How My Promising First Deal Resulted in a $5,000 Loss, Tenant Eviction—& Plenty of Valuable Lessons

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Do you remember your first real estate deal?

I’ll never forget mine. I hadn’t talked about it much in quite some time, then Brandon Turner asked me about it on my recent BiggerPockets Podcast episode.

I had sold my Detroit staffing firm and fancied myself semi-retired in my mid-30s. Which sounds like a great idea until you try it.

I was an energetic, hard-charging entrepreneur, and I got bored to death quickly. I became the worst version of myself. The worst husband. The worst father. The worst friend and money—and time manager. Just ask my wife.

My wife and I escaped Detroit as it was imploding, and we reacted to our decade there by buying a Blue Ridge Mountain “farm.” On top of a mountain. In the epicenter of the moonshine capital of the world (Franklin County, Virginia).

We thought raising our kids in a rural environment sounded like a good idea. I even bought a straw hat and bib overalls. And we planted an enormous number of blueberry bushes (or trees or whatever they grow on). No one told us they needed to be watered. They died within weeks. Dang.

Anyway, after two monotonous years that seemed like a decade, my good friend Jack moved to town.

Jack didn’t have a job, but he had lots of skills after years as a multifamily maintenance man. I didn’t have much sense, but I had a lot of cash from the sale of my business.

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The Dream Team Was Born!

Now what would we do with all this talent and time?

We stumbled across a car wholesaler who sold us a two-year-old Dodge Caravan (a nice minivan) at a few dollars over his cost (that’s what he said, at least). We learned that we could resell up to five cars before the State of Virginia required us to get a used-car lot license. We were in business!


Four months and ZERO van inquiries later, we decided that business was not for us. Oh, and my wife was pregnant with our third child, and we thought she’d look good behind the wheel. (It went with her denim jumper, and as new homeschoolers, we’d just found another way to fit in with the crowd.)

Related: 6 Aspects of Real Estate Investing You MUST Understand Before Your First Deal

Wait, I was supposed to write about my first real estate deal. Where was I? We’ve covered:

  • My first (and last) farm.
  • First (and last) overalls and straw hat.
  • First (and last) boring retirement.
  • First old moonshine stills and dead blueberry trees (we may try more of these).
  • First used car salesman job (I really didn’t look the part. Too honest, I guess).
  • First homeschool “uniforms” and minivans (done with that).

Our First Real Estate Deal

The Dream Single-Family Flip in the Town with 23 Percent Unemployment

Jack and I had heard that you could acquire houses on the courthouse steps for pennies on the dollar. Or at least under a dollar on the dollar.

I don’t think the term “flip” was coined until years later. We thought it was hilarious when we heard it. We just called them “fixer-uppers.” (Anyone else remember that, or was it a Southwest Virginia thing?)

We also heard that there were very few bidders in the town of Martinsville, Virginia. This was a textile town that was in steep decline since its jobs left after NAFTA. The unemployment rate there was 23 percent, but that didn’t deter us. Smart thinkin’, huh?

Spoiler Alert: This Story Does Not End the Way You’d Expect

We made a pact (but not in blood) that our visit to the courthouse steps was only an exploratory trip. We knew we needed 10 percent cash down to bid, so we intentionally took no cash to the sale. We were committed observers.

It was December 20, 2000. We awoke to snow and ice that morning, and in the Blue Ridge Mountains, that can be treacherous. We made it to Martinsville and stopped by the foreclosed home on the way. Thankfully it was vacant.

We were able to peek in every window, and we were surprised to see it was swept clean and looked great. It even had decent appliances. Assessed at $65,000, we thought it could bring that price with just a coat of paint and (we assumed) a handful of repairs.

“Someone’s gonna get a great deal if this baby goes for under $50K,” said Jack. He didn’t know what he was talking about, but he was generally correct.

We proceeded to the auction and were surprised to see no crowd. No one at all. The snow and ice had scared off “all of the other real estate investors in town,” we reasoned. (It couldn’t have been the economy. After all, 77 percent of the folks were still employed there, right?)

