Nightmare 1st Property - Does it get better?
Hello Everyone,
I currently live in one of the most expensive areas of the country (Bay Area, CA). I work in tech at an amazing company (Facebook) and I am extremely fortunate to have a relatively high salary for my age. Despite this salary and having a large total savings, I am unable to afford a 1 bed/1 bath fixer upper condo for 1+ million (the going rate in this area).
Being in tech I keep an eye on areas that have exponential tech growth and Austin caught my eye. I connected with a coworker in that office for a referral of a broke and realtor in that area and things were great. I had never been to Austin but for 6 months as soon as a property hit the MLS, I would review and debate writing offers. During this period of time 6 properties hit the market that I was very excited about. My interest was in renovated properties that would require little to no work, being remote, I did not want to have the extra stress an outdated property. Out of these 6 offers, all were place on the day of the property hitting the market and the very next day each seller asked for best and final.
The 6 property that I put an offer on, was a duplex that hit the MLS for $419k. I had my realtor and broker check the property out and give me their feedback on wether or not I should more forward. They agreed that it was a great location and I should submit an offer. My offer was accepted for $435k (25%/$110k down, 4.65int). It was a completely renovated, beautiful duplex with no tenants in either side (due to the renovations before sale).
Part of the contingency, I had an inspection which returned some questionable items, like no outlet under the sink for the garbage disposal (one of many small things) and a huge electrical panel swap, estimated at $5k. This was extremely concerning for me at the time but after discussing with my realtor and working with the seller they agreed to fix the issues caught by the inspector and give $5k towards the closing cost for the electrical work.
We closed and I used the same people to list the property for rent, as quick as I could. The property sat for 4 weeks with no interest on either side (after the realtor and broker told me it would be rented instantly - people will say anything while you're buying a property). I became concerned and flew out to Austin to visit the property. I found that the property was extremely dirty and there were no blinds, the renovation was sloppy (paint, tape, rushed worked) but as disappointing as that was, I put the time in and cleaned the property and installed blinds and the next week, two tenants applied.
Then the problems FLOWED in. As soon as I got a tenant there were issues after issues. First, I was notified that there were no smoke detectors in any of the units or rooms and I was liable to do install that ($350 for 8). There were no screens on any of the windows and the tenants wanted screens (understandable - not required $500). I was never told that there were no screens but this is relatively minor. The tenants called and said that no outlets were installed in any of the bathrooms (I didn't notice this when I flew out after closing and it was never included in my inspection - not up to code, $1,250). The electrician found exposed romex wiring that was also not called out on the inspection. Immediately upon one of tenants moving in the water heater went out and needed to be replaced ($800). Undisclosed expenses are starting to add up and I am starting to feel like I am drowning in things that were not told to me. Immediately after replacing the water heater, I get a call that the other unit water heater is out and their heater is out as well (HVAC system from 1994, $4,500) this wasn't called out to me either.
So far I have had:
- Smoke detectors that were missing and extremely overpriced ($350) - not disclosed
- No electrical outlets installed in any bathrooms and wiring not up to code ($1,250) - not discussed
- Window coverings ($400) - not disclosed / not required by law but crummy to not know
- Bad water heater upon purchase ($800) - not disclosed / 2nd one in process of replacing
- Broken HVAC system ($4,500) - not disclosed
- Broken Dryer Outlet called out on Inspection was to be fixed (not fixed)
Total: $7,300 in expenses not disclosed that would have swayed me from purchasing this property. Not to mention an extra $1-2k on misc. maintenance expenses.
I am defeated. I feel taken advantage of being a remote buyer without seeing the property. The seller did not disclose (there's no way they didn't know these problems, while doing a renovation). The inspector failed to note any other issues. The realtor didn't catch them either.
Each day I wake up expecting to see some other large expense, that is creating a financial burden on me. The broker has changed up the tune from saying this is a beautiful property that will rent quickly and be low maintenance from a renovation, to saying that I should expect these expenses from a renovated property and I am being a "new investor".
I feel helpless being remote and that jobs that I paid people to complete were not done correctly and I am paying a high price for them. I bought this property with cashflow in mind but with the undisclosed expenses that have come up immediately after purchasing, I am looking at 3 years before I can break even from cashflow on a $110k down.
My plan is to continue to purchase duplex/fourplexs but this experience has been terrible. I am working with a real estate attorney now to figure out what my recourse may be and I look forward to a week/month/year where there are no large expenses. Is my experience typical?!