The next morning, I turned the last page on yet another trashy novel. I was so groggy, I had no idea what time it was, and was shocked to see 11:07 am on my phone’s screen. I turned on the TV and flicked between talk shows and soap operas. No thanks. Hours in my day begged to be filled, days in my week itched to be scratched, but there was nothing for a jobless bum like me to do in the middle of winter. I hated to be the needy girlfriend, especially after we’d already spent so much time together, but I was ready to pull my hair out, so I called Dylan. “What are you up to?”
“Driving around, looking at properties.” I could hear the sound of traffic on his end.
“You with an agent or someone?”
“Nope, just on my own.”
“Want some company?”
So Dylan came to get me. He drove a hunter green pickup with a huge cargo bed. “What happened to that sporty little rental car you had last night?”
“I told you, Amber, I’m here to buy this time. It was criminal what I paid for this truck. I practically stole it.”
I pulled loose a fleece blanket from behind my seat. It smelled like pine and Ivory soap, clean, but not like Dylan. “You sure the guy you bought it from didn’t steal it?”
Dylan laughed. “You’re pretty close. He repossessed it.”
“Lovely.”
“It’s a buyer’s market, Amber. The few people who have money are reluctant to spend it. A guy like me, with ready cash, can practically name his price.”
“You don’t feel bad taking advantage of others’ misfortune?”
“You think if I hadn’t bought the pickup, then the repo man would’ve returned it to the owner? He lost out when he bought more truck than he could afford. You buy something, you can’t afford to pay for it, you lose it.”
I got to thinking about myself lounging on the couch all morning. “But maybe he could afford it when he bought it, but then got laid off or something.”
“That’s possible.” Dylan turned off the engine and faced me. “It’s more likely he had no savings, no cushion to catch his fall.”
“I just…I don’t like winning on someone else’s loss. It feels too much like Monopoly.”
“If you can’t handle that, you probably don’t want to come with me today.”
“Does that mean you’re buying foreclosures?”
“That’s right. The properties I buy in this down market will set the financial foundation for the rest of my life. Hopefully, for the rest of our lives.” He ever so gently touched my cheek. “I want my dollars stretching as far as possible.”
“I understand that. I do.” I shrugged, and my head fell into his hand. “But it still feels like you’re capitalizing on poor John Doe’s misfortune.”
“Let’s say John Doe is about to lose his house. He’s seriously in the hole with the bank, he’s swimming in credit card debt, and has two years of back taxes looming over his head. He’s strapped for cash and would benefit from selling his house at the market rate.”
“Exactly, he could sell it to—.”
“But nobody’s buying. He’s in so deep, the bank won’t wait any longer for him to get his act together.”
“So he’ll lose his house either way?”
Dylan nodded. “If I didn’t buy, you think John Doe would be better off? The fact is, buyers coming back into the market stabilize housing prices, which leaves struggling homeowners much better off.”
“That doesn’t help those who’ve already been foreclosed on.” Why was I fighting Dylan so much? I was reminded of how, as a little girl, I wanted to give my friends identical presents to be perfectly fair to everyone.
“It can. Remember, we’re buying these houses at auction. Auction prices are incredibly low right now because there’s such a strong supply of foreclosed houses, and the number of buyers is so low. But the more people who bid on foreclosed properties, the higher they’ll sell. When the sale price is high enough, a homeowner with equity can get money back.”
I perked up. “They get the difference between what they owed and what it sold for?”
“Not quite. Foreclosures are expensive. There are bank fees and attorney’s fees on top of the mortgage. Only after all that is paid do they get any money back. That’s why if the homeowner has any equity, it’s in their best interest to sell pre-foreclosure.”
When I thought about it logically, I knew Dylan wasn’t stealing people’s homes. The owners had already lost them to the bank, and the more buyers there were like Dylan, the better off the banks and the homeowners would be. So why did it make me queasy?
He revved the engine and drove across town. We pulled up to a one-story house. An old rusted lawnmower lay in the front yard next to a broken bicycle, a ripped trampoline, and other pieces of junk. “You’re not seriously interested in this place, are you?”
“That’s what I’m here to find out.” Dylan got out of the truck. I thought he’d head to the front door, but he instead went around to the side of the house.
I ran to catch up. “Aren’t you going in?”
He squatted next to where the gutter drained out to the lawn. “I have no right to. It’s not like the owners are selling it. It’s being taken from them.”
“So then what are you doing?”
“Just walking the perimeter.” He stood again and continued towards the back yard. “I’m searching for signs of damage. Cracks in the foundation. That kind of thing.”
