Good day dear readers. Contrary to the title, far be it for me to assume the mantle of Superman. But, for every real estate investor, there comes that challenge. Can you convince that person to make a deal on that property? How motivated are they, and are they motivated enough? Do you continue to bash your head mercilessly against that block wall, or is it just better to walk away? In my case, I am stubborn. I wanted to be the one that made that deal. So, sure, it was mostly about ego, but ego can be a great motivator. That, and the fact that every time I try to walk away, my particular Luthor always seems to show up again at the most unexpected times.
We will call her Desiree since if I use her real name she will probably sue me. I happened upon Desiree purely by chance. The connection came through a friend of a friend, which just goes to show you the power of networking. This guy called me and said he understood I was looking at properties to rehab. There is a great property on his block I should look at. It was a turn of the century colonial four-plex. Currently abandoned, it needed a lot of work and was bringing down the rest of the neighborhood. He said I could probably get it real cheap.
He had me at cheap. So, my partner and I took a look at it. The neighborhood wasn’t bad. It wasn’t far from downtown, where the city was doing a lot of re-development trying to bring the whole area back to life. He wasn’t kidding when he said it needed a lot of work, though. For starters, the entire structure was leaning about 3 degrees to the right. Other than that, it had nice lines, they just weren’t straight. A wide porch supported with carved wooden columns. Room for parking off an alley behind the building. There were two downstairs units with a staircase between them, leading to the two upstairs units. While the place was technically abandoned, we saw signs that someone was squatting in at least one of the upstairs units. We did some quick math and figured the ARV would be north of $350,000. Total rehab was probably somewhere between $150,000 and $200,000. Our maximum offer would be $100,000 which, all things considered, was a pretty fair price. The next step would be to track down the owner aka Lex Luthor.
Finding ownership really isn’t all that hard. Easiest way is to log on to the county tax collector website and see who is paying the property taxes. A lot of real estate websites such as Zillow, Redfin, and realtor.com, among others, also provide that information. That is how I got the name Desiree Smith. Getting a current address or phone number proved more of a challenge. At the time I had a subscription to people search so I was able to obtain that additional information through that app. I also discovered that Desiree was in her 70s, had apparently never been married, and had no children. It showed a few relatives, and one caught my eye. A second Desiree Smith that shared a birthday and was exactly 30 years younger. The app showed her living at many of the same addresses that the first Desiree owned. I have never been able to find any additional information on this particular person and I believe she and the Desiree I was looking into were one and the same person. I suspect a clerical error, accidental or intentional, had created this doppelganger. Either that or Desiree is a favorite aunt. First, I called Desiree, the one listed as the owner. What I got was a generic recorded message asking me to leave my name and phone number. I did, but I wasn’t even certain I was talking to the right person as she never identified herself. I waited a couple of days and, when I didn’t get a reply, I decided to drive over to her house, which is about 5 minutes away from where I worked.
This was right around Thanksgiving. I drove to a modest, ranch style house located in a nice if older neighborhood on a quiet cul-de-sac. I knocked on the door but there was no answer, and I didn’t see signs of any vehicles. I got a piece of scratch paper out of my car and scratched a note, tucking it in the doorframe with my business card. I then went next door and knocked on the neighbors’ door to make sure I had the right house. Yes, Desiree lived there. But she had property in Palm Springs and usually spent a lot of time down there. Fair enough. And at least I knew I was working the right corner. A week or so went by and I did not receive a reply, so I decided to get a little bit more aggressive in my approach. For the next few weeks I stalked Desiree’s house, stopping there two and three times a week on the way home from work and knocking on the door. Usually, the house appeared vacant but, on a couple of occasions, I did spot a truck parked in the driveway. Maybe Desiree was simply avoiding me.
The holidays passed and it was the week between Christmas and New Year’s. Kevin, my partner, asked me if I had had any luck tracking down the owner of the four-plex. I explained what was going on and he suggested that the two of us make a trip over to Desiree’s house. We drove over there and had pretty much the same result as I did solo, no answer when we knocked, leave a business card in the door, hope for a response. The next-door neighbor happened to be pulling in as we finished up, so we walked over there and spoke to her a second time. Kevin introduced us and explained that he was a local realtor interested in an abandoned property that Desiree owned. We were trying to contact her without much luck. When next she saw Desiree, could she pass along our interest with our contact information. The neighbor was glad to be of assistance.
A couple of weeks go by, and Kevin gets a phone call from a very irate woman. She wants to know why he’s going around telling the neighbors that she had a foreclosed property. Her property was none of our business. Kevin was finally able to get a word in edgewise and calm her down, a little. He explained that he had never told the neighbor the property was foreclosed. In fact, we had done our homework and we knew that Desiree owned the property free and clear. Taxes were current and there were no liens. Our best bet is that the neighbor had heard the word abandoned and automatically assumed it was a foreclosure, describing it that way to Desiree. Kevin further explained that the property appeared to have been abandoned for some time and we were wondering if Desiree would be interested in selling it. She thought this over for the briefest of moments before replying that she wasn’t sure what she was going to do with the property and once she decided, she would call us. Until then, we shouldn’t call her! Again! Ever!
