re: bad investments

Marketing Your Property
10yFollow

re: bad investments

Laurence Walsh-Hodson
Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes

Hi Friends,

My husband and I have been working with a company to invest out of state in Indy. The process has been horrible and arduous. The property has a great cash flow and a good cap rate, but the company keeps changing information on us. First, their agent says the owner will put in sump pumps to deal with the large puddle in the basement. Later the owner says no, she put in drains. Then they say they will fix windows and then decide that no, they will not fix windows. Finally they say they will take care of any mold issues and later come back and say they will "help remediate" mold issues if they are found. We don't know if there are mold issues because even after this now 45 day escrow, their Contractor somehow forget to turn in the sample. I keep telling my husband that this is a nightmare property, but he likes the cap and cash flow. I am looking for feedback from some experienced investors. I have bought two houses I lived in (and didn't have these issues), but this is our first investment property. Would you invest in this? With the constantly changing guarantees and possible mold? Thank you, Laurence

0Reply
143 views

Most Popular Reply

J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
10y
Originally posted by @Ryan Mullin:
You are entirely to "nit picky" to be investing in real estate.  From what I can gather your husband "gets it" and you are nervous and scared. 

....

Our contractor failed to send the test in...  guess what he's busy doing actual contracting.  Welcome to dealing with contractors. Guess what...  we lost money too.  We lost time.  Still losing time as I type this.  

I'm not jumping into the he-said/she-said and taking sides here (I don't know any of the parties), but after reading this post, I'll throw in an unsolicited opinion and a piece of business advice...

As a business owner, this is the WRONG way to be dealing with customer issues.  Badmouthing a potential customer -- who's biggest mistake is likely just being new, naive and paranoid -- in a public forum is not good business practice.  Especially given that many of your customers will be new, naive and paranoid.

As for your second statement above, it sounds like you agreed to get a mold test done and your contractor dropped the ball.  Sorry, but this isn't something you just chalk up to, "Welcome to dealing with contractors."  You told your customer you would do something; then you didn't do it. 

I've purchased hundreds of houses (i.e., I'm not new, naive or paranoid), but if I were told by a representative of mine that they would handle something for me, didn't handle it, and then just blamed it on a bad contractor, I'd be pretty pissed too.

The fact that you can blow off the fact that you didn't follow-through on the mold test you supposedly agreed to makes me wonder if you weren't just as nonchalant about agreements you made with the sump pump and the windows.  You may think these things are minor, but it's understandable that a customer wouldn't find them to be minor.  

This all goes right to the heart of your role as a turnkey seller -- you need to be TRUSTWORTHY.  And your comment above about the mold test doesn't instill much trust from me.

Again, I don't know you (or the OP) and it sounds like others here have had good experiences with your business, so maybe you're just having a bad day.  But, my suggestion is that, in the future, when you have to "fire a customer," you do it without the name calling and perhaps an apology for when your contractors may have dropped the ball.  If it weren't for your post above, I would have walked away from this thread with a relatively positive opinion of your company (based on others' comments and your other posts); but after this, I'm walking away thinking just the opposite.  

My opinion probably doesn't matter to you, but just think of all your potential future customers who may read this thread and walk away with the same impression I have...

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
17Reply
See this reply in the discussion

127 Replies

Jump to latestLatest
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    My answer is similar to @J Scott.  It is based on something my dad told.  Never argue with a fool, someone passing by might not know which one is which.

    Here are 2 ways to fire a client.  I do not trust you, I do not like you, and I don't want to do business with people like you.

    or I am sorry you are unhappy with me.  After looking closely at your case I realize it is a very complex and time demanding case.  I do not have the time to devote to your case that it deserves, I already have commitments.  While you may think that I could squeeze in time to do it, the fact is you would most likely not be happy with my work and I definitely would not be happy at doing less than my best work.  Both you and your case deserve an attorney with the time to give this case and you the attention it truly needs.  I am sorry that I cannot be that attorney for you.

    Which one do you think will hurt your business the most?

    7Reply
  • Mayank S.
    Investor · Herndon, VA · Member since 2015 · 185 posts · 74 votes
    10y

    I have bought few turnkeys through FS Houses and I can tell you@Laurence Walsh-Hodson from my experience, they are ethical honest people who never try to take advantage of their out of state investor. 

    Before investing, I thoroughly vetted them, flew into the city and met the team personally before putting my dough there. My experience has been nothing short of exceptional with their properties and management. However everyone's experience is different and things sometimes are blown out of proportion over a small thing and this post is classic example of it. Good luck to you and John and hope things work out for you both with whom soever you prefer to work with in Indy which is great market for cash flow.   

    @Ryan Mullin, @Ashley Mullin, @Jennifer Roberts keep up the good work. 

