The Dark Side of Real Estate

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Share your darkest experiences in real estate. List your five worst experiences. Here is mine to get started:

- Kitchen fire due to tenant frying chicken on the stove top. Over $10K in damage. It was my first property and first tenant.

- Seller covering up cat pee soaked carpet. Candles during showings and at my walk through masked the smell. Carpet needed to be replaced plus odor blocking primer on the floor. 

- Water in a basement due to a bad sump pump. Wrecked the carpet and took hours of time. 

- Saw a professional tenant on the news that had trashed another landlords property. They applied at my property and I denied their application. This "close call" still leaves me freaked out every time I screened someone.

- Verbally threatened by a tenants boyfriend over a security deposit deduction dispute. It was a series of texts, calls and in person encounters. I caved on most of the cost, because some battles are not worth fighting over a couple hundred dollars.  

to me those are just normal landlord experiences..

I think some of the worse things we deal with is contractors doing crappy work or flat stealing money.

being a lender in 08 meltdown that one was rough.

building a home that was 6 inchs to low and had to raise it up.. BRAND new home that boo boo cost 25k.

framing a house where in you dropped a ball at one end and it runs out the next.. get vertigo in it. ( another builder not me LOL) but he hired cheap unlicensed framing crew.

on the landlord side I have had everything you can imagine.. from suicide to destroying the house.. in one of my storage facilites we woke up one day and someone was living in the unit and had it stacked to the rafters  Hoarder .. LOL.. 

it just goes on and on.. if you landlord long enough or have enough homes your experiences are pretty normal.. and are to be expected.. 

One thing that I liked was I looked at a group of homes in Hattisburg that were all section 8.. this guy built them with concrete floors.. stainless cabinets concrete counters and block walls.. with a drain in the middle of the living room and bathroom.. he did a turn over with a high pressure hose.. fairly indestructible..

@Jay Hinrichs for sure if you do enough volume, then you will see problems reoccur and way worse problems than I have experienced. I didn't mention my second, third or fourth fire, because they were not as bad as the first one. You get immune to certain issues after a while. 

As far as those homes in Hattisburg, you know that sounds kind of like how they make prisons. My first thought when I read that is, wow that is scary and my second was wow that is genius.

Thanks as always for your mile high perspective. I am continually amazed at everything you have experienced in the real estate world. 

it was a bank owned project they wanted me to buy but it was too far out of our core area which was Jackson for me to pull the trigger.. but I loved how the guy set it up.. 

no dry wall..  tenants bring in throw rugs if they want them.. of course its the deep south so they acutally were pretty good being cooler.. in summer.. and it does not get that cold in winter don't thing they would work up your way but maybe.. I bought new construction in Jackson that had scored concrete floors and those are SOOO much better than wood or carpet.

This thread could get amusing.

A couple of these were bad luck, the rest were expensive tuition. Top 5, in no particular order:

  • Built a house around 2006. Shortly after we began, the price of copper went through the roof, blowing the electrical and plumbing budgets. Then the market began to tank before it was done, and killed the possibility of refinancing out of the construction loan. In the end, someone got a nice house, but it wasn't me.
  • Had a flip that I'm pretty sure Murphy was running the show. Raccoons, thieves, bad contractors, short appraisal, surprise tax assessments. Before it was over, I was wishing hard for a tornado or lightning to strike.
  • House burned down, thanks to an arsonist. It was empty, fortunately. Insurance paid to demolish it (that's not the bad part). Now we're stuck with an empty lot that we can't even give away because of the neighborhood.
  • Was checking out a vacant, boarded up house one day. Had been that way for a while. Went inside, walked through the living room and kitchen, and turned around and walked back outside (it smelled like death) - might have been in there for 10 seconds, tops. Ten minutes later, as I'm standing on the porch talking, I suddenly realize what I was feeling was in fact not a persistent mosquito, but instead it was fleas. They were everywhere - up to my neck, under my clothes. If you've never had the misfortune, let me tell you, you will do anything to make it stop. Including stripping in the middle of the street. For all I know, I may be a source of amusement on some neighbor's Youtube channel.
  • Knew better and did it anyway - let a contractor get ahead on money over work completed. Probably don't need to explain what happened after that. With that, plus needing to have some of the work redone, that flip ended up as a 5-figure loss.

I worked closely with a large company when I was first investing. Their lead contractor walked up to a property to check out laying some tile before going to his 8 year old's birthday.  This was a good "safe" rental area at that time. Was confronted by a 15 year old who robbed him then murdered him on the porch at 3 in the afternoon.

GC walked off the job after collecting the 90% draw on a high end gut job flip (much more costly experience than it sounds) (he also purchased a new truck at that time)

Resident cut through the firewall in the attic of a duplex and broke into the unit next door through the locked attic stairwell (went to jail)

Resident's guest passed out with their pants down on the sidewalk and the historic preservation district's attorney showed up in my driveway one morning when I was leaving for work to discuss the situation (not a dark experience...just interesting)

Cycling through two bad 3rd party management companies in the same year on 34 units was no picnic due to (1) concern over getting paid that amount of rent and matching security deposits with a lame duck manager and (2) resident satisfaction with having 3 management companies in such a short period (3) lots of extra work picking up their slack and (4) concern over ever being able to find a viable management solution.

Historic rain came through the day before I was to close on my first real estate investment, contractor had left the sump pump unplugged, and the basement had 4 feet of water in it at the time of closing (HVAC and water heater were in the basement)

Client bought a property, gut rehabbed it, property was broken into and stripped clean. He made insurance claim, put the property back the way he had it. Next day the property was broken into and stripped clean a second time. He donated it to a synagogue and wrote it off.  

Client paid his contractor $7,000 cash on Friday to complete a punch list so he can put a property on the market. Come Monday he found out contractor was murdered Friday night and cash was gone.

a few months ago I needed a small deck rebuilt on a rental I have across country. My regular guy was slammed and I just wanted to get it done.

So I called a friend I've had for 10 YEARS, we served in the military together. He's a contractor and does great rehabs. Told him the deal, it was a small project (like $2000), no problem.

2 months goes by and all he had to tell me was excuses, TWO MONTHS, then he just started ignoring me.

I'm not usually surprised by people's poor behavior but this one hurt a bit. People are funny when it comes to business, many will disappoint you eventually. Chalk it up to learned lesson.

second one I remember wasn't so bad but a little bleak. I had to boot my first tenant about 8 months into my first rental. She left voluntarily but left a bunch of bags of stuff, and many were untied. While cleaning a small box fell out. We looked it: it was an urn, for a child.

I contacted the tenant and let her know she must have forgotten. It was a son she lost when he was very young, she said just toss it she didn't care to keep it.

I'm not big on nostalgia, tradition, or sentiment, but that was another dark moment that caught me off guard.

I have no dark side stories, but only because I haven’t done my first deal yet. But seriously this is good for someone like me to hear (read). Helps keep things in perspective and reminds me that s#!+ happens.

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