Wanna know what was under the covers? Keep reading the blog post, I’ll tell you!
This post is Part 3 in the series of How It All Began, how two working stiffs with mediocre media careers ended up investing in real estate, becoming Wilkes-Barre landlords with grandiose dreams of building an empire. A dream that is still very much alive, even if it has been tempered with reality. All the stories I’m telling you in these blog posts are real – I do not have the talent to make this shit up!
Building a rental real estate “empire.”
Spring, 2008. We had purchased our first rental property that February, a 6 unit apartment house on Barney St from an old landlord who was retiring to Florida. My husband, Steve, found another “deal” - a duplex on Grove St “flipped” by another investor. These two naïve beginners were on a serious role looking at what would be our third acquisition.
Pulling the boards off our first abandoned building
165-167 West River St. stood abandoned on what was once the campus of the prestigious Wilkes-Barre Academy. Built around 1885, a lot of the original Victorian features survived its conversion into rental apartments. And wow were they great apartments! I have the rare ability to look past rot and decay and see the potential of a place. Our real estate agent Deb W. found this rough gem for us on a list of foreclosures. The building had been shut down when the landlord left the water bill unpaid. She was a Polish national who lived in Brooklyn and walked away from the property, leaving behind a mortgage in excess of $400,000. Keep in mind, this was 2008 – the end of the era of ridiculous mortgages written by out-of-state banks who would never see the property. Loans like these are what caused the Big Crash.
I will never forget that first walk through. The first apartment we went into was, um, “occupied” – there were mattresses on the floor, a couch with bedding on it, a dish of dog food, and I’m pretty sure I saw a crack pipe or two. Steve and I looked around in awe at this 1400-square foot space with its 14-foot ceilings and pillars in the open plan living room/kitchen while Deb called the police to report the squatters.
We climbed the curved Victorian stairs in the common hallway to the second floor apartment and keyed our way in. I fell in love with the glass paned door and the 19th century keyhole. But I was not prepared for what was inside. This was the apartment I described in the teaser paragraph at the start of this post – it was like the people who lived here had never moved out. The place was fully furnished. The lights were on! In an apartment building that had been abandoned for over a year? There was a horrendous rotten food smell coming from the kitchen, but we had walked through enough foreclosures in the past year that it didn’t faze us. I was just fascinated by this fully furnished abandoned unit, like one of those post-nuclear apocalypse movies: the living room with the open novel upside down on the coffee table, like someone had just put it down. The pill box labeled with the days of the week, opened to Monday. An old fashioned console TV with family pictures arranged on top. A collection of jazz on vinyl near an old Hi-Fi. Walking from room to room, curtains in the windows, bedside lamps and end tables, beds all made up. And then that bedroom.
There was a lump under the covers on the bed. A full-length, human body-sized lump. Oh. My. God. The smell – was it really rotted food? Oh Lord – My husband pushes past the two of us, Deb and I, cowering in the doorway, Steve, no, what are you doing, noooooooooo! He yanks back the comforter…
Deb and I laugh. We hug each other. My chest loosens up and I can breathe again. And we get the Hell out of that apartment.
Up to the third floor, where two similar floor plans, apartments 3 and 4 welcomed us side by side. No squatters here – just gorgeous, light-filled spaces with Victorian hardwood floors, big windows and elegant French doors opening into the living rooms. Incredible views from the balconies. Standing under the skylight inside apartment 4, I thought, “I could live here. We should move!”
Down the stairs and out the front door to the 165 West River side, this one was a two-level townhouse (apartment 4 occupied the third floor on this side, accessed from 167.) It had its own elegant front entrance. The first floor was a beautiful open-plan living room/kitchen with a brick fireplace. There was a half-bath. Upstairs was a large bedroom, 2 smaller bedrooms that were connected, and a large bathroom with a washer and dryer that looked new.
