or furnace behind piles of junk. There could be serious damage or fire and health hazards that will become expensive to fix.
Opportunity
The hoarder houses tend to be the best deals regarding the purchase price, assuming there is access to the home before the auction or sale. An average home buyer will not buy a hoarder house for their primary residence since this would require a ton of physical labor to clean the house out before even thinking of moving in. The investor considers this a unique opportunity for a fix and flip where everyone can benefit.
When first gaining access to the property use your mobile phone to take good photos and some walking video of every room, attic and basement. Bring a good flashlight and highlight the hidden areas behind and under things if possible. Bring a good set of gloves to avoid coming into contact with “something” that does not agree with your skin.
Were looking for signs of neglect, animal stains, pests and damage. The “junk” may have been stacked or stored in front of the property wet wall, appliances, HVAC or just boxes covering the fact that the basement has been leaking for the past 2 years. The photos and video can be reviewed later so go slow and film everything even areas where you cannot see. Estimating the repairs is going to be critical because we still have to get rid of the junk just to get to it.
Estimate High
You will want to make the estimates higher than normal. You may want to assume a complete tear down for certain areas due to neglect and damage. There may be mold and water damage so don’t be surprised you will need to demolition down to the sheet-rock and tear up or repair floors. It might sound extreme but some sites recommend planning to take the house down to the studs when preparing your repair estimate.
Another potential cost is upgrades to the electrical box or wiring. It’s common that the owner has lived in this house for decades and there may be upgrades needed to the electrical to bring it up to code. Also be sure to check on the dates for the water heater and HVAC as they may be in need of cleaning or replacement depending on their last install. Hoarder houses tend to be avoided because the employees cannot get tools and materials through the house let alone guarantee their work.
I have a friend who works in HVAC and he tells stories where he had to turn jobs down because the house was too cluttered to get to the heater or conditioner and the owner expected him to move everything to do the work. Then there are others where he couldn’t work on the house due to the smell or the pet smell if you happen to be allergic. The removal of the junk and cleanup is going to have a higher cost than other projects.
Junk Removal
The number one recommendation for junk removal is to rent a dumpster and park it in the driveway, close enough to not have to drag heavy items far. From what I gather dumpster rental will run somewhere between $300 – $800 depending on time and any dumping fees.
I also found companies that offer services specializing in cleaning up hoarding houses. They will clear out the junk, clean and disinfect the entire house. Some of the specifics are cleaning and sanitizing carpet, improve the air quality and odor elimination, elimination dust, cleaning ducts and handling pest control. There is no pricing on any of the sites I found but reddit has some posts citing the cleanup cost as between $10,000 and $20,000. This is pretty pricey for a fix and flip and would cut deeply into the profits. Depending on the market value this may or may not be financially feasible.
If your buying the property from the living hoarder it is good practice to understand there is an emotional component to all of the “stuff” they have accumulated. They have an attachment to all of these things at some level and it’s not considered junk to them so be careful when discussing removing or bringing in a dumpster get rid of the “junk”.
Garage Junk
The hoarder garage may be an interesting challenge for cleanup depending on the type of hoarder. A google search reveals some wild photos of a hoarders garage with junk just piled to the ceiling. I see this particular situation as different than the house because you will probably be dealing with things like large equipment, tools, used oil or car parts all stacked on top of each other. The house will tend to be more household items like clothes and boxes but in both cases there can be cleaning required for chemicals and spills.
The same logic applies here as with the house, were looking for damage and wear and tear to the garage structure or the garage door. Look for cracks in the concrete, and fluids or chemicals spilled out on the floor or wet boxes near the walls of the garage. There may be some concern for cleanup when you have tanks of propane or torches that need to be disposed of.
There may be items that can stay and be sold with the house and if after a little cleanup they would look good for staging. I’m referring to things like lawn tools, a work bench or outdoor furniture that with a little cleaning looks pretty good. These items can be used to help with staging the garage or the backyard.
Items of Value
If the property is a straight sale and the family is not interested in anything inside the house there might be items of value that can offset the cleanup costs. The first reaction is to dump everything in the house and get down to the repairs. I might suggest that taking a look at some of the possible value in items may allow the flipper to sell the unwanted junk for a some cash. This can also be outsourced to a 3rd party to sell items and keep a percent for commission.
This is a choice for the investor as it requires looking at much of the junk with a different eye to identify something of value. Hoarders have been known to buy things brand new and when it is delivered the box sits in the living room unopened and eventually buried under more boxes as they arrive. This means there are items that are new in box and still retain some kind of value to them even if sold as used. Someone with plenty of time could sell these items at a discount on ebay or amazon. I know of someone who’s son made some extra cash selling property found after a house was purchased for flip. He was in charge of going through boxes, finding values and selling it on ebay.
A good combo idea can be to have an estate sale or yard sale and at the same time, use the opportunity to let each visitor know you will be placing the house for sale in a few months.
Garage, Yard or Estate Sales
The investor needs to decide whether spending time on selling a hoarders junk is worth it. Just cleaning out the house may take months to complete and you will need labor type help to get it done. Nobody enjoys shoveling junk into a dumpster for hours every day and what happens when you have some bottles of chemicals break and spill over everything?
One Dollar Days
I’d like to suggest an idea I learned from an old lady who loved to visit garage sales and had a husband that was a hoarder. After her husband passed, being in her 60’s, she was not physically able to remove all of the leftover junk in her house and garage let alone any heavy items such as her husbands tools and welding kit. She moved to retired living but the house still needed to be cleaned out and sold.
She created some signs that read “YARD SALE – EVERYTHING $1” and placed them at the end of the street and the local main street too. She sold everything for only $1 and that included all of those heavy items such as tools and tool boxes, propane tanks and a well used welding kit. Smaller items like a bag of balloons went for 10 for $1 to the little girl from next door. The end results was over 80% of the junk left over was carried off by happy customers, heavy stuff, light stuff and dirty clothes too. She made around $800 over the weekend and that money was used to pay her grandsons to finish cleaning out the house and painting.
For the investor the “one dollar day” is an option to spread out the physical labor and time required to dump a hoarders collection,.. and you might make a few bucks doing it 🙂
No matter how many yard and garage sales I have been a part of, there is always leftovers. These are items that are broken or just too old for anyone to be interested in and they will end up in the dumpster. An alternative to the dump would be recycling, can this stuff be recycled? If so you might be able to call and have someone pick it up for you.
After Cleanup
The post cleanup stage is where the investor gets back to business. The same process applies with regards to assessing damage and repairs or estimating contractor time. Cleanup has simply revealed whatever was hidden below all of that junk.
Expect things like paint that is peeling mold, pest damage such as ant hills, roach colonies and termites. Due to the items blocking access to many parts of the home, there may be much damage from neglect and the owners inability to see the damage.
Another important consideration after the cleanup is to re-negotiate the sale price based on the newly found issues.
Re-negotiate Price
After the cleanup has completed there will be issues that were not considered when the price was first negotiated. If you took the above advice the estimates were high expecting some higher repair costs when the clutter was cleared. The investor will want to re-assess damages, do another walk through and update the estimates for rehab. This is where you will have a solid understanding of the after repair value (ARV).
After this is done the investor will want to have an estimate done and update all of the repair numbers from before. Then re-negotiate the sale price with the buyer using this new information.