Uninformed online real estate investors buy trouble

Good, bad deals mix block by block; one success story involves renting.

JIM NOELKER/Online Housing Before Paul Young's house was in bad shape when he purchased it in 2007.

Paul Young, from New Hampshire, bought his home at 139 Lorenz Ave. online for $11,000. Young is rehabilitating the home and hopes to sell it for a profit. Staff photo by Jim Noelker

JIM NOELKER/ONLINE HOUSING Paul Young, from New Hampshire, bought his home at 139 Lorenz Ave. online for $11,000. Young is rehabilitating the home and hopes to sell it for a profit. Staff photo by Jim Noelker

ENLARGE PHOTO

Houses in the Dayton area listed on eBay during the week of May 30-June 5, 2010

ENLARGE PHOTO

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By Ken McCall, Staff Writer Updated 6:40 PM Saturday, June 5, 2010

DAYTON — Neighbors say the house at 2219 W. Second St. has been sitting empty for years.

“Enter at your own risk,” one woman says.

But there’s no way to get in without a crowbar. The 106-year-old, 1,390-square-foot house has been sitting on the city’s nuisance property list since March 22, 2008. It’s had to be re-secured after break-ins twice this year alone, according to city records. And it’s on track to join the city’s demolition list, which means it may not be standing much longer.

But there it is on eBay with one bid on its opening price of $7,000.

The house shows what a crazy market exists in some Dayton neighborhoods. A little over a year ago, the house changed hands for $5,375, when a buyer based in New Jersey purchased the home. A James Davidson then bought it in January for $56,300, according to Montgomery County records.

It’s not clear if the seller on eBay — listed under the name “reinvestor523” — is Davidson. The description of the house, however, and the neighborhood around it, is definitely generous. It’s a “handyman special” in a “modern, middle-class neighborhood,” according to the eBay description — perhaps a bit kind for a block that has its share of overgrown lots and vacant houses.

At least the picture of the house shows it’s boarded up. That’s not always the case, observers say.

“Oftentimes, we see these investors, once they see how much it’s going to cost to do these repairs, they just walk away,” said Donna Martin, president of the nonprofit Preservation Dayton. “They stop paying taxes. They stop paying insurance. They try to resell it, but it just doesn’t work out.”

Aaron Sorrell, housing and neighborhood development manager for the city of Dayton, said he sometimes hears from disgruntled online buyers, but it’s hard to muster sympathy for people who buy these houses sight-unseen, without doing due-diligence research on their purchases.

“Often when they call me, they are either looking for cash, or they’re looking for the city to somehow solve their problem,” Sorrell said. “In some cases they bought half of a lot, or the house is no longer standing because it had been in our nuisance program and we demolished it at some point in time, and they were not told that.”

You can’t trust the pictures, Sorrell said. Of one eBay house he investigated recently, he said: “The seller put online the best-looking picture he could possibly Photoshop.”

New Hampshire handyman

Paul Young had something like that experience.

The 73-year-old retired electrician from New Hampshire paid $11,000 cash for his house on Lorenz Avenue in the city’s Westwood neighborhood from another online auction site, Bidassets.com, in 2007.

After looking at the house in person, he figured he could have gotten it for half that.

“They had an old picture, which was a lot better than the house was,” Young said. “When I came, I saw there was a lot of stuff ripped out.”

Still, Young said he’s not the kind of person to back down from a challenge. He did enough work to get the electricity turned back on, moved into the house and began fixing it up.

It was in reasonable condition, he said. The windows were intact. The furnace worked. None of the bathroom or kitchen fixtures were stolen. It was paradise compared to some he’s seen since.

“I’ve been in a couple of places on the street,” Young said. “People have broken in and stolen stuff out of there for scrap. The druggies live in them, and trash them. There’s dog crap all over the place and cats and clothes strewn all over.

“You’d have to get a crew in there to really clean it out if you get one of those.”

Not quite three years into his project, he’s got the exterior almost done, the front porch completely rebuilt, the roof and siding replaced, the second floor refinished with attractive laminate floors and some landscaping in. He’s about to take on the first floor and figures he’s got another year of work to do. When he’s done, he estimates he’ll have about $50,000 invested.

At that point, he said, he’ll probably try to sell it. He’s gotten reports of houses selling nearby for more than $50,000. The house next door was purchased by a contractor, lightly renovated and sold for $58,000, he said.

But that was in 2006 — four very long years ago in this housing market.

If he finds a buyer, Young said he’d look around for another, cheaper, purchase. He’s hoping the county or the city will declare a “special category” with lower taxes for abandoned houses.

“If I could pick up a couple of these old houses cheap enough, I would hire a couple of people who are not working and fix them up,” he said.

But, he points out, he doesn’t have to earn a living at it, like local contractors.

“They have to get their money out of a house,” he said. “And if houses are not selling, they’re not going to fix them up.”

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