Flooded! What now ?

Question

So my finished basement flooded during a record breaking downpour on Sunday. I just bought the house and renovated the basement for a house hack opportunity. Refinanced pulling 20k cash out of the deal. Life was good until Sunday. The previous owners had a $7k system put in including a sump pump and perimeter drain to prevent such an occurrence from happening. A $10 check valve got stuck and the pump couldn’t pump the groundwater out so we got completely flooded. I filed a claim but insurance won’t likely cover it because the don’t cover storm water floods. I had to find temporary housing for my family and the house is being torn apart, dried out, and damage control. Tenants are upstairs unscathed, fortunately. Feeling extremely defeated.

How do I get through this? I feel like throwing in the towel. Any advice for a newbie who’s first deal went terribly wrong?

John Underwood · Answer

So was the fault the storm or the checkvalve that was part of a system to remove water?

Might want to consult an attorney if they decline and see what they say.

Jason Shackleton · Answer

Hey @Mason Jeffries Your focus right now should be ensuring the problem is not only fixed but also making sure this never happens again.

You need to reframe this situation. Yes right now it seems bad but zoom out and get perspective on the situation. You need to remember why you are doing this in the first place. Ask yourself how will this look in 10 years? Will you simply sell now or fix the problem, or wait for 10 years to pass and build wealth?

My mentor had a basement flood once, it cost him about 7k. He had really stong reasons to not quit and he turned it into a learing experience. He made a video out of it to help other investors learn how to not have this happpen to them. I am sure 7k seemed like all the money in the world when he was starting out.

I share this particular story because he did not "throw in the towel" he kept going, he fixed the issue and moved forward. He wrote a book this year of his investing story. I get to read it early because my success story is in it too. I found out that years later after his investing experience that went "terribly wrong" he has since built around 4-5 million in equity!!! Not the value of his portfolio but equity! Imagine if he quit then. If you asked him about that 7k now he would very likely laugh. To him years later it has become pocket change. That is where you can go if you don't quit. Never quit!

You will always have a challenge. Something to test you early on. My "test" was a tenant that I could not get rid of, in a tenant friendly region. I selected her because I felt sorry for her. She did not pay rent for 7 months and caused many many issues, Cops called, water damege, noise etc. Cost me about 7k and many headaches. I had just renovated the property and I had to renovate again when she left. Did I want to quit? Kind of...years later that property is worth nearly tripple what I paid for it and the cash flow it now produces is a big part of my current financial freedom.

Note that my success story is in my mentors book because I didn't quit. My mentor was only able to be my mentor because he didn't quit. I am glad he didn't quit.

Time will make your situation seem way better. Also it was not a "terrible failure".

- You took action and started investing something many never do

- You refinanced the deal and pulled out 20k something you can now do over and over again

- You picked good tenants that decided to stay during the fix

- You will not have this happen again

- You now have negative investing experience, this will help your investing story in the future.

- You can now more easily raise capital from investors in the future as you have direct experience overcoming one of there objections for investing with you. "What if it floods they will say"

You got this keep moving forward

Justin Hoggatt · Answer

@Mason Jeffries - So sorry to hear of this.  It's always a horrible situation and I've personally gone through a couple similar situations.  How much water did you end up having?  From my experience, it's sometimes the shock factor that gets the nerves going and the feeling of defeat.  I suppose it depends on the amount of water, but I've found that generally after a quick response and removing the water, that there isn't as much damage as first thought.  Getting the bottom of the drywall cutout if needed to allow the walls to dry is needed and often drywall repair is generally cheap.  I'm not sure of your flooring, but if you can clean it and get it dry, it shouldn't be to bad.  I think just take one step at a time and you'll work it out.  It all makes for a great story later after you've not thrown in the towel and have gone through some of these experiences and come out ahead in the end.  I'm not sure how much help I am, but maybe just knowing that many of us have gone through this same situation before can be somewhat comforting as well.