We passed by a bay window that I assumed belonged to the master bedroom. I was so tempted to see inside. How could someone buy a house without knowing what was creeping around in there? What if there was a corpse in the living room? What if there was a corpse in every room? “Can we at least peek in?”
“I’ve never been the peeping Tom type.”
“Oh, come on. Where’s your sense of adventure? Real estate is boring enough without sticking to the law. Go on, give me a lift up.” I grabbed the window sill and held up a foot for Dylan to hoist.
“As you wish.” Dylan leaned over and cupped his hands. I stepped into them, and he easily lifted me high enough to get a decent look inside.
“This place is deserted, Dylan. There’s junk everywhere, but no signs of life.”
“That’s good.”
“Why?”
“No one to evict.” Dylan’s voice grew deeper, probably from the strain of holding me. “Do you see any signs of damage?”
“No, but I can’t see much. You’re really not able to enter?”
Dylan grunted and lowered me to the ground. “That’s how foreclosure auctions work.”
“But what if you get a house that needs major repairs?” I circled around to the kitchen window and put my hands on the sill.
Dylan hoisted me again. “You either suck it up or walk away.”
Half the cabinet doors were off their hinges, and garbage was strewn throughout the kitchen. “You can walk away without having to pay?”
“No, I’d be out the purchase price.” Dylan lowered me down again.
“And you’re willing to risk that?”
“It’s the risk that drives down the prices.” Dylan kept eyeing the house’s foundation as we circled around it. “Most houses don’t have some major, hidden problems, and you make enough on the good ones to cover the losses on the bad ones. It’s like a poker hand. If your cards say you have an 80% chance of winning, you bet big. You’ll still have some losers, but if you play enough hands, you’re bound to come out in front.”
This sounded like Anthony and his bets on start-ups, though I don’t think his VC firm would have invested in a company sight unseen. “If that’s the case, then getting in a little extra-legal inspection seems like an ace up your sleeve.”
“Not my style, Amber. Walking the perimeter is about as far as I’m willing to go.”
At the next house, we didn’t get so lucky. The yard was fenced in, and a Doberman paced behind it. “This place is definitely still occupied,” I said. “What are we going to do?”
Dylan pulled out a drone from the back of his truck. “We’ll just take ourselves a little video.” He flew the drone up and over the house. The dog chased it, barking like mad, and jumping as if to attack, but the drone flew too high for its reach. Dylan got the shots he wanted, including a full inspection of the roof.
A woman poked her head out the door. “Rudy, what the hell you barking for?” Then she saw the drone, and her gaze landed on us. “Are you some more of those real estate agents? Bugger off! I’m not selling.”
“She seems friendly enough,” I whispered between tight lips. “Let’s talk to her.”
“You call that friendly?” He mumbled back.
I waved to the lady. “I said friendly enough. What’s it going to cost us?” I approached the fence. “Sorry to bother you, Ma’am, but you do realize this house is being foreclosed on, don’t you?”
The woman waved me off. “They’ve been threatening to foreclose on us for years.”
“But now it’s going up for auction.”
“That’s why you leeches have shown up…” Her words hit me like a punch to the stomach. I could see what Dylan meant about evictions. Even if he did win this place on auction, I wouldn’t want to be the one charged with kicking her out of the house.
Dylan came over at 8 am. He’d offered to pick me up at 9 for the day’s events, but I convinced him to come over for breakfast first. Nothing too fancy this time. Just pancakes and orange juice. With hash browns. And fresh jam. And coffee, of course.
“What’s that in the pancakes?” he asked as we sat down.
“I made three kinds. Blueberry, plain, and chocolate chip.” OK, fine, so I went a bit overboard. Can you blame a girl for wanting to cook for the man in her life? “Which would you like?”
“I’ll start with blueberry, then have the chocolate chip for dessert.”
I served Dylan two of the blueberry. “I can’t wait. This is going to be my first auction.”
Dylan poured himself coffee. “It’s not that exciting.”
“No?” I held out the maple syrup but then drew it back out of his reach. “Do I hear one kiss for the maple syrup? One kiss for the maple syrup? Do I have any bids?”’
“Two kisses.”
“Two kisses to the man in the flannel shirt. Two kisses going once. Two kisses going twice. Sold to the man in the flannel for two kisses.”
Dylan got up, took me in his arms, kissed me twice, and grabbed the syrup.
“And you’re telling me that isn’t fun?”
He drowned his pancakes in syrup. “You’re a lot more kissable than the auctioneers at the courthouse. Trust me, it’s not that exciting.”
