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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Before and after: House flip in north Spokane turns nuisance into new start

When he bought the house last September, Lee Arnold said it was the second-worst one he’d ever been inside.

The two-story ranch house at 6117 N. Cedar St. had fallen far beyond what most people would call disrepair. The original owner had died, leaving her adult son, Michael, living there. His mental health issues and drug use worsened, causing him to yell at and threaten neighbors repeatedly.

Aleah McGinnis, who lives next door with her husband and 2-year-old son, said Michael would scream, break things and tear the house apart day and night.

“It was scary,” she said. “He woke us up quite a few nights.”

Police were called to the house more than 50 times from the beginning of 2015, often for mental health issues, disturbances and welfare checks. Then Arnold’s company bought the house.

Arnold owns Cogo Capital, part of a network of real estate investment companies, and specializes in flipping distressed, foreclosed and abandoned homes. In 2015, he began working with the city to facilitate sales of chronic nuisance houses, often buying them from owners where the city’s hands were tied.

The first day inside the house on Cedar was surprising, even for Arnold. The house had gone without power and water for months, and Michael was using a 5-gallon bucket in the backyard as a toilet. Michael slept in the basement, entering and exiting through a ground-level window, and had tipped the kitchen refrigerator to cover the stairs so no one else could enter the basement.

His nest in the basement included a board tied to electric wires he had ripped out of the wall. Once he was inside, he’d use the wires to pull the board into the window and wind them around hooks, keeping anyone from following him inside. For heat, he burned pieces of the walls in a newspaper stand he stole off the street.

It wasn’t Arnold’s worst house ever. That distinction belongs to a house where he found “250 gallons of urine in the basement,” he explained. But it was close.

Spokane City Attorney Matt Folsom, who works with the Police Department on chronic nuisance properties, said officers exhausted their options trying to get Michael help. He didn’t want to work with mental health counselors. A judge ruled he didn’t meet the criteria for involuntary commitment based on mental illness. Since he technically owned part of the house, he wasn’t committing a crime by living there. Every time the city boarded the house up because of substandard conditions, he would break back in.

Shortly before Cogo bought the house, a team of police officers went inside, trying to find Michael with police dogs.

“It was such a mess in there we couldn’t find him,” Folsom said.

After their mother’s death, Michael and his two sisters owned the home. The sisters were willing to sell it, but the city couldn’t offer them real estate advice or work with them to make that happen, so Folsom called Arnold.

Arnold met with the sisters, who said they just wanted the value of the land, about $26,000. They published notice of the sale, which a judge approved after Michael failed to appear in court. The sisters set up a trust so their brother will get his third of the money from the sale if he’s ever well enough to collect it, Arnold said. Cogo paid the city about $4,800 to cover outstanding fines and abatement costs on the property.

In September, Cogo hired a crew to begin hauling trash out, part of the process of gutting the house before refurbishing it. The detritus included empty Gatorade bottles, pieces of the walls Michael had torn off, notebook paper with drawings of a robot on it and a book, “Time Traps and Proven Strategies for Swamped Salespeople,” on the kitchen floor.

When the crew finished for the day, a Cogo staff member stayed behind to walk through the property and discovered Michael, covered in insulation, standing out on the porch. He’d apparently been hiding in the attic the whole time, Arnold said.

Cogo gutted the house, finishing the basement and adding a new bathroom, gas heating and egress windows to give the house a total of four bedrooms. The house went on the market for $189,900 in early February and had a full-price offer within a few days. Cogo put about $85,000 into the rehabilitation, making it one of the company’s more profitable flips.

The Cedar house is the fourth city nuisance house Cogo has refurbished. The first, a longtime drug den on West College Avenue, was purchased by a retiree from Whidbey Island last spring.

Michael has been around a few times since the sale, Arnold said, but police have been able to get him to leave. He’s currently couch-surfing around north Spokane, Arnold said.

McGinnis, the neighbor, said the neighborhood has been much calmer since the rehabilitation started. She said she hopes Michael is able to get help.

Without the chaos next door, McGinnis said she’ll now be able to sell her home if she ever wants to move.

“They did a really good job on it,” she said.