The auctioneer approached, dryly read the rules, and opened bidding.

“The bank is bidding $34,000 for this property. Bidding opens $100 above that.”

I looked at Jack. He looked at me. We both knew our pact and our empty pockets were a silly idea. We also knew the rules. The auctioneer had no option to accept a bid without a check for 10 percent.

We obviously didn’t know her, but we pleaded with her to let us get to a bank and meet her back at the auction site. The problem was that our bank was across town, and it was icy. And she had already driven for hours on a circuit through several other counties that morning.

I think God was smiling on us that day, because she suddenly realized she was hungry and needed to go grab lunch. She said, “I’ll swing back by here after eating my bean burrito, and if you happen to be here, I’ll see what I can do.”

We made it to the bank and back without incident, brought a cashier’s check for $3,400, and got the deal. Jack and I were real estate investors!

Here’s Where it Gets Good…

Entrepreneurs are an optimistic lot. We tend to look at the upside and ignore what may go wrong. This is why entrepreneurs often have a hard time raising capital from investors. Smart investors look at the upside, but they also look at the downside. And they look deeper and ask if they can bear the worst-case scenario, something many entrepreneurs ignore.

You Probably Think You Know Where I’m Going, But You’re Probably Wrong

Sometimes things go better than planned. No, seriously!

Two weeks later, in early January, we closed on the home for cash. We got the keys and eagerly explored the house with our wives. We tested the furnace, the water, the appliances—everything had been maintained and worked like a charm. This home really only needed a coat of paint, and Jack would be able to do that in a few days.

Three weeks later, around Groundhog Day, we put a “For Sale by Owner” sign in the yard with my phone number on it. The home was on a short dead-end street, so we knew we’d have to do a lot of additional marketing (newspaper ads and such) and we’d be ready to list it with a real estate agent if it didn’t sell by spring.

My bag phone (yep, that’s what they were called at one time) rang two hours later. The caller told me how she had been visiting her mother on that same street and was leaving to return to the D.C. area when she saw my sign. She had been hoping to get a home near her elderly mom so she could care for her. This looked perfect.

We showed her the home, and she signed a contract the same hour at the asking price. No negotiation: $65,000 cash with a quick closing.

This All Seemed Too Good to be True

As Jack and I celebrated that evening, we plotted our next moves. “We could do two of these per month! At a $25,000 profit per house, we would clear up to $300,000 each! Then we’ll sit back in our hot tubs (cigar in one hand and bag phone in the other) barking out orders to our crews and enjoying the mountain air and semi-boneless ham.” Semi-retirement sounded more fun than ever!

Several weeks later, by mid-March, everything seemed to be on track to close. Then it turned into a month. Then another month. We had purchased one or two more homes to flip by then, but we had no reason to be seriously concerned.

The buyer just needed to close a deal on another asset to free up cash. Little did I know who her buyer would be!

My bag phone rang and our buyer let out a long sigh. “So you know I have this small doublewide at a trailer park in Northern Virginia, right? Well I thought I had a buyer for it, but they backed out. And the next one couldn’t get financed. How would you like to have a nice move-in ready rental property right outside D.C.?”

She was offering for me to take the home in trade, which would give her the rest of the cash she would need to close on our fixer-upper.

I had no real experience as a landlord, and I wanted to get the deal done. I left rational thought at the door and began to think through the positives of this new “opportunity.”

  • I really don’t want to put this house back on the market.
  • Regular monthly rent.
  • Hey, it was built in 1970, and they don’t make ‘em like that anymore!
  • Little out-of-pocket cash (since I stood to make about $12,000 net on the fixer-upper).
  • Nice and successful people live near D.C., so I’m sure the tenants will pay their rent on time.
  • My wife and I have been wanting to take a homeschool field trip to D.C., and this would be a way to write off part of it.

You know the mental routine. Using left-brain logic to justify right-brain, emotional decision-making. The human condition, especially for rookie investors.