“Well, I’m excited, so don’t kill it for me.”
We arrived at the courthouse around 9:15 to find a crowd milling outside. “It’s late already,” I said, “I’m surprised they haven’t opened the doors.”
“Oh, they have. Court’s already in session.”
“Then what are all these people doing outside? Shouldn’t they be in the auction rooms?”
“There are no auction rooms.” Dylan splayed his hands out wide. “This is where it all happens.”
“Right here? On the courthouse steps? I thought that was just an expression.”
“Right here.”
“Where are the auctioneers?”
“They’re here. That guy in the blue suit is one. That woman’s another. If you look around, you’ll see at least five of them.”
Once Dylan pointed out a couple of them, the auctioneers were easy to spot. All wore suits and read aloud off iPads. About forty others sat on the steps, talked on their phones, or chatted in small groups, not one of them paying attention to the auctioneers. “What are they reading?”
“Legal disclosures.”
“No wonder no one’s listening.”
An assistant stood next to one of the auctioneers, holding up a whiteboard with the address of the property on auction. The rest of the auctioneers had no such signs, and Dylan had to ask around to find out which properties were being auctioned off. “OK, that’s one of the houses I’m bidding on.” He pointed toward a group of six milling around an auctioneer. “We might as well wait with the rest.”
He sat on the courthouse steps, and I sat on the step below him. “If we’re just going to be waiting, it’s a shame for those hands of yours to remain idle.” Dylan rubbed my shoulders, the response I’d been looking for. All in all, I could think of worse ways to spend my morning.
Eventually, the auctioneer said, “OK, we’re about to start the bidding for 258 Geppart Road. All interested bidders must come forward to certify.”
Dylan pulled identification and a check out of his pocket. “What are you doing?” I asked.
“Proving that I’ve got the funds to bid on the house.”
“How do you do that?”
“Cashier’s checks.”
“But you don’t know how much the house is going to sell for.”
“That’s why you come with a bunch of checks for different amounts. I’ll need to put down a 20% deposit today, so before I’m allowed to bid, I have to show I have enough in ready funds.”
Once everyone checked in, the auctioneer announced, “The opening bid on 258 Geppart Road is for $34,000. Do I hear $34,000?”
Two of the bidders threw up their hands and walked away. “That’s it?” I said. “They’re done, just like that?”
“The first rule of auction bidding is to know your maximum bid.”
“But didn’t they know the opening bid before they showed up?”
“No. You never know until they start.”
“But we’re still in?”
Dylan squeezed my shoulder. “Yes, we’re still in.” He leaned into my ear and whispered, “I’ve got 52 grand in cash I’m willing to spend on this place.”
“Do I hear $34,000? Going once. $34,000, going twice. Final call at $34,000.”
“Dollar over,” Dylan said.
“The bid is now at $34,001. Do I hear $34,100? $34,100 going once. Going twice. Final call at $34,100.”
“$34,100,” a lady in a brown coat standing next to me said. I shot her a scathing look.
“I have $34,100. Do I hear $34,200? Going once. Going twice. Final call at $34,200.”
“Dollar over,” Dylan said.
“I have $34,101. Do I hear $34,200?”
Dylan was right. This got boring fast. It wouldn’t have been so bad if people just cut to the chase like they do in the movies. If Dylan was willing to pay $52,000, he could have just said so, and either he’d win or he’d be outbid, but at least the damn thing would be over quickly. OK, I know that’s stupid. I didn’t want Dylan paying $52,000 if he could get it for $35,000, so I got that it had to move up slowly. But did it have to move so slow? If Dylan wanted to outbid someone, why not just jump in and do it? Each time the auctioneer called out going once, no one said anything. Going twice received crickets. Final call, and finally someone would pipe in, but often just for a dollar at a time. So we stood as the price slowly crept up. At $37,000, one of the bidders left. At $43,200, we lost another. At $48,000, one more dropped out, leaving just Dylan and the woman in the brown coat. At $52,000, Dylan said to me, “that’s it, we’re done.”
“You’re going to walk away and let her get it?”
“The number one rule of bidding on auctions is to know your price. $52,000 was my max. I’m done.”
I’d never even seen this house, but I couldn’t stand the idea of Dylan walking away a loser, especially after blowing 30 minutes in this auction. “You’re just going to give up?”
“On this house, yes. But don’t worry. I’ve got twelve more properties to bid on today.”
