So, my first deal has been a total disaster so far...

13 Replies

previously posted this but after looking around a little more, I think it belongs here...

Hey BP!

Like many others, I have silently stalked these forums for months on end, Read and re-read posts of everyone’s advice, successes, failures, and everything in between.

I finally decided to go for it and take the leap into purchasing my first home. It is a 2 family home that I planned to house hack. I made sure to double check all my numbers and in the end, figured I could either break even with my mortgage and the rent I would charge or be paying about $100 per month , which was better than $900/month I was paying in rent at the time so I was happy with that.

First issue I ran into: my homeowners insurance was going to be WAY higher than I expected. Nearly triple. The agent told me she never sent my quote to underwriting to solidify the quote she gave me because I had explained to her that I was feeling around for figures and she wasn’t sure if I was actually purchasing. That company ended up rejecting my policy and I had to find another company. No other place came close to the premium that I was originally quoted. Given that, I still decided to move forward with the deal. Instead of breaking even, I’d be out of pocket about $300-400 per month. Which still cut my current house payment more than half, so I was still happy.

Next came after I was already in the home - the furnaces went out and there was no heat. Yes, furnaceS. I now had to replace 2 furnaces. I moved in the middle of winter so this was very important to fix asap. I had been told the furnaces were new so I didn’t budget this into my expenses.

Roadblock 3: my mother lost her job. I am my mother’s only child and practically only family. She was renting. All of her unemployment check pretty much went to her rent. She didn’t have much to live off after paying that so we decided that it’d be best for her to move into the other unit until she got back on her feet. Right now, we do not have a lease agreement and I wouldn’t feel right asking my mom to pay me the rent I would have asked from a tenant, mostly because I know how much of a strain that’d be on her financially right now. So, there goes “breaking even” I’m now paying my full mortgage of $1000/month, which is now $100 more than I was previously renting for.

The next big thing is there is mold in one of the units’ bathroom. This was found when we were redoing the paint. While I could probably just clean this with a bleach/water solution, this is alarming to me because I’m not sure if it is anywhere else in the house or other unit. This is a big red flag to me.

Other miscellaneous gripes: multiple doors need replacing, there’s now dampness in the basement, leaky kitchen sink, windows that were painted shut were actually off the track all together and don’t function properly, faulty plumbing, the list goes on.

I’ve read a bunch of stories on these forums about first deals being a total dud and homes from hell but as the list keeps growing, I get more and more overwhelmed. I am starting to think this was a huge mistake on my part and maybe I should’ve never purchased this home.

Knowing that I probably can’t sue the seller for not disclosing the mold or claiming the furnaces were new has me feeling kind of stuck. What advice would you give to a new investor that seems to have everything stacked against her? Should I run and try to sell? Fix the issues and stick it out? And what about the mold; has anyone had any experiences with this?

If you made it to the end, thanks for reading - I know it was long. I appreciate any insight you may have. 

I’m sorry that you’re having so much trouble from the beginning. I don’t have a lot of advice to offer but I was wondering if your mother could live in the same unit as you do until she gets back on her feet. That way, you could still rent out the second unit, not lose any income and (if you choose) not charge your mother rent or utilities since you would have been paying for expenses in your unit anyway. Unless there are mitigating factors, I think this makes sense to me as one way to lessen the blow from everything you have going on.

I am excited for you on your pre-work of reading and learning from the people who have experience on here.  I am still working on finding the right first transaction.  I just want to encourage you a bit even though I haven't taken the plunge yet.  A couple things right off the get go....the situation with your mom really doesn't have anything to do with your first purchase or the quality of the property.  That piece was a choice and frankly I would want to help my mom too, but that is an emotional decision and shouldn't be lumped into whether you are deeming this a good deal or a bad deal.  Secondly,  there are a couple things that you aren't focusing like the appreciation over time and the depreciation on the rental portion of the duplex on your taxes.  Yes, you are experiencing some unexpected costs right now, but stay positive in that benefits will come in the long run.  

