Money pit or potential home?

Stephanie Gruver has entered more foreclosed north Minneapolis houses than a ring of copper thieves.

Gruver's eye is critical to determining whether an empty house has a future. She has scrutinized close to 400 foreclosed houses.

Her bias is toward preserving the North Side's housing stock. But close to one-third of the houses she examines fall short.

"There are houses that definitely need to be saved," she said. "But unfortunately, there are houses that are so far gone -- and they weren't extraordinary houses to begin with -- so it doesn't make any sense that they should continue."

Gruver was hired 16 months ago by the Greater Metropolitan Housing Corp. (GMHC) as the housing nonprofit began to use millions of state and local dollars intended to get foreclosed houses market-ready. That's recently been augmented by millions more in federal housing recovery dollars. The nonprofit is the main agent for city foreclosure recovery efforts. It also gets the right of first refusal to buy foreclosed homes owned by several national lenders.

The North Side has been the epicenter of close to 8,000 foreclosures in the city since the start of 2006, with a foreclosure rate several times the city average. Blocks are dotted with boarded houses with unkempt yards or unshoveled walks and trash that drive down property values.

Joined by a real estate agent, Gruver tries to detect the character flaws that doom a house, such as flawed structural underpinnings or functional obsolescence. She brainstorms in others how to reconfigure them for more appeal.

If a house looks salvageable, as most do, construction managers from the housing corporation work up a detailed estimate to compare against the expected sales price.

The corporation is willing to sink more into a house than it will sell for if that saves a worthwhile house, but it also has to husband its gap financing.

"She's very savvy about the potential and about what the houses cost," said Carolyn Olson, the GMHC president who hired Gruver.

Gruver came to this job after an 18-year career as an insurance broker and a history of activism in her Webber-Camden neighborhood in Minneapolis.

"I was kind of a house junkie anyway," she said of her hobby of showing up at north Minneapolis open houses. "I've always loved houses."

"She understands values, and she understands properties. She is a homeowner and she is a landlord," said Roberta Englund, a North Side neighborhood staffer. "I think that because of her people skills she is better at this job than most."

An afternoon's work

An afternoon with Gruver offers a glimpse at the range of conditions in bank-owned properties coming onto the market.

One tiny house on 31st Avenue N. is an obvious candidate for demolition. The porch sags, and there are other structural issues. The floor is littered with plaster from walls bashed by copper thieves to strip the copper piping. Some of the aluminum siding also has been stolen. She's having trouble even finding a basement entrance to check the furnace.

"This is a good example of a demo," she proclaimed. She expects GMHC to raze the house, then hold the lot. "Sometimes the best thing that you can do is to take out the weakest link on the block, and eventually when the market recovers something will probably be built in its place," she said.

Her second stop on Queen Avenue N. ranks as one of the better finds. It's a three-bedroom house built in 1950 that still has the original pink bathroom tile. It will get a moderate rehab with servicing of the furnace and hot water heater, a new roof, fresh paint, new carpet and a shower. It also has a basement height that passes what's playfully called the Stephanie ceiling test -- she's 6 feet 2. The bill approaches $20,000, but Gruver thinks GMHC has a shot at recovering its purchase-rehab cost if it's sold for $100,000.

"We want to have some homes that are really nice and ready to go at a little bit lower price," she said.

But another house on her tour will run closer to $70,000 just to rehab. That will cover such items as removing a poorly draining sidewalk, removing lead, fully insulating it, installing new windows, replacing the furnace, and adding roofing, siding and a new door for the garage. The biggest element is removing a chimney, so that the house's only bathroom need not be accessed only through a bedroom.

Gruver knows home rehab from experience. Her first house cost $69,000, and had a 30-year-old furnace and 60-amp fuses, among other features that needed an upgrade. Now she lives in a 1928 Tudor a block off Webber Parkway, and owns and rents out the house next door.

Most foreclosed homes need some rehab; she's seen only a handful in move-in condition. "If you're willing to put the time and effort in, there are some decent houses. But a lot of people don't understand how much this remodeling can cost. They see an octopus and they don't realize it's not the cost of the furnace, it's the cost of the asbestos removal ... There always seems to be a little more than you expect," she said.

Steve Brandt • 612-673-4438