Five of Dylan’s auctions were postponed or outright canceled before they even began. On two more, the opening bid was beyond his maximum, so we walked away without a single bid. Dylan’s first win came a little after noon. By this point, I was over fifty pages into Anna Karenina. I figured if I was going to spend so much time reading, I might as well pick up some classics to balance out the cheap romance novels I’d been binging on, so at 10:30, out of sheer boredom, I’d slipped out to a used bookstore on Beacon.
I shoved Anna in my bag and went to stand by Dylan when I saw he was one of two bidders left. When the other bidder dropped out at $62,000, I wrapped my arms around Dylan’s waist and whispered in his ear. “What was your max amount on this one?”
“$78,000.”
Not a bad bit of savings for a day. “Nice going.”
Dylan pulled out a cashier’s check for $15,000 and signed it over to the attorney. Oh yeah, it turned out that all the auctioneers were actual attorneys. No wonder the proceedings were so boring.
“I thought you only owed 20%,” I said.
“I do, but that’s the problem with pre-written cashier’s checks: they’re rarely going to be exact.” Dylan bent over a clipboard to sign some papers.
“So you wind up putting down more than the minimum?”
“They’ll mail me back the difference in a few days.”
“So when do you close?”
“I have 30 days to pay the rest of the money.”
“And if you don’t?”
Dylan walked toward the next auctioneer. “I forfeit my deposit.”
Late in the afternoon, a woman in her mid-fifties, dressed in a bold red suit, patent leather heels, and a Louis Vitton handbag showed up accompanied by an assistant and a suit who looked fresh out of law school. The attorney read the boring legal disclaimers, the assistant held a sign with the property address, and the woman worked the crowd, making sure everyone who mattered signed in to her auction. By the time she was ready to start, twenty or more bidders surrounded her, despite her starting bid of $650,000, far more than anything else that day.
“Do I hear $650,000 going once?” she called out.
“$652,000,” shouted a man in a green jacket.
A corporate type upped him. “$655,000.”
Bidders jumping up the bid? Not waiting for the final call? I stuffed Anna away again. This is what I’d come to see. Many of the other bidders stood by silently, not getting in. Some of them, I knew by now, were serious bidders, waiting for all the suckers to drop out before jumping in and stealing the show. Others, I suspected, were just like me, enjoying the excitement of an auction that finally moved and that wasn’t run by some stuffy attorney mumbling legal disclosures. In less than five minutes, the bid had jumped to over $800,000.
“Come on, people,” the auctioneer called, “the water’s warm. Who’s ready to dive in?”
I turned around to check on Dylan, who was now one of three bidders left in a different auction across the courthouse steps. I was having too much fun watching this one to track his, but something caught the corner of my eye. An auctioneer stood all by himself, which wasn’t that unusual since these guys could read off disclosures forever. But this one wasn’t looking down at his iPad. He’d looked up, as if checking for people.
I left the big crowd and went over to him. Even though he was alone, he was still making announcement after announcement, probably to fill some legal requirements. I got there just in time to hear him say, “As there are no bidders, this house will be…”
“Wait,” I called out. “Don’t close it yet.”
He turned to me. “Are you interested in placing a bid, ma’am?”
“What’s the opening bid?”
“Just $100.” Even he sounded bored by this deal.
“What can you tell me about the property?”
“Just the address.” He scanned the screen. “This auction is for the home on or near 278 Alpharo Street.”
“On or near?”
“That’s what it says.”
“And you can’t tell me anything about the house at all?”
“I can’t tell you what I don’t know, ma’am.” The suit checked his watch. “This is my last house of the day, so if you’re not going to bid, then I’m going to send this one back to the bank and—.”
“Dollar over.”
“What was that?”
“I’d like to bid a dollar over.”
“Hang on. You’re jumping ahead here. First, you need to be certified to bid. Can I see your identification and a cashier’s check?”
I pulled out my ID. I didn’t have a cashier’s check. I could probably go and get one from Dylan, but it would be in his name, and I’d have to pull him away from his auction to do so. Instead, I showed the guy a $20 bill. “All I’ve got is cash. I hope it will do.”
“It’s not standard, but it is legal tender. OK, I certify you as a bidder. Sign here.”
I signed the document and rubbed my hands together, ready for action.
“I hereby start the bidding at $100. Do I hear $100? Going once.”
“Dollar over.”
“I have a bid for $101. $101 going once. Going twice. Final call at $101. Sold, for $101 to this lady right here.”
“Woohoo.” I threw my arms around the startled auctioneer. I got several strange looks at that one, especially from Dylan, but I didn’t care.
“Now, I’ll need a deposit for 20% of the closing amount.”
