I just realized that I have never told the full story about the meth house my dad and I bought that burned down. We did not know it was a meth house when we bought it, but we found out soon enough, and then to top it all off, the house burned down, and we had to completely rebuild it. This all happened in 2003 when I first started in the business as an agent and helped my dad buy the occasional house flip. We bought this flip from the foreclosure sale and had no idea what meth labs were at the time. It was quite the crazy story, and we learned a lot from this experience!
How did we use to buy houses from the foreclosure sale in Colorado?
Back in 2003, we bought a lot of houses from the foreclosure sale. There were not nearly as many house flippers as there are now and a lot less competition. Today, I very rarely buy anything from the foreclosure sale because all the properties get bid up so high. The rules were also different in Colorado for buying foreclosures in 2003 than they are today.
In the past, the owner of a foreclosure had a redemption period to pay off what they owed on the house. If they paid off what they owed, they could redeem the house and get it back from the foreclosure. There were some loopholes in this process that allowed investors to become the “owners” of the houses and pay off what was owed. We used this strategy all the time to buy properties. Here is how we would become the owners and pay off the houses:
- If there was a house with a low bid coming up in the sale, we would go talk to the owners. This took some work if we could not find them. I even considered flying to Brazil to meet the owner on one house until we found out I needed a Visa and there was no way I could get one in time.
- We would explain how the foreclosure worked to the owner. In some cases, we would try to list the house for sale to get as much money as we could. In other cases, we would pay them for a Quit Claim Deed. We would give them $500 for the Quit Claim Deed, and if we ended up buying the house, we would give them another $1,000 or $2,000 depending on the house.
- Once we had the Quit Claim Deed, we had the legal right as owners to redeem the house from the Public Trustee. We had to pay off the high bid at the foreclosure sale plus any interest and a few other costs.
- This was a completely legal way to buy houses, but many investors were forging Deeds, and a few went to jail over it, so they eventually changed the system.
There is no longer an owners redemption period in Colorado, only a junior lien holder redemption period.
How did we end up buying this meth lab from the foreclosure sale?
We used the same strategy to buy the house that turned out to be a meth lab. We had no idea that it was a meth lab at the time, but looking back on it now, we should have known. Part of the problem was that we had never dealt with a meth lab and did not know what signs to look out for. This house was going to the foreclosure sale or had just gone to the sale, and we knew it was a good price. We went to the house, knocked on the door, and explained the foreclosure process to the owner. He let us in, gave us a tour of the house, and we decided to try to buy it.
There were many things wrong that we should have noticed:
- There were cameras all over the outside of the house. On many drug houses, there are cameras everywhere.
- The house smelled weird. It was a mix of smoke and chemicals.
- There were what looked like smoke stains on the walls and ceiling.
- There was a really weird guy in the basement who acted super sketchy and would not let us in one room.
If I encountered any of these things now, I would think this is a meth house, but back then, the thought never crossed our mind.
How did we find out the foreclosure was a meth house?
The house was busted as a meth lab shortly after we ended up buying it. We did not find out from the police but by seeing the story in the paper. The story is still available online, and you can read it below:
“Gas drive-off leads police to suspected meth lab
EVANS – Officers investigating a gas drive-off early Friday stumbled on to two men who they think were cooking methamphetamine.
Evans police traced a car from the gas theft to 3604 Boardwalk Drive. When they arrived about 1:30 a.m., they found a suspected meth lab, said Detective Gary Kessler of the Evans Police Department.
The Department of Social Services took three children – one 15-year-old and two elementary-school-age children – into protective custody.
Police arrested Mark Eugene Hasting, 41, who lives in the home, and Dale Edward Ketels, 26, of Greeley.
Hasting was at the Weld County Jail on Friday, suspected of drug possession, intent to distribute and child abuse. Bond was set at $30,000.
Ketels posted $7,500 bail.
Kessler said he did not know the relationship between the children and the men, but the children lived in the home.
The Weld County Drug Task Force and Drug Enforcement Administration processed and cleaned the scene. Stains indicated the lab had been in place for a while.
“They were in the process of cooking, and there was a very strong chemical odor,” Kessler said.
Such labs are extremely dangerous. Investigators wore suits to protect themselves from the chemicals, which are extremely volatile.
“Pretty much as soon as officers realized what was going on they got everyone out and sealed it up. Everybody, people in house and officers, had to go through decontamination process,” Kessler said.
Friday afternoon, a moving van and two cars sat in front of the home, which is off 34th Street. No one answered the door.
The DEA posted a red notice on the door warning that although the home had been cleaned it still was risky.