Now at the time, we thought we were looking at a five unit building, and we had seen all five units. That is what Deb had on her property description sheet. We wanted to see the basement before we left – check out the heating system, the electric service. Two bulkheads in the back yard led down – the right one had the electrical panels but no furnace or water heater. The left one led to a separate basement – one that was semi-finished with a couple of spaces that included a pool table game room and the remnants of a workshop. There was the big steam boiler, a fairly new one – jackpot! A fairly recent water heater. And a set of stairs leading up… to a sixth unit no one knew about!
This one was even more impressive than the others – a hardwood & brick front room with a working fireplace, open plan with a kitchen off to the side. A huge room behind it with new carpeting and floor-to-ceiling windows. A full bath. Upstairs a large bedroom, a smaller one, and a second full bath. Wow.
There was no way I wasn’t buying this building. I couldn’t leave it here all boarded up, it just wasn’t right! It was like pulling teeth with the bank. They couldn’t understand why we were only offering $160,000 on a building they had mortgaged for $437,000. Suncoast Bank or something like that out of California. They probably couldn’t have found Wilkes-Barre on a map. Luckily, someone at Suncoast realized $160,000 was better than $0, and agreed to sell it to us. We closed at the end of May, 2008.
Our first major rehab. Honesdale National Bank loaned us $20,000 to fix the place up. It wasn’t in terrible shape, actually. The electrical needed to be updated, and that was our first of many horrible experiences with contractors. Seriously, if you know of any GOOD contractors in Northeast PA who actually do what they say they’re going to do when they say they’re going to do it, leave their information in the comment section of this blog! Oh and they’re not allowed to relieve themselves behind the dumpster of the building next door, either.
Yup. Our electrician drained his dragon behind West River Apartments, and that’s how we met their property manager. (Cool guy! Wish he’d never left, I miss him, but they weren’t paying him enough for the crap he had to put up with there.)
Next up was a contracting company based in New Jersey who gave us a great rate on the complete rehab. We wrote them a check for $10k to start and they began work on Apartment 1. Then we got a work stoppage notice from the City of Wilkes-Barre and a $1,000 fine because these idiots never pulled permits! Steve read them the riot act. And they never came back. Just took our $10,000 and ran.
That might have been the end of us. But this is why I believe this building is haunted and we were being helped by unseen hands – I was standing in the now empty kitchen of apartment 2, wringing my hands, what are going to do now? It was a warm Saturday in June so all the doors were open in the building as my husband and I and a few friends attempted to continue the rehab ourselves. “Hello?” A young woman’s voice echoed up the common stairway. “In here!” An attractive woman in her early twenties appeared in the doorway. She was a Wilkes University pharmacy student and needed an apartment for the fall. Would this one be ready by August? “Sure!” It wasn’t exactly a lie – I was raised with a sort of Pollyanna-ish optimism, probably from growing up in Vermont where Pollyanna takes place. “I like to pay the whole year’s rent in advance, that way we don’t have to bother each other unless I need you to fix something.” “Okay.” I handed her an application and a pen, she asked for three more for her roommates. Then, “Mom?” An older woman appeared in the kitchen doorway, she had been scouting out the rest of the apartment while I spoke with her daughter. “What do you think?” Mom nodded. Then she wrote me a check for $9,900.
We finished the rehab with a ragtag of handy-types, friends and friends of friends, brothers of cousins of friends. At least one of them was licensed by the city so we were able to pull permits. All six units were done and rented by August 1st. I don’t think we’ve had one sit empty for more than a month.
In fact, Apartment 2 is available now! The rent is up to $900 now – taxes went up in Wilkes-Barre. But heat, hot water, off street parking and nice views from the balcony are included. It’s a 3 bedroom that could be a 4 (I’ve seen that room used as a formal dining room and as a bedroom, tenants’ choice.) If interested, call Paula at (570) 709-6720.
Next Sunday I’ll have Part 4 of “How It All Began” and how a surprise pregnancy can shake up even the best-laid plans for building an empire. Till then – some pictures of 167 West River St., Apartment 2. Had to use the panorama function on the camera because the rooms are that big!