I handed him the $20 bill and fished an additional quarter out of my purse. “You can keep the change. No need to mail me back the five cents. Won’t be worth the price of the stamp.” I had no idea what I just did, but I was having fun.
“OK, I’ll need you to sign here. You have 30 days to close, or you’ll lose your deposit. Put your address down here, and I’ll mail you all the pertinent details. Plus your check for five cents. If you don’t want to cash it, you don’t have to, but I need to follow procedure.”
“You go right ahead then, if it makes you happy.”
Behind me, the professional auctioneer called out, “You can’t take it with you, sir, so no reason not to pony up the cash today. Do I hear $1,115,000?”
I couldn’t imagine the house that would sell on auction in this economy for over a million, but could it be worth 10,000 times the one I just bought? I hoped not.
I skipped over to Dylan, where he was one of two bidders left. I grabbed his arm, but couldn’t hold still and bounced up and down. “Do I hear $84,000?” the attorney called out. “$83,500 going once. $83,500 going twice. $83,500 going a final time.”
“$84,000,” Dylan said.
The other bidder threw up his hands. “That was my number. Good luck.” He walked off, but of course, we weren’t yet done. These auctioneers had to follow procedure.
“Do I hear $84,500? $84,000 going once. $84,000 going twice. $84,000 going a final time. Sold, to this man right here for $84,000.”
“You did it.” I hugged Dylan again, this time jumping right off my feet. He stumbled but caught me.
“That’s two houses today. Not bad.”
“Three, actually.” I held up three fingers. “Two for you, and one for me.”
Dylan’s eyes narrowed. “Amber, what have you done?”
“Was that idiotic?” Dylan and I ate early bird specials at a diner across from the courthouse. Neither of us had eaten a thing since that morning’s pancakes.
“I don’t know.” Dylan focused on his meatloaf.
I downed a load of fries. The more I thought about it, the more I feared I signed onto something scarier than I’d realized. “OK, now I’m freaking out. What’s the worst that could happen?”
“The worst is that you pick up a ton of liability.”
“How would that happen?”
“First of all, you don’t even know if the foreclosure you just bid on was a first or second mortgage.”
“I’m not following you.” I opened my notebook and had my pen at the ready.
“Say a guy buys a house worth $100,000 with an $80,000 mortgage. Later on, he’s strapped for cash and takes out a second loan against the value of the house for another $15,000.”
My parents did something like that when three of us were in college at the same time. A pang of guilt turned my insides. “Is that like a home equity loan?”
“Yes. It’s also called a second mortgage.”
“I thought a mortgage was money you borrowed to buy a house?”
“A mortgage is any loan secured by real estate no matter what you use the money for.” Dylan poured more ketchup onto his plate.
“OK, so bring me back to this guy. He’s borrowing another $15,000 against his house. But that makes his loans almost equal to the value of the property. Risky, no?”
“To the borrower? Not necessarily. I’ve taken out plenty of HELOCs over the years.”
“HELOCs?”
“Home Equity Lines of Credit. That’s how I was able to buy The Death Trap on Haber. I borrowed against the equity in my other properties. Since I was acquiring another cash flowing property, I didn’t mind leveraging myself. The bigger risk is to the second mortgage lender.”
“Why?”
“Because they’ve taken a second position loan. Back to our example. Let’s say this guy bought a year ago in a stronger real estate market, then loses his job and defaults on his $80,000 mortgage. The bank forecloses and can sell the house for only $75,000. Since they have the first mortgage on the house, they keep all $75,000. The other mortgage still gets wiped out, and the bank that lent him the $15,000 gets nothing.”
I bit into another chewy chunk of meatloaf, feeling grateful I never grew up with the stuff. “That sucks.”
“That’s why interest rates on second mortgages are higher. They need to make more to cover the risk.”
I dipped the meatloaf into ketchup and was surprised to find some improvement in the flavor. “What happens if John Doe is making the payments on his $80,000 mortgage but defaults on the $15,000 line of credit? You said they could also foreclose, right?”
“Yeah. Even a home equity line still has the right to put a lien on a house.”
“What’s a lien?”
“The right to repossess,” Dylan said.
“But they don’t have first rights….”
Dylan nodded. He was enjoying watching me put the pieces together. “Precisely. If the first mortgage forecloses, all later mortgages get wiped out. But if a later mortgage forecloses, the first mortgage still exists.”
“Which means…” I dropped my pen. “Are you freaking kidding me? I might have just bought someone else’s debt?”