Children exposed to meth labs are getting more attention lately. A bill is advancing through the Colorado General Assembly that would make manufacturing meth around minors felony child abuse.
A neighbor, who would not give his name, said he suspected something was going on at the home because of the number of people going in and out.
“My wife was pregnant the whole time, so that’s a concern. We took our baby to the doctor this morning to be sure she was OK,” he said. “We’re relieved. This has been a long time coming.””
Below is a link to the article:
My dad and I were a bit surprised and in shock. We had never dealt with a meth lab and were not even sure what it was. The guy who was busted and we bought the house from had the nerve to call us from jail to ask for the rest of the money for the Quit Claim Deed. Part of our agreement was the house was vacant and in good shape when they got paid the rest of the money. We thought a number of those conditions were violated! I think that was the only time we did not pay someone the rest of the money.
How did the meth lab burn down?
We thought this was a crazy situation until it got even worse. Again, this is how we learned that our house had much more problems:
“Evans police investigate suspicious fire at home
March 23, 2003
Evans police are investigating the cause of a fire that damaged a house that once housed a methamphetamines lab.
Police do not know whether the meth chemicals contributed to the Thursday night fire or if it was set intentionally.
“It’s suspicious at this time,” Evans Police Sgt. Rich Strang said.
The extent of the damage was not fully known Saturday because fire personnel still were working to determine what type of environmental damage may have occurred as the result of the fire.
Strang said investigators have collected evidence to be analyzed by the Colorado Bureau of Investigation.
He said investigators expect to know more about the fire’s cause within a week.
The fire began at 8:30 p.m. Thursday in the basement of a home at 3604 Boardwalk Drive in Evans. The home was unoccupied at the time of the fire.
Police went to the home March 7 and found Mark Eugine Hasting, 41, who lived in the home, and Dale Edward Katels, 26, cooking chemicals to produce meth.
The Hasting family was evicted from the home and three children were taken into the custody of the Department of Social Services.”
Now we had to deal with a fire at the house which we had never dealt with in the past.
How the fire affected the meth house and we became suspects
Again, we learned a lot from this situation. Looking back on the fire, it was actually a good thing for us, but we didn’t realize it at the time. My dad and I were both interviewed by the Evans police department to see if we set the fire so that we would not have to clean up the meth house. If meth is cooked in a house, you may have to gut the entire house, including the drywall, heating system, kitchen, subfloor, and more. The police thought maybe we set the fire so that we could collect the insurance money and rebuild the house.
I was pretty nervous about going to the police station. I knew I had done nothing wrong, but it was not a fun situation to be in. They took me into one of those tiny interrogation rooms with no windows, and a police officer who was not much older than me at the time started to ask me questions. I felt a little better when every question was read off a sheet of paper and the officer did not seem to care what I said. They obviously did not think we had done it but were covering their bases. The police let us go, and we were no longer suspects.
It turns out the person who they thought set it was a friend of the previous owner. He had broken into the house and either accidentally or on purpose set a mattress on fire which then caught the basement on fire.
How bad was the meth lab house damaged in the fire?
The house was a complete loss due to the fire. The fire did not burn everything, but the fire department cut a hole in the roof and soaked the entire house with water. The fire burned mostly in the basement but also burned the floor upstairs. The only thing we could save was the foundation. When a house is in a fire, it is often the smoke that does the most damage and not the fire.
Now we had the problem of rebuilding the house because our insurance company wanted to review the case as well before they paid anything. We waited a couple of months for them to agree it was not us who set the fire. Once they paid, we started to rebuild. Luckily, my dad was good friends with a builder who handled the entire project for us. We rebuilt the house, put it up for sale, and sold it. I think we still made a little bit of money on the deal!
What were the numbers on the meth fire house flip?
We did not make much money on this property, but I think we made a little thanks to the fire. We bought it for around $120,000 and sold it for $155,900 in February of 2004. Those are horrible numbers for a flip, and I cannot remember why the margins were so low on it. I think that we thought a little bit of paint was all it would need when we first saw it. I also think that part of the basement was finished when we bought it, and when we rebuilt it, we decided not to finish the basement again. No matter what the scenario was, we would have lost a ton of money if the house had not burned because we would have had to gut it. As it was, the insurance company paid for the damages and for us to rebuild it.
Since we bought that house, I have been a lot more careful when looking for signs of a drug house. Not every house with cameras is dealing meth, but some might be. I also know what a meth house smells like and know to look for stains on the walls. I have dealt with more meth houses since we bought this one, but as an REO agent and not as an investor. I have listed a few houses that needed to be completely gutted due to meth contamination.