Don't get too bummed out.  Most people buying a house end up in that moment that 'everything is going wrong'.  Stick with it, it'll get better.

In terms of your specific issues, did you get the house inspected before closing?  It sounds like you already handled the furnaces, but did you see if they could be repaired instead of replaced?  Did the seller say they were new?

Also mold in the bathroom is common and can usually be cleaned with normal household cleaners.  You may also consider a vent fan to help prevent it in the future.  Just because you see some doesn't mean it's a big problem.

And the bigger issue with the money and your family, just remember that you would probably be helping your mom with her living arrangements - so it would likely be two rents you were paying!

Anyway, good luck.


Originally posted by @Karen Johnson :

I’m sorry that you’re having so much trouble from the beginning. I don’t have a lot of advice to offer but I was wondering if your mother could live in the same unit as you do until she gets back on her feet. That way, you could still rent out the second unit, not lose any income and (if you choose) not charge your mother rent or utilities since you would have been paying for expenses in your unit anyway. Unless there are mitigating factors, I think this makes sense to me as one way to lessen the blow from everything you have going on.

 We talked about it but she has been having knee and hip pain and would have a hard time going up and down the stairs that lead to my unit. I also thought about moving down but then there’s the issue of where I’d put my furniture. Since she already has hers, thered be no need for another couch, dining set, etc. With the new dampness in the basement, I wouldn’t want to put it there until I got that situation under control. I don’t know, we’re still figuring this bit out. 

Originally posted by @Nicole Richards :

I am excited for you on your pre-work of reading and learning from the people who have experience on here.  I am still working on finding the right first transaction.  I just want to encourage you a bit even though I haven't taken the plunge yet.  A couple things right off the get go....the situation with your mom really doesn't have anything to do with your first purchase or the quality of the property.  That piece was a choice and frankly I would want to help my mom too, but that is an emotional decision and shouldn't be lumped into whether you are deeming this a good deal or a bad deal.  Secondly,  there are a couple things that you aren't focusing like the appreciation over time and the depreciation on the rental portion of the duplex on your taxes.  Yes, you are experiencing some unexpected costs right now, but stay positive in that benefits will come in the long run.  

 Thanks Nicole for the encouragement! You’re right, that has nothing to do with the deal and I’d be helping whether I purchased or not. With everything happening at once it was easy for me to lump it all together when I shouldn’t. 

Your situation sounds tough so I can only encourage you to tough it out. Hopefully you will look back on this in the not too distant future and realize it was worth it. 

Here are my thoughts:

Why can't you sue the seller for the furnaces and mold? If they explicitly lied to you and you have damages it seems you have a case. But, you are right, with all the hassle with lawyers it probably wouldn't be worth it. 

Keep shopping around for insurance. Email every broker you can find until you can get a lower policy. 

Don't forget to protest your taxes before that expense gets added to your list

Move you mom into your unit and try to convince yourself that it is okay for her to help with paying something. You are both going through hard times so you both need to understand each others pain and empathize before it strains the relationship. If you lose this property, you will both be looking for a new place to live. 

Clean the mold up with bleach and repaint with Kilz, put the exhaust fan in like suggested earlier. 

Try to do most of the fixes yourself to save money. YouTube has it all. 

Good luck, you can do it even though it seems tough right now. And even if you do have to end up selling it you will have a lot more knowledge for the next time the real estate itch starts itching and it will.

Originally posted by @Mike McCarthy :

Don't get too bummed out.  Most people buying a house end up in that moment that 'everything is going wrong'.  Stick with it, it'll get better.

In terms of your specific issues, did you get the house inspected before closing?  It sounds like you already handled the furnaces, but did you see if they could be repaired instead of replaced?  Did the seller say they were new?

Also mold in the bathroom is common and can usually be cleaned with normal household cleaners.  You may also consider a vent fan to help prevent it in the future.  Just because you see some doesn't mean it's a big problem.

And the bigger issue with the money and your family, just remember that you would probably be helping your mom with her living arrangements - so it would likely be two rents you were paying!

Anyway, good luck.