    1Reply
  • Ingrid J.
    Investor · Tromsø, Norway (Europe) · Member since 2015 · 431 posts · 194 votes
    10y

    @Laurence Walsh-Hodson

    I gotta link to Wikipedia on this to give you a historic perspective, whether or not the land is in Florida.

    "Swampland in Florida refers to decades-old but still recurring real estate scams involving swamp lands misrepresented as being possible to develop, or "buildable". These scams became widely known and now also have meaning as a common figure of speech."

    https://en.m.wikipedia.org/wiki/Swampland_in_Flori...

    1Reply
  • Jeff James
    Real Estate Investor · Whiteland, IN · Member since 2014 · 54 posts · 20 votes
    10y

    @Jerry W., I was once fired by a prominent national company that is often mentioned in BP posts that used your first method to do so.  It was over a minor dispute where I pursued a refund for what I thought was an inexcusable omission on their part and if they had denied my request in a professional manner I would have let the matter drop.  However their response basically called me an idiot.  Because I am an emotional guy I dug my heels in at this point and I admit that I made a mountain out of what was really a molehill.  However, instead of sending me an e-mail that fired me by your second method they sent several more similar to their original response with each one more unprofessional than the previous one.  I will accept responsibility for not handling the situation correctly but I will never understand how a company could treat a customer in the manner it treated me and yet achieve and maintain prominence.  I would have a lot more respect for that company had it employed your second method to end our business relationship.  I know better than to think that every business relationship will be successful but it is ridiculous to treat a customer in less than a professional manner.

    0Reply
  • Nnabuenyi Anigbogu
    Chicago, IL · Member since 2015 · 298 posts · 261 votes
    10y

    I have to say after reading the thread I am coming away with a more negative opinion of the company in question. Now i dont think they are a bad company, on the contrary they seems to be prety good based on the opinions of others on here, but the way this client was treated and responded to on here did leave a bad taste in my mouth.

     @Ryan Mullin I have private investors who are brand new to real estate that are investing in my flips. One of the investors on a flip only invested about $4000 to start with`(started small) which represents about 1% of the the entire flip. However, he has the most questions and is the most nitpicky about everything. He actually has no say in how the flip goes but he bothers me asking for info all the time. It is probably more trouble than its worth to placate him giving how small his investment is. But i answer every question because small investors turn into bigger ones. Clients/investors refer others and talk about your business. There are times you should divorce yourself from a client/investor but it must be done in a more diplomatic way. 

    Also first time client/investors tend to be more neurotic and nitpicky because they are dealing with a product they dont fully understand. I was that way when i first started and you probably were too. I guarantee you that this is not the last time you will deal with this given the turnkey type of business you operate and the cheaper asset class. The OP might or might not be wrong but as the business owner i would expect better handling of the situation especially since it seems you/your contractor had a hand in escalating the situation both in actuality and also here in the forums.

    This is just my opinion and im sure your company will go on doing well. I hope this is just a faux pas that will pass.

    4Reply
  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    10y

    This is clearly a shady and untrustworthy turnkey company and I'm not surprised. I hear these stories every single day. Run the other way, find a top tier agent in the market you're interested in who has experience working with investors. Then ask to get the contact information of other investors they've helped find properties for, and ask them if that agent did everything right and was truthful, and if their investment is cashflowing as expected. That's your answer.

    0Reply
  • Account Closed
    Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes
    10y

    @Vincent Crane  Actually it's not that clear.  Look at all the people responding to the thread sharing thier good experiences with FS Houses.  I hear the horror stories too, but look at the facts in the post.  Is this really a nightmare or just a minor issue that always comes up with deals like these and an overreacting inexperienced buyer.  That's what I clearly see!  

    2Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Jeff James:

    @Jerry W., I was once fired by a prominent national company that is often mentioned in BP posts that used your first method to do so.  It was over a minor dispute where I pursued a refund for what I thought was an inexcusable omission on their part and if they had denied my request in a professional manner I would have let the matter drop.  However their response basically called me an idiot.  Because I am an emotional guy I dug my heels in at this point and I admit that I made a mountain out of what was really a molehill.  However, instead of sending me an e-mail that fired me by your second method they sent several more similar to their original response with each one more unprofessional than the previous one.  I will accept responsibility for not handling the situation correctly but I will never understand how a company could treat a customer in the manner it treated me and yet achieve and maintain prominence.  I would have a lot more respect for that company had it employed your second method to end our business relationship.  I know better than to think that every business relationship will be successful but it is ridiculous to treat a customer in less than a professional manner.

     Thank you Jeff for sharing your story.

