What a Trashed, Mold-Infested Rental Taught Me About Out-of-State Investments

Expertise: Personal Development, Business Management, Real Estate Investing Basics, Landlording & Rental Properties, Personal Finance, Flipping Houses
120 Articles Written

If you have been through a good number of houses–or even just one real stinker of a house–you know that feeling when you walk back out of the house. You breathe a little harder, have a little crud in your throat, and you wonder what you just spent the last however many minutes breathing in.

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Probably should have had a Tyvek suit on or something.

Well, I was in on of those yesterday. After a lead from a wholesaler came through, I scheduled an appointment with the seller, through the seller and tenants, and went out to the property.

As I pulled up to it, there was decent curb appeal, but the house definitely needed some love. I walked to the front door, knocked, and was greeted by the tenant, the husband of the family. He was nice but timid as I walked through the threshold of the house. It was a mess. Stuff everywhere. The house not taken care of.

I started walking through the house, through the kitchen and then the downstairs bathroom. It looked like it hadn’t been cleaned in about three years. It didn’t smell that bad; it actually smelled quite good, with the tenants cooking chili. Each of the bedrooms was worn, unkempt, and dirty. The carpet was torn in multiple places. Anywhere hands had touched–the walls, doors, knobs, switches, everything– was absolutely disgusting with layers of grime and dirt.

We walked upstairs, seeing lots of cracks in drywall from a settling house, and then to the upstairs bathroom, which was continuously leaking water on both the inside of the tub and somewhere within the wall of the house. The tub likely had an inch of mold on the inside to the shower insert. GROSS!

The two other bedrooms had the same worn, tired rooms with stuff everywhere.

We walked back downstairs, through the kitchen and into the basement. The first thing I noticed was the musty smell. And then immediately to my left was an entire ACTIVELY LEAKING hole in the ceiling that was completely molded, with large spores of blackish colored mold. I stopped the tenant at that moment and told him it was dangerous. He needed to get that out of his house right away. I talked him through why it was dangerous for his kids, himself, etc.

Related: 3 Reasons Beginners Don’t Invest Out-of-State (& How to Overcome Them!)

He actually fought me on getting it taken care of. He was afraid to cut it out. Afraid to do whatever. SERIOUSLY? For the health of yourself and your family?

We kept walking around the basement, noticing the cracks all over, and, you guessed it, more mold. Everywhere.

After walking back upstairs and chatting with the other tenant, I explained to her about the mold as well. And that they needed to get it out of the house immediately.

I left the house well past sunset, climbed into my truck, and picked up the phone. I called the seller, and she answered. These are not the kind of phone calls I like to make. My conversation began with asking her the last time she’d been in the house and what condition it was in then.

She said 3-4 years ago they had put $35k INTO THE HOUSE. My heart sank.

I began talking her through what I found. It’s basically a total gut inside. The torn carpet. Beaten up walls. Leaks. The bathrooms. I told her that I hadn’t gone through all my numbers on the house, but likely, I wouldn’t be able to give her even what she owed on it with all the repairs.

She went on to explain that she had fired a property manager at the beginning of the year, and many of the major issues going on had “been paid for” already, and were supposed to have been done.


What’s wrong with people?

I let her know specifically about the mold and the active leaking going on on THREE LEVELS in the house and how it needed to be immediately addressed. We hung up, and I was just heartbroken for her.

Out-of-town owner.

No idea what’s going on in the house.

She has been taken advantage of.

The house is a disaster.

Tenants are at least a few months past due.

Wow. What a mess.

If you are an out-of-town owner, you need to have mechanisms in place to ensure your property is being taken care of. Here are 4 ways to check in:

1. Demand pictures and receipts of work.

For all our owners, we have everything inputted into our online system, and then we request copies of receipts and orders, checks, and pictures of the work. It’s all there. You can see it, and you know it’s actually been done. If you are cutting checks for work being done, you better know it’s actually getting done!

2. Touch base on a regular basis with your PM.

If they are hearing from you, they are thinking about and working on your property. There is nothing wrong with regularly touching base with the PM to see how things are going. Even just saying “hi” or asking if there are any new properties that might be good for you to buy keeps the communication going.