Thanks Mike. I did get an inspection but a lot of the issues weren’t addressed or came about after the fact. There were a few issues, such as the doors and leaky sink, that I chose to take on and fix myself. The mold was painted over, the windows were painted shut and wouldn’t open and looking back, I should’ve pushed harder to have them opened to make sure they were in working order. 

Also, looking back I was kind of in panic mode for the furnaces. They probably could have been repaired but the technician suggested replacing and I was freezing so I went with it with no hesitation or second look. Mistake on my end. The seller told me they were new but I found from the technician that one was 10 years old and the other 18. 

I’d like to share the story of my first house hack. I was in my early 20’s and eager. I found a 4 unit building I house hacked. I got the building for a great price and the inspections were great. When I moved in my mortgage with a 3.5% down fha loan was $1400 a month with taxes and insurance. Each unit was rented for $650 so i thought I was living there for free plus cash flowing $550. It turns out the previous owner of the building was very sick and then passed away. While he was sick he had no one to run the property. His daughter from another state sold it without letting me know that part. No one was paying rent. They hadn’t for months. Once they were used to living there for free it was next to impossible to get them to pay. I tried for about two months to collect rent, one person made good. Then I had to go through 2 evictions. One of them left right before the eviction date, the other knew what she was doing and managed to drag it out for 6 months. Both evicted tenants damaged their units in retaliation. One of them flushed those little green army men toys down all the toilets causing overflow and pipe damage. And poured what I assume was bleach in the AC unit. The other left in the middle of the night and took all of the appliances with him. My first year I Iost 32,000 in mortgage payments, repairs, lawyer fees and court costs. I thought I had made the worst mistake of my life. Every free penny went to that building. There were many nights I stayed awake in a panic. The second year though I got it cleaned up and filled with quality tenants. By the 3rd year I took a job transfer out of state and hired a PM company. They were able to raise rents and It cashed flowed about $1,000 a month (after all expenses) for several years. Then the market all of a sudden became hot. I sold the building for 400k more than I paid for it. The moral of the story is things can and often times do turn around. Hang in there!

As far as I can tell your first deal was meant to be. If you didn’t buy it where would Mom go???? You’re paying $100 for your mom to live in her own place.  You’ll figure it out. 

Originally posted by @Matt McKinney :

I’d like to share the story of my first house hack. I was in my early 20’s and eager. I found a 4 unit building I house hacked. I got the building for a great price and the inspections were great. When I moved in my mortgage with a 3.5% down fha loan was $1400 a month with taxes and insurance. Each unit was rented for $650 so i thought I was living there for free plus cash flowing $550. It turns out the previous owner of the building was very sick and then passed away. While he was sick he had no one to run the property. His daughter from another state sold it without letting me know that part. No one was paying rent. They hadn’t for months. Once they were used to living there for free it was next to impossible to get them to pay. I tried for about two months to collect rent, one person made good. Then I had to go through 2 evictions. One of them left right before the eviction date, the other knew what she was doing and managed to drag it out for 6 months. Both evicted tenants damaged their units in retaliation. One of them flushed those little green army men toys down all the toilets causing overflow and pipe damage. And poured what I assume was bleach in the AC unit. The other left in the middle of the night and took all of the appliances with him. My first year I Iost 32,000 in mortgage payments, repairs, lawyer fees and court costs. I thought I had made the worst mistake of my life. Every free penny went to that building. There were many nights I stayed awake in a panic. The second year though I got it cleaned up and filled with quality tenants. By the 3rd year I took a job transfer out of state and hired a PM company. They were able to raise rents and It cashed flowed about $1,000 a month (after all expenses) for several years. Then the market all of a sudden became hot. I sold the building for 400k more than I paid for it. The moral of the story is things can and often times do turn around. Hang in there!

 Ah I’m in escrow on a house hack fourplex.  And you almost make me want to back out.  Haha. Every thing I have read up till now has been “it’s the best thing I’ve ever done” “I wish I could have started that way” ...

