In this Q&A session, Chris Prefontaine addresses whether investors can purchase properties that have working but non‑approved septic systems or cesspools, focusing on Massachusetts Title V standards as an example. He walks through a real‑world case where his team bought a home with an operational cesspool, held the existing loan, and later sold it via a rent‑to‑own arrangement that included a price buffer and explicit contractual obligations for the new owners to replace the septic system before they could obtain conventional financing. Chris outlines the key due‑diligence questions investors should ask—such as current occupancy, town or DEP mandates, and financing limitations—and explains how to structure agreements so that septic replacement is clearly defined, funded, and timed. He emphasizes that while this strategy can create win‑win scenarios for sellers stuck with non‑approved systems and for investors willing to handle the upgrade, it requires careful assessment of the property, the buyer’s capability, and clear contractual language. He invites viewers to contact support or join weekly Zoom “Wicked Smart Sit‑Down” sessions for further guidance.
Chapters
Welcome to this week's Q&A Thursday. I want to address what has come up in our community several times in the last few weeks, and we personally did a home that had this issue. And the issue is— Can you buy a property where the septic system is not approved, but it's working? It's just not approved by new standards. And/or it has a cesspool that's operational, it's working, but wouldn't be approved. So when I use the word approved, I'm talking about by town standards or the DEP standards, will it be approved? Therefore, if it wouldn't be approved, it wouldn't be financeable. Okay, so a couple things here. The best thing I can do is give you the example of the property we did, and a similar example came up this week with one of our certified coaches, uh, Rick Abbiati, with one of our students. Okay, we bought a home in Massachusetts. The home had a cesspool. The family had 3 or 4 kids. When I, when I hear, oh, it's a cesspool, or oh, it wouldn't be approved by new standards, I want to know, are they living there? How many people? Because it's a single person, I'd be a little concerned, like it's working but it's not getting much, you know what, going through the system. But this house had 3 or 4 kids, mom and dad, working fine, kept pumping the cesspool. So I knew this, they wanted to move. They needed to move to get the kids in a different school system. They couldn't sell conventionally because they didn't have the money to put a septic in or they'd be in the hole. It was worth about what was owed without touching the septic, and no buyer can get that financing, right, if it's not in Massachusetts Title V. So we bought the property subject to the existing loan. The family left. We sold the property on rent-to-own with the— disclosure in the criteria and a buffer built in price-wise so that the new owners could put a new septic in when they got to the end of their term on the rent-to-own to go get financing. Now that's exactly what happened. A couple came in, they were a small building outfit, they did some rehabs, they were aware of the cesspool that it was working today but needed to be updated when they want to go get financing. They Inside of their 3-year term, got to the end. It was very close to 36 months. They put a new septic in, went and got financing, closed out the house, payday 3 for us, ownership for them. So you can do this, and I'm not advising you to do this because I don't know your deal, but just understand that that deal is pretty normal. The one that a student brought to Rick this week was— I don't think it was accessible. It was just a septic that by the new standards wouldn't be approved. And so you got to dig a little bit because you don't know. Again, how many people living there? How did you find out it wasn't approved? Is it a mandatory town thing that they're going through the neighborhood and making you do this? In which case you wouldn't wanna buy it. Or is it just what I described earlier? It wouldn't be approved by new, like in Massachusetts Title V standards. And so you're the only one that could buy that property, 'cause no one else can buy it conventionally. So when I hear things like that, I wanna dig more and see if there's an opportunity for us to solve a problem for a seller that otherwise couldn't solve it with the conventional market. Market and capturing 3 paydays for us. Total win-win. Buyer coming in, win-win. They've got to be handy. They got to be able to handle it. You have to ask them, well, when it comes time to cash this out, where are you going to get the money for the septic? You got to dig. And then in the agreement with the rent-to-own, it has to state how and when they're going to upgrade that septic. So there's no, there's no qualms later about, oh, I didn't know I had to do it, or, oh, I didn't have enough money. No. Everything has to be laid out up front. So if you have any questions on this, let me know. By all means, you can send an email to support@smartrealestatecoach.com, or you can jump on our weekly sit-downs every week, 4 o'clock, Wicked Smart Sit-Downs, 4 PM on Zoom for 50 minutes. If you want to register for that, you can hit support or you can go to smartrealestatecoach.com/events.