I agreed to the deal. And I learned that it would even come with a bonus liability: I would be responsible for the $800 monthly lot rent! (Where else could you find a deal like that?)

I took a quick trip to Northern, Virginia. I verified that the park was right off I-95 (this was before Google Earth), that it was in high demand, and that the trailer was in reasonable shape.

We took the trailer in trade, signed the park lot agreement, and closed on the home. My partner, Jack “settled” for his portion of the profit with $12,000 or so in cash, while I took the trailer and all the benefits that were about to come along with it.

Related: The #1 Reason Newbies Never Land Their First Deal (That No One Talks About!)

Don’t Try This at Home

This Was a Deal Created For Sophisticated Investors


I think you can guess how the rest of the story unfolded. Jack, a man with a dozen years of experience in multifamily must have been cackling laughing all evening as he told his wife, Julie, about the deal he’d cut with me. I can hear her now…

“Seriously? He took the trailer and gave you all the cash? How could we be this lucky?”

Exactly what I thought later.

I was able to rent the trailer to the first caller referred from the mobile home park. That was my first second mistake. I was not at all qualified to screen tenants, and after a few months, this one stopped making payments.

I quickly learned the eviction process, and she moved out a month or so later. But not before trashing this already-aging tenement on blocks. And I learned that apparently, I was an evil person for wanting to collect rent!

Of course, I continued to pay the $800 lot rent each month during this process. I was able to round up a few friends (including Jack—he felt sorry for me) to spend several days there cleaning, fixing, and repainting the trailer.

How Could One Person Cause This Much Neglect And Damage in Less Than Six Months?

Amazingly, I would be asking that same question again about seven months later when the next tenant performed a replay of the first. I won’t bore you with the details.

After going through the “non-paying tenant and trashed home” cycle a second time, I was smart enough to realize that there’s a time to surrender and walk away. We talk about this process with most of the guests on my podcast.

One small bright spot: Rather than paying someone to haul it away, I convinced a local mobile-home dealer to pay me $1,000 to assume my lot agreement. He was eager to place one of his new homes in this high-demand location. And he hauled my albatross off to the graveyard of tenements on wheels.

Final tally:

Jack: $12,000.

Paul: $5,000 or so.

The Rest of the Story

If you’re still with me, congratulations. I hope this somewhat comical journey through my first real estate deal gives you hope that you can ultimately learn from your mistakes and go on to great fun and success in real estate. Even though sometimes (always?) things don’t go as planned.

Note that Jack and I are best of friends, and we went on to do dozens of fixer-uppers, built a half-dozen modular homes, and much more. This episode literally launched my real estate career and has led to millions of dollars in income (as well as quite a few losses), years of personal and financial freedom, two books (so far), and a life I wouldn’t trade for any corporate job in America.

Lessons Learned

I think the best way to learn from others’ successes and failures is through hearing their stories, and you’ve already done that. But here are a few points I want to emphasize:

1. Just do something. But prioritize objective thought over emotion and convenience.

I talk with many people in the BP community who are plagued by analysis paralysis. Jack and I had committed to not buy a house on the courthouse steps that day (to assure we’d done enough analysis). But we made the leap anyway, and it launched two real estate careers. I’ll never regret that decision. But I obviously regret the decision to take the mobile home in trade. That decision was made out of convenience and emotion, and I wouldn’t do it over again.

2. It’s OK to partner with close friends. But always make humility a priority.

Though conventional wisdom says not to partner with close friends, I have done it at least four times and I can’t recall one that went bad. I always took responsibility for my decision to take the trailer in trade, and I never blamed Jack for taking all the cash. And he came to my rescue when I needed to repair it later.

3. It’s OK to take something in trade. But evaluate that Deal on its own merits.

I was tempted to say that a lesson here would be to not take something in trade. But it could have honestly worked out fine. The question to ask yourself is this: “If I saw this deal on Craigslist or the MLS, would I want to buy it for its own merit?” If the answer is no, then I wouldn’t take it in trade either. One exception to this: The guy who paid me $1,000 in trade for my lot agreement essentially took my old mobile home in trade. The economics were so overwhelmingly favorable for him that the scrap trailer was inconsequential. So, for example, if someone offers you a thousand-dollar clunker car as part of their down payment on a rent-to-own deal you’re selling, you can certainly do it. Even if you wouldn’t choose that lime green Ford Escort for your personal ride. (Donate it to charity!)