If you didn't notice the mold when you first looked at the property then chances are the mold is very superficial and easy to clean. The biggest issue with and when cleaning mold is that often while scrubbing it you spread out spores.... I suggest if you're going the "bleach & baking soda" route you spray the affected area let the bleach settle in for 24 hours before you scrub at it.

As previously mentioned you can't look at your mom's situation as an issue that is a "mistake". It's a life event and you're being a good family member by giving her support. 

Someone mentioned that you could go after the seller for the furnace or mold. I advise against it. My best guess is that you would spend more time, effort, energy and money than it's worth.  I don't know the tax law where you reside and how far forward you can carry expenses, but talk with an accountant. Chances are when you are able to declare an income you could expense the cost of the furnaces against the income and avoid paying taxes or perhaps even better get a return!

Regarding the home owners insurance... there was a miscommunication, and as a result you ended up having to pick up some insurance immediately rather than shop around.  If I was you I'd take the time now to look for better insurance options and if there is one that covers you well and cost less switch. 

Totally get where you're coming from .. after the intital "high" and excitement of purchasing a home there comes a moment where some may think "OMG what did I just do!!!" No business runs perfectly all the time and at the start there's some growing pains.  Best thing you can do right now while you have your mother in the unit, is learn all the in's and out's of landlord-tenant laws in your area. Learn all your rights and obligations and how you need to act and address the majority of issues that may arise.

You got this man!

@Shenay Russell

It's going to be all right if you see it through. The mold isn't a big deal -- a lot of scare and hype for very little. Go with the EPA-suggested bleach treatment and you'll be fine. See it through and you'll never go through the scaremongering again. It comes up A LOT in this business. Reject the red-flag thinking. Research the mold issue carefully and find the smoke and mirrors behind this issue. It'll be a relief.

The furnaces were expensive, I know. It's happened to me, too. You now have new furnaces and they'll make money for you. You also have a great expense you can deduct from your income next year at tax time.

Homeowner's insurance baloney quotes and rude awakenings have happened to me, too.

Get your mother on Section 8 assistance if this goes on. Utilize your local foodbank. File for food stamps. Reject the surreal logic of thinking that when billionaire corporations utilize whatever subsidies are available for them it's smart business, but when your mother utilizes one it's a moral failure.

You're helping your mother. Isn't that one of the reasons you got into this in the first place?

You may be paying $100 more a month for a mortgage, but check your amortization table and see how much goes against the principal. If it's more than $100, you're putting equity back in your home and the attached investment property with that money. Rent goes down a black hole and you never see it again.

As @Peter M.  pointed out, you have YouTube to help with the fixes. You also have the DIY forum over here on BP. I read it all the time, so do others like me. There are some very good handymen writing here. All modesty aside, I'm one of them.

Doors and leaky sink? Take photos, post them up in the DIY forum and talk to us.

You're going to look back on this post in five years and see it as the moment you took your life in your own hands and really started fighting for your financial independence, and at the same time stepped up to bar your mother's door when the wolf came to it.

Originally posted by @Nicole Richards :

I am excited for you on your pre-work of reading and learning from the people who have experience on here.  I am still working on finding the right first transaction.  I just want to encourage you a bit even though I haven't taken the plunge yet.  A couple things right off the get go....the situation with your mom really doesn't have anything to do with your first purchase or the quality of the property.  That piece was a choice and frankly I would want to help my mom too, but that is an emotional decision and shouldn't be lumped into whether you are deeming this a good deal or a bad deal.  Secondly,  there are a couple things that you aren't focusing like the appreciation over time and the depreciation on the rental portion of the duplex on your taxes.  Yes, you are experiencing some unexpected costs right now, but stay positive in that benefits will come in the long run.  

It looks like this will be a disaster for a long long time.  Really should consider selling.  

You're helping your mother. Isn't that one of the reasons you got into this in the first place?---------------

People need to stop thinking  buying a duplex or quad with minimal down is going to help themseleves solve an immediate issue. Buying is EZ.Maintaining and actually making money is tough.  The benefits are not to be seen till 2038 or so if you buy now.  Maybe never if you bought wrong.