“It’s possible. That’s why it’s crucial to do a title search before buying a house at auction.” He snatched one of my fries. I slapped his wrist, but he managed to eat the fry before I could grab it back. “By the way, there could be debt on this house that’s not even owed to a bank.”
I quickly forgot about the fries. “Then to whom?”
“The government. If these guys haven’t been paying their mortgage, you think they’ve been paying taxes?”
The meatloaf sat even heavier in my stomach. “So now the government might come after me too?”
“Maybe.”
“But even so, it can’t be that bad, right? I mean, if I did inherit a mortgage or taxes, that means the debt is on the property, not the individual. So if I don’t pay, worst case, they’ll foreclose on the property again, right?”
“Even so, failing to pay it can still destroy your credit and make it nearly impossible to take out loans in the future.”
This picture was getting gloomier by the minute. I flicked my salad around with my fork. “Anything else that could go wrong?”
“Oh yeah.” Was he enjoying this? “The house could be in total disrepair and require more work to be livable than it’s worth, but you might still have to pay taxes on it. The house could be a hazard. If it’s dangerous, you won’t be able to get insurance on it, but you’d still be liable if anyone gets injured.”
“But it’s private property. The only way someone could get hurt is if they’re trespassing.”
“Still doesn’t protect you from liability.”
“Oh man, I’m so screwed.”
“Screwed?” Dylan laughed. “No, you’re not screwed. At least I don’t think so.”
“Why not?”
“Because you didn’t actually buy the house. You promised to buy the house within 30 days, but you don’t own it yet.”
“What happens if I walk away?”
“You lose your deposit.”
“It won’t be a black mark against my credit?”
“Not as far as I know.”
This was why Dylan had so much fun spreading doom and gloom at my expense. “You mean that at worst I’d be out 20 bucks?” Even at his stingiest, Dylan would have considered that cheap tuition for a crash course in foreclosures. “I can live with that.”
“And at best, you’ve acquired an asset basically for free.” Dylan grabbed a few more of my fries. I guess my mood made him feel it was a safe play. It was.
“I might have done something brilliant?”
“It’s possible.”
I pumped my arms in victory. “What do we do now?”
“Everything we’d normally do before the auction. We’ll take a look at this property, do a title search, and then decide if it’s worth it or not.”
“That doesn’t sound too bad. What should we do first?”
“Let’s drive over there.”
They say that beauty is in the eye of the beholder. In this case, ugly was in the eyes of the auction winner. Because that’s the first thing that hit me about this place. It was U G L Y.
It was a two-story house on a fifth of an acre lot, and the exterior was painted a color that I would generously call puke. It probably didn’t look that way when the paint was fresh, but I doubt I’d been born then. The two front windows were boarded up and covered in graffiti. As soon as I saw that, my stomach turned. “Just how bad is this neighborhood? Is this what you’d call a war zone?”
“It’s not the worst neighborhood in town.”
“But it’s still a D neighborhood?”
“D+.”
“Then it’s a good thing I’ve got my bodyguard with me.” I wrapped myself around Dylan’s arm, and he led me closer. “Come on, let’s take a look at this thing.”
We climbed onto the porch, and I tried the door, which was locked. “You know,” Dylan said, “you don’t own it yet, so you don’t technically have the right to enter.”
“You’re not seriously telling me to walk away without getting a good look inside this place, are you? What do you think the odds are there’s a back door?”
“You want to add breaking and entering to your list of misdemeanors?” Dylan wagged his finger at me. “What happened to the girl who couldn’t bring herself to buy a dirty house?”
“That house wasn’t just dirty, it smelled like the dead. And that girl has grown up. Besides, I’m not advocating breaking, just entering.”
Dylan kneeled down for a closer look. “Foundation looks good.”
“How can you tell?”
“There aren’t any cracks in the concrete.”
The back door was also locked. Just for kicks, I checked under the mat. Wouldn’t you know it, there was a key. I unlocked the door and went in. My heart pattered just like it did when my sorority sisters and I snuck into Kyle’s frat and stole their toilet seats. The house didn’t smell good, but at least it wasn’t putrid.
More graffiti covered the large living room and kitchen area. “Looks like we’ve come across someone’s clubhouse.”
“Not so unusual with abandoned houses in this neighborhood.” Dylan brushed his fingers against a wall and rubbed them together. “At least the spray paint doesn’t look new. There’s a good chance no one’s been here for a while.”
“A good chance isn’t good enough. If anybody’s squatting here, I’d rather they run into you first.” I stood behind him and pushed at his hips. “You head upstairs, and I’ll follow.”