4. Have fun! But take the business seriously, too.

Jack and I had hundreds of laughs through this ordeal, and we still recall it fondly around the campfire today. Our friendship was strengthened, and we actually remained friends with the lady who traded us her trailer for years after the deal closed. At the same time, we were learning many valuable lessons—lessons I’ve drawn on for almost two decades and will for years to come.

Tell us about your first fixer-upper or real estate deal!

What lessons did you learn? Share below!

About Author

Paul Moore

After graduating with an engineering degree and then an MBA from Ohio State, Paul started on the management development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner. They sold it to a publicly traded firm for $2.9 million five years later. Along the way, Paul was Finalist for Ernst & Young's Michigan Entrepreneur of the Year two years straight. Paul later entered the real estate sector, where he completed 85 real estate investments and exits, appeared on an HGTV Special, rehabbed and managed dozens of rental properties, developed a waterfront subdivision, and started two successful online real estate marketing firms. Three successful developments, including assisting with development of a Hyatt hotel and a multifamily housing project, led him into the multifamily investment arena. Paul co-hosts a wealth-building podcast called How to Lose Money and is a frequent contributor to BiggerPockets, producing live video and blog content on a weekly basis. Paul is the author of The Perfect Investment—Create Enduring Wealth from the Historic Shift to Multifamily Housing (2016) and is the Managing Director of two commercial real estate funds at Wellings Capital.


  1. Lana Lee

    Thank you, Paul. This article was both entertaining and educational. It taught me to look at both good and worst case scenarios. It also taught me that failure shouldn’t brake us down. I listened to your latest episode on BP and you seems to be very energetic and passionate person, one of those people I look up to.

  2. Marili Beckmann

    Hey, Paul. Congratulations on this post! It is obvious that you are now a very successful investor, after going through the old “School of Hard Knocks” in the beginning. But what struck me just as clearly is what a great writer you are! You managed to keep my attention until the very end, while teaching some very important lessons, in a totally entertaining way, as if you were telling a chose friend a cool story! Congratulations on that additional wonderful talent, and please continue to use it knowing that you communicate very well with people.

    But in my opinion the greatest talent you have been given is a caring heart, which is made clear in your commitment to invest the result of your hard work in fighting human trafficking and rescuing its victims. I feel very strongly that nothing makes life more worth living than to help the ones who cannot help themselves! If you need some help with this program in the future, please let me know. I have lived in different countries, speak 5 languages and have been told I am a good writer and public speaker, so maybe you could use some of my skills and experience, as a volunteer, in your organization. Thank you and the people who support you in this valuable work for all you do! If you have a Facebook group for any of your endeavors, please let us know here. All the very best in your future, Marili

    • Paul Moore

      Marili: Wow, thanks so much for those kind and very encouraging comments! That is very nice of you to say. I met with one of the nation’s foremost experts on trafficking yesterday at Liberty University – Dr. Judith Reisman. People should check out her books. And the film, Nefarious. That is what opened my eyes to this.

      Please connect with me on BP and we will start a conversation. Thanks again!

  3. Sara Kennedy

    Thank you for sharing these incredibly valuable lessons with us Paul. I have yet to start my investing journey and likely would be tempted to do many of the things you mentioned here. I’m grateful for your tips and advice!

  4. Melanie Hartmann

    Thank you Paul! This was entertaining and valuable simultaneously. I have currently spent near $1K on inspections and rehab estimates this year for them to result in “wasted” time and no deals. Haha, but I have to look at it as SAVING a ton of money and learning a few things along the way rather than loosing. Similar to the point you are making here in this article.