Obviously, Desiree was not ready to sell. That was okay because this is Bakersfield and there are a lot of abandoned properties. This was just one that was going to remain abandoned. We progressed into the new year, and I had a friend that was employed doing security installations for a home security company. He was outside going from neighborhood to neighborhood on a daily basis and saw a lot of abandoned houses. On Tuesdays, which are his day off, he and I would get together and take a look at these. One day we were looking at a house that showed all the signs of not having been lived in for quite some time. Upon closer inspection we could see that there was some fire damage to one side. The windows had been boarded up and we were trying to see if there was a way to peek inside to see how much damage had been done. About this time, we heard a voice saying, “what are you guys doing there.” Turning around, we discovered the next-door neighbor observing us from the other side of the fence. We told him what we were about, and he seemed fine with that. In fact, he was more than willing to share details. He said the fire happened about two years before. The owner hadn’t bothered to do any repairs, simply boarded up the windows, locked the doors, and walked away. He said that was kind of the way this owner operated. The same person owned his house and he had to go through hell to get repairs done, usually paying for them himself. I pointed out that he was within his rights to get necessary repairs done and present the owner with the bill. But he had lived there 10 years and had never had a rent increase. If that meant taking care of the odd repair himself, he was fine with that.
I told him that yeah, it was a sad fact, some landlords just didn’t seem to care. I then began to tell him about this run down four-plex we had been looking at and the owner just refused to sell it or do anything with it. There are a lot of older buildings in Bakersfield, some of them historic, that are held by owners that were perfectly willing to see them sit empty and rot. I just couldn’t understand it myself. He asked me the name of the person that owned this four-plex. I said it was Desiree Smith. He laughed and said “yeah, she owns my house and the one you were looking at as well.” We all got a chuckle out of that. We looked at seven or eight properties that afternoon. I noted addresses and took pictures and then I went home that night to look up the owners. I was astounded to discover that all of them, save one, were owned by Desiree Smith. I wasn’t laughing now. That got me to thinking, so the next day I contacted the title company with which we do business. I asked them to do a reverse search for me and find out the addresses of any and all properties that Desiree Smith may own. I was further astonished to discover that she owned 48 properties. Most were single family residences although there were a few multi families. In total she held 65 doors. All of them had apparently been bought during a three-to-five-year period in the 1980s. All were owned free and clear and had no liens on them. I later discovered two additional properties that she owned that, for some reason, had not turned up in this initial search. Also, this was just Kern County. We had been told that she owned property in Palm Springs as well, and who knew where else. Desiree Smith was a very rich lady.
I spent a couple of weeks doing research on all of the properties on that list. I even did a drive by on each and every one of those 48 properties. Of the 48 properties, 18 appeared to be abandoned. Two of them were actively seeking renters. The other 16 were empty and had been empty for some time. Desiree had a property management firm managing the properties for her and I was able to contact them. Now I wasn’t just interested in the four-plex. There were several properties that looked promising. I even had thoughts of seeing if we couldn’t buy all 16 at once, then rehabbing them and selling them off. I estimated that we would probably end up with two properties that we keep as rentals free and clear. The property manager said that Desiree was a very private person. People had tried to buy properties from her in the past, but she simply wasn’t interested in selling. Still, she said she would pass our information along, although something tells me she never did. Trying to contact Desiree directly was no more successful. Whenever I went by her house, she never seemed to be home. And she never returned my calls. After three months of research, I probably knew more about her properties than she did. And I was no closer to owning even her worst, most dilapidated property then I was the previous Thanksgiving.
I thought perhaps Desiree had a thing against men. With that in mind, I spoke with a couple of female investors that I knew. I explained what was going on and asked if they would try to make contact. Of course, if they made contact and we were able to work something out, I would bring them in on the deal. They had no more luck than I did.
I was really at a loss. Even allowing the properties to sit idle and rot, there was a certain amount of overhead. Desiree would have to pay annual property taxes and insurance at the minimum. I know for certain that the city had had to come in and do maintenance on several of these properties as they were becoming fire hazards. When that happens the owner of the property is sent a bill. In most cases, if the owner decides not to pay the bill, the city or county will then place a lien on property and will eventually seize the property, taking it away from the negligent owner. In Kern County, if the owner doesn’t pay the bill, it is simply applied to their property taxes so they end up paying for the maintenance, whether they know it for not. This is why you can drive around Bakersfield and see a lot of neglected and abandoned houses. It’s also why you can drive down to LA and not see many abandoned houses. Bakersfield simply needs to get more aggressive with negligent owners.
