Thursday, May 19, 2011

Investment Nightmare: Worst Case Scenario Comes to Life

It appears Ogden's reduction in rental supply continues...

When shopping for investment property with clients, one of the things I always encourage my clients to do is to get a home inspection.  There is a reason I suggest this.  The following example is NOT one of my clients. 

The fourplex at 2807 Quincy Ave. was a splendid craftsman style building with architectural charm.  Here is a photo from a couple years ago:

Here is a photo from this morning:

What was once an adorable property is now a dirt lot.  So what happened to this fourplex?  I know it didn't burn down.  I also know that several years ago the owner made some major (i.e. $50,000) foundation repairs due to some settling.  So, I pulled the title abstract to find out more.  Here is a copy of the most recent title history:

The title abstract reveals that the owner refinanced the property with Zions bank in July of 2008 for $220,000. Then in November of 2010 we see this "ORDR TO ABATE" as the last entry.  I haven't bumped into one of those before so I pulled that document to see what it says.  Here are pages from the document (click to enlarge):

WOW!  You do not want to get one of these letters in the mail.

This is a case where the owner of the property likely did not do proper due diligence prior to purchasing it.  Despite the best efforts to correct the foundation problems when discovered they were not enough.

It appears that the owner now owns a dirt lot with a $220,000 mortgage.  I don't know any crops (besides particular species of poppy) that they can harvest on that space that will make the mortgage payment.  It will be interesting to see if the owner defaults, sticks it out, or has some sort of recourse through their homeowners insurance.


Chad said...

Wow! Loved this post. Very informative. I've been searching abstracts a long time and never seen and order to abate before either. Thanks for posting this Jeremy.

Robert Wayne said...