In most years, architect Carolina Bassal rehabilitates between five and 10 zombie homes on Long Island — structures abandoned by owners who have fallen behind on mortgage payments, and others that have become unlivable because of fires, storms, illness or death.
With the pandemic, that number is down to one over the past six months.
A lot of these houses, a legacy of superstorm Sandy in the fall of 2012, have been neglected for years, and some for decades, says Bassal, who owns Great Neck-based DNA Studios. “Houses are livable, breathable objects,” she says. “They need to be cared for.”
Abandon them and turn off the heat for long periods, and they quickly fall into disrepair. Raccoons and other animals often move in, can’t find their way out and cause a lot of damage.
Bassal’s is among the businesses that, despite limitations imposed by COVID, are helping to salvage these blighted properties, and effectively preserve, or raise, home values in entire neighborhoods.
“Once you have one of these houses on your block it’s hard to increase the value of your own home, because you have such a bad comp [comparable sales],” she says. “So once the house is renovated and it sells for market rate, all of the houses in the immediate vicinity can maintain their value.”
1. Finding blighted homes
Before the pandemic, it was easier to identify derelict properties, Bassal says.
“You had the normal real estate cycle, where houses would go regularly into foreclosure. There would be short sales. There would be bank REOs [real estate owned]. There would be auctions. And there would be markets for you to go and easily access distressed properties.”
All that changed after New York ordered an embargo on foreclosures and evictions.
“This is really unchartered territory for us,” Bassal says. “There’s no inventory on the market.”
Carl Schiovone, owner of Stat Home Buyers, of Oakdale, says distressed homes can be found on Realtor.com, through targeted lists of homes behind on payments, through other investors, but most commonly by “driving for dollars.”
“That’s where you’re literally driving around looking for homes that have some evidence of deferred maintenance,” Schiovone explains. From there, he researches the property to see whether it is in foreclosure.
2. Identifying the owner
In many instances, it’s not clear who actually owns an abandoned property and owners typically don’t want to be found because they’re usually going through significant financial and personal stress, Schiovone says, noting that through skip tracing — services that identify owners through records, neighbors or social media — investors can eventually locate the homeowner.
3. Does it have equity?
If the home is in foreclosure, you need to determine whether the property has equity, says Schiovone.
“If there is equity in the property and the homeowner just can’t keep up the payments and they need a way to get out quickly, we can just go in and make up the difference in those mortgage payments and take over that home.”
If the home’s value is less than the mortgage amount, they can negotiate a short sale with the bank.
A third strategy is approaching the bank about buying the note for the property, which would stop the foreclosure.
“The cleanest approach is if there’s a highly motivated seller,” Schiovone says.
4. Getting the permits
After buying the home, you put together a remodel plan and file for the appropriate permits, Schiovone says. This could be an arduous process because many town building inspectors are working remotely and casework is lagging.
“It could take months to get a rental permit, meaning you can’t legitimately market this to a tenant until you have at least that temporary permit.”
Even in the best of times, working with building departments proves challenging.
“You still had the problems of getting that permit issued and the inspectors continuing to ask for more and more things,” Schiovone says.
One option, Schiovone suggests, is to hire an expeditor to serve as an intermediary between the municipality and homeowner to help navigate the process.
Many Long Island towns are not cooperative, requiring variances and approvals even for structures that have been there for years, resulting in delays, Bassal says, adding that Long Beach is an exception and has been exceedingly accommodating.
Long Beach building commissioner Scott Kemins says he’d rather work directly with homeowners to save them the expense of hiring expeditors and get people back into their homes as quickly as possible.
5. Monthslong process
Most investors or builders have a team of contractors who develop a project plan and schedule.
Schiovone does his own general contracting with his wife Eilene handling the interior design.
Schiovone, who is working on a top-down renovation of a three-bedroom Mastic Beach home he plans to rent out, says the entire process takes between 6 and 8 months: two to three months for remodeling, two months for marketing and two months for closing.
6. Raising the house
For the past few months, Bassal, who partners with her husband Ari Merabi, has been renovating a 1929 two-family bungalow cottage in Long Beach that was damaged during Sandy.
The City of Long Beach requires builders to elevate storm-damaged homes — a long and costly ordeal — to prevent further damage in the next storm, Bassal explains.
“You have to move out,” he says. “You have to detach the house from the foundation. You’ve got to lift the house 15 feet in the air. You’ve got to pour new foundation; put the house back down. It’s quite an undertaking.”
Crews would need to build a concrete floor beneath the house that could serve as a garage or storage area.
“You want to get everything off the ground floor and put it up on that higher ground, and then you place the house back down on the new first floor that you built.”
7. Modernizing the space
Once the framing is complete, the builders can work on the interior, Bassal explains.
“Everything’s going to be updated, brand new to code: brand-new kitchen, granite countertops, stainless steel appliances, brand-new bathrooms.”
Depending on where the home is, you could go for a more vintage look to blend into the neighborhood, Schiovone says, while modernizing the interior by adding more cabinetry, blowing out walls, putting in larger windows and more efficient air conditioning.
8. Selling or renting
In most cases, Bassal and Merabi buy a home, fix it up and flip it.
“You have to always reinvest into the market,” Bassal says. “Otherwise, you kind of run out of funds quite easily if you keep your money locked into the house.”
In the Long Beach home they have been renovating, they maintained the two-family structure by reframing a second floor to create two three-bedroom, two-bathroom apartments that they’ll rent out.
Schiovone decides on whether to flip or rent a home depending on whether he can recoup his investment by renting. If not, he flips the house, which happens about half the time.
9. After COVID, the ‘flood’
Once the embargo on foreclosures and evictions is lifted, Bassal predicts that the market will be flooded with properties going into foreclosure.
“This will feed the market for the next year at least,” Bassal says. “They will just have a lot of inventory to sell off to try to cut their losses on the missed payments.”
Oyster Bay razes 17th zombie home
The Town of Oyster Bay recently demolished its 17th zombie home since forming the Quality of Life Taskforce in 2017, which addresses zombie homes, property nonmaintenance, illegal housing and other quality-of-life issues.
For the most part, the town learns about these homes through resident complaints and then opens an investigation, says Councilman Lou Imbroto, who chairs the task force.
Depending on what the situation is, the town can begin a court proceeding to have the house demolished or give a notice of violation to whomever is responsible for the home.
If the town has to address issues — secure the property, cut the grass, and even demolish the home — it’s at no cost to taxpayers because it is either done via a lien on the home’s tax roll or paid for by the bank in a foreclosure proceeding, Imbroto explains.
One initiative of the task force was to ban the use of plywood to board up a home, Imbroto says.
“We use plexiglass so that it actually looks like a window rather than a boarded up, abandoned home, which alleviates some of the blighted appearance that a zombie home or abandoned home normally has,” says Imbroto.
The town vacates and demolishes a home that presents an imminent danger to occupants or surrounding properties, he says. In nonemergency situations, demolitions can take about six months to wend their way through the court system.