Dylan climbed the stairs, and I stayed just a step behind him. He poked his head into each of the three bedrooms. “I wouldn’t be surprised if people have slept here. But there’s no one here now.”
A spider landed on my shoulder. I brushed it off but still squirmed. “Let’s get out of here. I’ve seen enough.” We sneaked out the back door like private detectives, made sure the coast was clear, locked up, and scurried to Dylan’s truck.
“OK, Mr. Real Estate Pro.” I buckled my seatbelt. “What’s your prognosis?”
“It’s a dumpy house in a dumpy neighborhood.”
“Do you think I should walk away?”
“Too early to tell. The house needs work, but I don’t see water damage, mold, or foundational issues. It’s got hardwood floors, which need to be sanded and refinished, but which are otherwise in decent shape. I’d say that it will cost between $10,000 and $15,000 to get it to the point where you could rent it out.”
“And what will it rent for?”
“I’d guess $600 a month.”
I wrote down these numbers in my notebook. “So even if it costs me $15,000 to fix up, that’s a 4% monthly return on my investment. That’s pretty good, right?”
“It’s great. Remember, I’m in the market for properties that give a 2% monthly return.”
“What would the cash flow be?”
“There’s a rule of thumb that says your expenses, before your mortgage payment, is usually 50% of the rent. Here there will be no mortgage payment, so you might cash flow $300 a month.”
$300 wasn’t a ton of money, especially for the headache of fixing up a house and renting it in a run-down neighborhood. Still, considering I was unemployed, it felt pretty good. “So I did OK making that bid?”
“We won’t know that until we check the title and see if anything is owed on it.”
I forked over another $100 to Dylan’s title search company (this house was starting to get expensive), who said they’d get back to me within two weeks.
For a guy who claimed to be financially independent and never had to work again, Dylan was busting his butt. “I’m only financially independent if my money is working for me,” he explained as we drove around in his truck for yet another day looking at properties. “So yes, as long as we’re in this crazy low housing market, I’m going to hustle to get my assets producing as much income as possible.”
In the two months since Dylan’s return, he’d bought six single-family homes, four multi-family homes, and an apartment building with ten units. Multiple work crews labored to get them into rentable shape. His years doing renovations as a crew foreman were paying off. He knew how to evaluate and hire workers, and his fluent Spanish meant he could hire qualified foremen others had passed over because of communication barriers.
I played a valuable role as a sidekick. I packed us a picnic lunch each day. “Where is this house? We’ve been traveling for a while.”
“Another five miles or so.”
“Is this another foreclosure?” I asked.
“Tax lien. They haven’t paid property taxes in over seven years.”
“You think it’s abandoned?”
“I hope so.” He turned onto a one-lane road. “If it’s any of those separatists who feel taxes deprive them of their Constitutional rights, they’re likely to defend their property with a shotgun.”
Dust rolled over the windshield. “They could just be regular folks who’ve fallen on hard times.”
“Maybe. But then why not sell when the economy was booming? Seven years is a long time to go without paying taxes.”
Dylan pulled into a gravel driveway longer than a football field. Finally, a house in scary disrepair came into view. “Uh, Dylan, if that’s the house, you might wind up wishing they were separatists.”
“Why do you say that?”
“Because that looks like it belongs to the Addams Family.”
“I’m more afraid of the separatists. They might shoot you, whereas Morticia will probably invite us in for a cup of tea.”
“If she does, say ‘no thank you, I brought my own.’ I wouldn’t trust anything served by that woman.”
All joking aside, the house was clearly inhabited by neither separatists, monsters, or humans of any other sort. The previous owners might not have paid taxes in seven years, but from the giant hole in the roof in the east wing (yes, this house was so huge it had wings) and the broken gutters, I’d guess that no one had lived in it for ten or more.
Dylan pulled right up to the front of the house since there was no one around to object. The front door was locked, but great, big windows overlooked the surrounding hillsides. Unfortunately, they also started a good eight feet off the ground. “Let me climb on your shoulders. I want to get a look inside.”
Dylan, always the dutiful boyfriend, bent over and allowed me to walk all over him. “You know I won’t be able to hold you up for long,” he grunted.
“Yeah, yeah. I dig the strong silent type, so keep your mouth shut and lift me up to the window.” He stood up, and I grabbed onto the windowsill for a bit of extra support. “No freakin’ way.”
“What?”
“The largest room I’ve seen in my life. It’s still furnished and everything. There’s even a grand piano that’s probably only good for firewood, but still. Whoever owned this house must have been rich.”
“And whoever buys it needs to be even richer,” Dylan replied. “My back is going to bust.”