  5. Jessica G.

    I love your writing style! I just closed on my first rental and we are in the rehab-then find tenants stage – scary to say the least! But you’ve reassured me that just getting in the game is what matters! Thank you for this article, it was great.

  6. chris schu

    Wow, from a SF in Martinsville to a trailer in DC – what a contrast.

    Yes, newbies are very susceptible to the power of emotions and convenience when pondering the value of “deals.” Rose colored glasses can be a common distraction to reality.

    At least you were flexible enough to see opportunity and seize it by striking while the iron was hot on those court house steps – despite the cold winter air.

    Initially I thought you were talking about Martinsburg (WV) which is in a completely different region/market yet close enough to NOVA (locals speak for Northern VA) since values there took off during the insane real estate price hikes leading up to 2006.

    Of course, the DC market is an animal all onto itself.

    As you stated, “prioritizing” in favor of objective thought is essential if you don’t want to lose your shirt. Your $5k loss is but a drop in the bucket compared to what some investors in many urban areas lost during 2008 and thereafter.

    Glad you experienced the majestic Blue Ridge mountains and shared both sides of your flip adventure.

  7. David Oberlander

    Paul, what an entertaining story. It’s a pity the referee is about to throw a couple of flags on the field and penalize you for too much of a hit on the BS meter.

    First, you claim to have bought a house in Dec 2000 (probably true) where the unemployment rate was 23 percent (TOTAL BS). Google, take us to the replay. First up, the Federal Reserve Bank of St Louis which has charts online showing the unemployment rate was actually 4.8 % In Martinsville, Va. In Dec 2000. Quite a difference there. Took more time to type “unemployment rate in Martinsville Va” then to find the evidence.
    Now, does everybody remember this was at the end of the Clinton economy where the US economy had grown tremendously during the 90s. Martinsville did have a spike in 1999 that reached 19% for one month and dropped 10& (to 9.8 %) in the two months after but overall the economy was fine there. In fact it was better in 2000 then it is today. (5.1% for May 2018 latest available)

    2nd The Lot rent $800 a month in 2001 sounds high even for a DC suburb. I’ve been around mobs on leased lots since the mid 90s (Baltimore and then Florida) and never heard of a rent that high even in places where they’re trying to drive the renters out so it can be torn down and new homes built instead.

    3rd Bag phone in 2000? Even I had a MicroTAC by 1998.

    So, anyway, your story was entertaining but some of the embelishments were not needed. Those of us who been doing this a long time have had similar incidents and it’s good to have a few laughs early in the morning.
    (I’ve “fixer-upped” cars since 1984 and houses since 1995) and it’s the first article this year where I’ve actually felt like signing in to Bigger Pockets. (Too much stuff here is now directed to the Hipster Douchbag generation
    and most of them have yet to prove that they’re going to learn anything. Maybe when they reach 40???)

  8. Paul Moore


    First of all, I want to sincerely thank you for reading my post, and your kind comments that were weaved in here. I’m glad you enjoyed the article overall.

    What your comments fail to take into account are the long-term unemployed that are no longer counted in the numbers. The graph here from the Federal Reserve shows about a 19% or so unemployment rate. But it was widely known in this area that there were many, many other folks who had been laid off from the textile and other similar businesses (as a result of NAFTA, etc.) that had been unemployed for many years and were no longer being counted. Estimates of total unemployment about 23%. By the way, the Bureau of Labor Statistics actually now tracks this issue under an alternate unemployment rate called U6.

    On the lot rent… this mobile home park was 470 feet from an exit on I-95, with a lot of nice mobile homes, minutes from the beltway around DC. It was called Grayson Village, and you can look up the location yourself. I called them just now, and Donna, the same manager, still works there. She informed me that their lot rent is $730 right now, and that it was not $800. I stand corrected. I asked her how I may have arrived at the $800 number that I recall clearly, and she said that I could have easily been spending that when factoring in taxes and utilities, which is exactly what happened. So you were correct in calling me on the lot rent. But that was still my total cost for having the mobile home there.

    Thanks again for weighing in, David.

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