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What you need to know for 04/25/2017

Schenectady finds a way to sell foreclosed properties

Schenectady finds a way to sell foreclosed properties

Bit by bit, the city has managed to get rid of almost every property it took in foreclosure two year
Schenectady finds a way to sell foreclosed properties
The last tenants in this home on Campbell Avenue in Schenectady seemed intent on causing damage, new owner Christopher Malizia said.

Bit by bit, the city has managed to get rid of almost every property it took in foreclosure two years ago.

The easy ones, the ones that were in good shape in strong neighborhoods, sold directly to new owners. But the others, the deteriorating buildings in neighborhoods with hundreds of boarded-up houses, have sold as well.

And therein lies the key to Schenectady’s success: getting new owners for hard-to-sell properties that were abandoned by their previous owners.

When the house on Paige Street blew up in a gas explosion, some residents were surprised to hear that the city had been trying to sell the house, although it was in poor condition.

But it turns out it was one of the few houses left from the 2012 foreclosures.

All but about 20 of those 148 houses have sold, said Assistant Corporation Counsel Rachel Ward.

“For the right person, any property is marketable,” she said. “It’s definitely not hopeless.”

In neighborhoods where the value of property is too low to justify sinking tens of thousands of dollars into major renovations, she has sold houses to tenants for as little as $2,000.

“We do a lot on Hamilton Hill where there was a tenant left behind,” she said.

Tenants are “left behind” when they have been paying rent but their landlord wasn’t paying the taxes. The city discovers the tenants when they inspect the building after foreclosure.

Ward offers them a deal: use their monthly rent to pay for renovations, getting the property up to code within a year. Apply for grants through the city and its partnering banks, get a small mortgage, and make a small down payment. The city often sells the house for $5,000 to $15,000.

“A lot of people do have the dream of owning a home,” Ward said. “A two-family house is a perfect situation for people.”

She helps them budget, showing them how the second apartment can pay the mortgage on the building.

“They’re basically paying the taxes” and maintenance, she said.

Many other properties have been left vacant for years, often damaged by vandals, roof leaks and other costly consequences of abandonment.

Those properties aren’t move-in ready, but they’re not so deteriorated that they should be demolished.

Ward sells those to contractors who can “flip” the house to a new homeowner.

That’s another strategy that has worked well on Hamilton Hill, where housing prices are depressed.

“Hamilton Hill does have some stuff that is tough to sell,” Ward said.

But contractors can put their own labor into a house, rehab it quickly, and then sell it cheaply and still make some profit.

That’s not to say the final sale is easy.

Peter Della Ratta, who owns Simon’s Rock contracting, bought a house from the city for $5,000 on Hamilton Hill.

Over the course of six weeks, he put $40,000 into the three-bedroom house: rewiring it, replumbing it, and completely replacing the kitchen and bathrooms, which had been badly vandalized. The house also needed a new furnace and water heater.

He added hardwood floods with Brazilian Cherry borders, tile in the bathrooms and granite in the kitchen.

“We tried to bring the quality up quite a bit,” he said.

It’s across from Jerry Burrell Park and has off-street parking and a backyard. But at best, he hopes to sell it for $55,000. That means he’d end up with a profit of less than $10,000.

“If it’s a minimal gain, it’s a gain in my eyes,” he said. “The choice is to knock them down or fix them up.”

But he’s getting nervous. He finished the project this winter. Now it’s August and the house still hasn’t sold.

He started with a price of $65,000, then lowered it to $55,000. He might end up making no profit, but he has to sell so that he can use his capital for his next project, he said.

Still, he said he was looking at the city’s list of new foreclosures, which just came out this month. He plans to flip another house, and he said he would consider a house in Hamilton Hill.

“I would do another one again,” he said, before adding, “You really have to crunch the numbers and make sure you can do it and still have a profit.”

Another contractor took a different approach: he bought a house he intends to keep.

Christopher Malizia and his brother David worked on their Campbell Avenue house for six months, doing all the work together.

“Seven days a week, 16 hour days,” he said.

The house has two apartments. Now that it’s done, his brother lives upstairs, and a tenant rents the downstairs. Through the rent, they expect to make back their investment in about six years.

But things went so well that they plan to buy another foreclosed house and repair it this year, using their house to pay for the new one.

“I can get a home equity line because I own the house outright,” Malizia said. “You make your money work for you.”

The city recently took 215 houses in the latest round of foreclosures. Ward and other city officials are spending the next two weeks inspecting every building. Then Ward will get down to business, selling them all.

As for the few remaining properties from 2012, she hasn’t given up.

But the last ones are the trickiest.

“A three-family with no driveway can be a tough sale,” she said.

And a few still have title problems, because the owner sold to a new owner during the foreclosure process.

The court still awarded the house to the city, but that’s not much help.

“Even though the law is on our side, the title insurance company isn’t going to want to insure that,” she said.

The city is also making efforts to ensure that no more foreclosed houses explode due to gas leaks.

National Grid workers are walking with city officials as they inspect each foreclosed house. They are turning off the gas at indoor meters at the city’s direction, Stella said.

He said they had turned off the gas to the outside meter at 310 Paige St., but could not reach a second meter in the basement. There was a split meter at the house.

On several occasions, they went back to try to get access to the house, National Grid spokesman Patrick Stella said. But their title searches did not yet show that the city was the owner, and they weren’t able to find anyone who could let them inside.

Then the house blew up after gas leaked inside for days.

“The event kind of prompted this, but at least it’s getting us access,” he said.

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