I lowered myself down and wiped off the dirt my shoes had left on Dylan’s shoulders. “You’re not planning on getting it?”
“Are you kidding? This place is a money pit. Just hauling away the old furniture could cost a fortune. It’s going to need a new roof, and who knows how much water damage this place has suffered.” He headed back to the truck. “And all that for what? The rental value on a place like this is minimal. There could be ten bedrooms here, which will all need renovating, but even large families seldom want more than four or five bedrooms, so adding more doesn’t bring up the rental value one iota.”
“Couldn’t you turn it into multiple apartments?”
“It’s probably not zoned for that.” Dylan turned back toward the truck. “Besides, who would want to live in an apartment out here? Whoever moves this far out wants their own property.”
“So that’s it? It’s a lost cause?”
“I’m afraid so.”
I looked over my shoulder at the house. “How does something like this happen anyway? This must have been such a beautiful house. How can it suddenly be worthless?”
“It’s not sudden. It’s years of neglect.”
“But that giant hole in the roof didn’t just appear out of nowhere. Did a tree fall on it or something?”
Dylan followed my gaze. “Not this time. That giant hole probably started out as a tiny leak. That’s what happens when you don’t maintain a property.”
Something clicked in my head. “If someone had been living here when that tiny leak developed, how much would it have cost to fix?”
“Not much. $500 tops.”
“So for the lack of a $500 repair, the entire side of the house is garbage.”
“I’m afraid so.”
“So Vinny’s wrong.”
“Huh?” Dylan didn’t follow the leap in my logic.
“Vinny said depreciation is a myth. He said real estate generally goes up in value not down, and that the government’s rule that houses depreciate in 27.5 years is a total loophole. But this gorgeous house has probably been neglected for less than a decade and look at it now. The government has a point. After 27.5 years without maintaining it, I bet most houses really would be garbage.”
“True. Real estate requires maintenance to keep up its value.”
“But those repairs are a relatively minor cost compared to the value they create, especially when you factor in the tax savings. It’s like the government created its deprecation rules on the assumption that you’ll make no repairs. Then if you do take care of your property, it’s treated as if you’ve created all this value. And in a sense, you have, because you’ve stopped it from falling apart. Such a shame about this place. It must have been something.”
Dylan put a hand on my shoulder and turned me to face him. “You were hoping I’d get it?”
My eyes scanned the broad doors, the tall windows, the old tiles on the roof. They wandered towards the orchards in the back of the property, and the views of the hills beyond. It felt like an enchanted place full of stories and fairies and mystery. “Just for the adventure of buying a haunted house.”
“Not happening.” Dylan leaned in and kissed my neck. “But if you like, we can picnic out front.”
“Sure, let’s do that.” It was a bright, sunny day, so even if there were any vampires in this haunted house, there was no chance they’d show themselves at our picnic.
Dylan threw down a blanket, and I brought out sandwiches, salad, and lemonade from my cooler. As I laid out the spread, I thought about how, technically, I should have been looking for work all these weeks, but I was so enjoying the days in Dylan’s company. And who knows, on the off chance the house I bought on auction came back with a clear title, I’d perhaps make some money without working. Even so, a few hundred dollars a month in cash flow wouldn’t make up for a lost income stream.
I was so caught up in my internal financial debate, I hadn’t noticed Dylan, the lover-of-food, hadn’t touched a thing. He was beside me, resting on one knee. He held yet another ring box, this one bigger than all the rest.
As Dylan had promised, his proposals had grown less and less grand. On Valentine’s Day, he proposed with a ruby rather than a diamond. There was an emerald-studded ring in the next gift box, and then I got offered a measly sapphire.
“Amber, my love. Will you marry me?”
He opened the ring box, and the moment I saw it, I couldn’t help but giggle. It wasn’t quite the ring of my girlhood fantasies, with the perfectly cut, multi-faceted diamond, though it did hold some resemblance. I held out my finger, and he slipped it on. The ornament on top was gigantic, far bigger than the precious stones my girlfriends wore, but this stone wasn’t precious, nor even a real stone, though it was shaped to look like one. It was a hollow piece of plastic, shaped like a diamond, one of those princess rings you get out of the dispensers at the entrance to Walmart.
This was the ring for me, for the person I’d become, the ring I’d wear with pride. I no longer cared that diamonds are forever. How many women still had their diamonds years after their guy had left the scene? The ring could be a piece of crap as long as it was given to me by a forever man. That’s what Dylan was. He was the guy I could build a future with, who’d stand by my side even when times got tough. If only I could have done the same for him all those years before.