More to the point, I did the math. It was costing Desiree a minimum of $30,000 a year just to keep those houses empty. Common sense would dictate that she put some money into them, bring them up to a proper living standard, and rent them out. If she could afford to let those properties sit empty, and she had roughly 30 properties owned free and clear, each of them paying rent, then she could certainly afford to put a little bit of money into these empty properties and make them cash flow. If not, sell them off and let someone else put in the effort. I mean seriously, 16 properties all in disrepair, but salvageable, she could easily get $1.5 to $2 million for the lot of them. We had already established she wasn’t hurting for money, so I go back to my original statement, I was at a loss. Maybe money was the reason. She didn’t need the money, so she had no motivation to sell them. It’s the only thing that made even a little sense.
I tried to do the sensible thing and walk away from the whole mess. Really, I did. A whole year went by and then some. Kevin and I picked up some rental properties and did a flip or two. One day we were driving around looking for potential properties. If you’re not familiar, it’s called driving for dollars. We saw this one property, clearly a multi-unit of three or possibly four apartments. It had some fire damage and the city had posted a notice on the front door of the main unit. Kevin stopped to read the notice while I squeezed through a gap in the fence and wandered around the back to see if there was a way to get inside or, at least, get a better look at the fire damage. Nothing! She was boarded up tight. As I’m squeezing through the fence to come back up front, I hear Kevin laughing. I approached him and I asked him what was so funny. He said “read the notice.”
This is going back a few years now so I will have to paraphrase. Basically, the notice said that the building had been condemned and it was unsafe to enter. Entering the building was a violation of some law blah blah blah blah. Violators will be prosecuted. At the bottom of the notice, it was signed off by the building inspector and, by law, it listed the name of the owner. One Desiree Smith. Kevin just laughed and said “hey it’s your arch enemy”. I thought he was going to pee himself. Of course, I contacted the building inspector and asked him about the building. I asked him if he had met or knew the owner. He laughed and replied “oh, we all know Desiree down here.” Apparently, Desiree is well known to the code enforcement division. She has quite the reputation. Something of a slumlord. He said every once in a while, she will sell one of her buildings. But those are few and far between. In the meantime, all of her buildings need repairs which she refuses to do and are borderline code violations. Unfortunately, with the way the laws are structured in Kern County, they really can’t do anything about it.
So once again I tried to walk away. Another year went by. Then comes an article in the local newspaper. Not a lot happens in Bakersfield most of the time, so the story made the front page. A photograph of the very building that started this whole mess. The fourplex located near downtown. Except, since the last time I had seen it, there had been a fire which destroyed most of the roof. A group of neighbors were fed up. The building was an eyesore and had been attracting vagrants and drug users, bringing down the value of their properties. Then one of the vagrants or druggies had almost torched it. A fire that could have potentially spread to other homes. So of course, me being me, I had to try to talk to Desiree again. I went to her house and knocked on the door. Believe it or not she answered. I met a thin, wiry, white-haired old woman, although she seemed spry enough to be able to kick my ***. I asked her about the four-plex and told her we were still interested. It was basically a tear down at this point so we would pay her the going rate for the land and cover demo costs. A very fair offer. She said she was waiting to hear from her insurance carrier. She seemed to be of the opinion she could negotiate the payout with the insurance company. Negotiate and insurance company, three words you will rarely find in the same sentence. She felt she could get a better price for it than what we were offering.
This was all news from over a year ago, pre-covid. I hadn’t seen the building or been in contact with Desiree since that time and now I’m curious about the current status of the property. Again, me being me, I had to pick at it, so I drove over to the property this week. Took a couple of current pictures seen below. Not much has changed since I was there last time. I’m sure Desiree still owns the thing and she probably got something from her insurance company, not what she wanted, I’m sure. The group of angry citizens demanding she sell it or “fix” it went nowhere. The city doing anything went nowhere. There is a notice posted on the door saying there will be an abatement hearing in November and the owner could be fined. Desiree will ignore that, as she always does, and it will be tacked onto her property tax bill. A bill which is probably paid by an accountant or bookkeeper. I imagine, as far as Desiree is concerned, out of sight, out of mind. Really very sad and I hate to see an old building like that being so badly mistreated. What was it Doris Day used to say? Que sera, sera. What will be will be. The really sad thing, or perhaps immoral is a better word, there is a housing shortage in Bakersfield. With dozens of vacant homes the city can step in at very little cost and let investors do their job. That probably makes too much sense.
So once again, I have walked away. Although I haven’t walked far. Desiree is almost 80 years old now, so I check the obituaries on a daily basis, morbid as that sounds. With no children and no close relatives, the whole mess is probably ending up in probate. If I spot her death notice maybe I can get a head start on it. As I said, I’m stubborn. This just goes to show you there are a lot of strange situations out there. I can see someone being over extended and walking away from a money pit, letting the bank or the county take the property via foreclosure. Why anybody would own abandoned property AND pay taxes and insurance on it is a complete mystery. Especially if they own it free and clear. The more run down the property becomes the more it loses in value. It’s like burning money. Just makes no sense but there it is. I’m sure there are other Desiree’s out there. Maybe you have come across one. Let me know in the comments. Until then, like I always say, swing for the fences.