3. Call the contractor directly.

Especially if you are unsure what is going on or if the work doesn’t seem to be getting completed on time, don’t miss the opportunity to make a call to the contract yourself. Yes, the PM should be dealing with your business, but if you think there might be something else not happening on time, or if you want to dispute an expensive bill, call them up and ask them what’s going on.

Related: 80 Smart Questions to Ask BEFORE Hiring Your Next Property Management Company

4. Call a local inspector.

If all else fails or there are major issues, hire a local inspector for not a full inspection, but just to walk the property. If you are out of town, for $100-$200 you could likely get someone to come out and give you a synopsis of the house, its condition, any major issues, etc.

There are many awesome property management and turnkey companies out there doing an amazing job for their clients. Just make sure you are following up on YOUR property and that things are getting done. Don’t end up being on the other end of a phone call like I had to make yesterday, wondering where another large rehab went wrong or why you’re experiencing a loss on a rental property.

Are you an out-of-town investor? How do you handle keeping up with your properties?

Let’s talk in the comments section!

Nathan Brooks is the co-founder and CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling more than 100 turnkey properties per year. With over a decade of experience in real estate, Nathan is a seasoned investor with a large personal portfolio and a growing business portfolio. Just last year, through Bridge Turnkey Investments, he helped investors add over $12 million in value to their real estate portfolios. Nathan regularly produces educational content to fuel his passion for helping other people learn about and find success in real estate investing. He has been featured regularly on industry podcasts such as the BiggerPockets Podcast, Active Duty Passive Income Podcast, Freedom Real Estate Investing Podcast, Fearless Pursuit of Freedom Podcast, Titanium Vault, The Real Estate Investing Podcast, The Best Real Estate Investing Advice Ever Show, the Good Success Podcast, FlipNerd, Wholesaling Inc., The Real Estate Investing Profits Master Series, Flipping Junkie Podcast, Flip Empire podcast, Think Realty Radio, and more. He is a sought-after speaker and writer and can be found on stage regularly at events across the country.

    Richard G.
    Replied about 4 years ago
    Wow! A very good article that kind of hit home and made me think what if that happen to me — thank you for sharing
    David Roberts from Brownstown, Michigan
    Replied about 4 years ago
    Are these bad PMs managers that turn out bad usually smaller ones? Just hard to imagine it.
    Chad W. investor from Sacramento, California
    Replied about 4 years ago
    @David, I would hope that the larger PM firms do what they say they are doing and I imagine they would have a hard time staying in business if they did not. I feel good about the before and after pics my PM’s send me but nothing beats seeing it first hand. @Gregory, Well, tenant screening is the big catch 22 of the turnkey world for me. If I am not mistaken, the leasing agents are paid to get someone in the property, not to have them stay and pay rent on time for the length of the lease.
    Gregory Jackson real_estate_agent from Boston, MA
    Replied about 4 years ago
    Nathan, Holy Jack Lemmon! Reminds me of the movie, “The Out of Towners”. Great thoughts here on how to avoid this mess. Also, I was thinking some better tenant screening might have helped. Greg
    Christy Greene from San Diego, California
    Replied about 4 years ago
    Wow!!! This is a wake up call. I should not be surprised that people are willing to live in such horrid conditions. Taking pictures and receipts is a common sense idea but it seems this doesn’t happen as often. Great ideas and input. Thank you for sharing that story.
    Gloria Almendares from Kailua, Hawaii
    Replied about 4 years ago
    My experience has been that the larger the property management company (that manages over 400 rental units) the inferior the service (and not the other way around). Smaller management companies can give you more individualized attention, and handle any issues or concerns with the property in a timely fashion. Just like you screen your tenants, you need to screen your Property Manager and management company and ask for references. I have been doing property management for over 25 years and only handle a handful of clients, in order to provide excellent service to my clients. Gloria Almendares – Principal Broker, Property Manager, Vacation Rental and Beachfront Specialist Realty By The Sea, LLC