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Vincent Crane:

    This is clearly a shady and untrustworthy turnkey company and I'm not surprised. I hear these stories every single day. Run the other way, find a top tier agent in the market you're interested in who has experience working with investors. Then ask to get the contact information of other investors they've helped find properties for, and ask them if that agent did everything right and was truthful, and if their investment is cashflowing as expected. That's your answer.

     Thank you Vincent. Good advise.

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Nnabuenyi Anigbogu:

    I have to say after reading the thread I am coming away with a more negative opinion of the company in question. Now i dont think they are a bad company, on the contrary they seems to be prety good based on the opinions of others on here, but the way this client was treated and responded to on here did leave a bad taste in my mouth.

     @Ryan Mullin I have private investors who are brand new to real estate that are investing in my flips. One of the investors on a flip only invested about $4000 to start with`(started small) which represents about 1% of the the entire flip. However, he has the most questions and is the most nitpicky about everything. He actually has no say in how the flip goes but he bothers me asking for info all the time. It is probably more trouble than its worth to placate him giving how small his investment is. But i answer every question because small investors turn into bigger ones. Clients/investors refer others and talk about your business. There are times you should divorce yourself from a client/investor but it must be done in a more diplomatic way. 

    Also first time client/investors tend to be more neurotic and nitpicky because they are dealing with a product they dont fully understand. I was that way when i first started and you probably were too. I guarantee you that this is not the last time you will deal with this given the turnkey type of business you operate and the cheaper asset class. The OP might or might not be wrong but as the business owner i would expect better handling of the situation especially since it seems you/your contractor had a hand in escalating the situation both in actuality and also here in the forums.

    This is just my opinion and im sure your company will go on doing well. I hope this is just a faux pas that will pass.

    Thank you Nnabuenyi for your opinion.

    0Reply
  • Michael Jiang
    Investor · Mercer Island, WA · Member since 2015 · 41 posts · 9 votes
    10y

    I would never buy an out-of-state property if I don't trust seller/agent/management company.

    1Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Manolo D.:

    Ryan Mullin It is always part of the business, I don't think they are that extensive as far as PMs go, especially because there was no names mentioned. Sometimes you get bad clients, sometimes you are the bad provider, both take a look at it a different way. There is always two sides of the coin if things start to get sour. My government clients are always like that, the architects can't get the right stuff on paper all the time, the end user has a different imagination, and we always have to explain how we do it before we do it, especially if they are tenant improvement projects. Now that you have exposed yourself being the subject of the thread, might have exposed your company on a bad rep even if you have defended your side. People always see the bad situation and will not mind anything good. Just man's nature of thinking.

     Thank you Manolo for your opinion. 

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Michael Jiang:

    I would never buy an out-of-state property if I don't trust seller/agent/management company.

     Thanks Michael. Good to know.

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @David Faulkner:

    Not going to comment on this particular deal or the provider, but I have to say that I agree with @Meghan Reed ... if you are an inexperienced investor, you are stepping over dollars locally in CA to try to pick up dimes out of state in Indy. This is not an CA vs Indy thing, it is a hands on local vs passive out of state thing. If you are an inexperienced investor that wants passive cashflow with a Real Estate investment, by a diversified basket of REITs and be done with it ... otherwise, invest local and hands on until you learn the ins and outs, then parlay that experience out of state if you want. You won't likely get high cash flow day 1 from CA, but boy the capital gains and rent growth sure are nice ... and if you do it right then those gains are NOT based on speculation that the market will shoot up like a rocket forever. This is my perspective, having invested successfully both locally in SoCal and out of state (Phoenix, not Indy) over the last 12 years.

     This is great information. Thanks David.

    0Reply
  • John Arendsen
    Homeowner · VISTA, CA · Member since 2015 · 726 posts · 340 votes
    10y

    Mold is a very messy issue overall and we tend to avoid it like the plague. It's really hard to determine without a thorough inspection, often if not most generally including destructive inspection which can be extremely costly, just how pervasive a problem really is. 

    I've found after 3 plus decades as a general contractor specializing in insurance claims which include mold issues and a real estate broker and investor that sometimes the greatest deals on paper i.e. CAP, ROI, NOI, etc. aren't always what they really are in the real World.

    Additionally, I have yet to invest in RE out of my farm or comfort zone. Long distance RE relationships can be just as arduous if not more that a long distance romance. My 3 cents adjusted for inflation 

    Have a very Merry Christmas and a Happy, Healthy and Prosperous New Year.

    1Reply
  • Natalie Barber
    Rental Property Investor · Plano, TX · Member since 2015 · 67 posts · 9 votes
    10y

    Indy has a good market, you don't need to deal with this property... moving on may be best

    0Reply
  • Alain Perez-Majul
    Investor · Indianapolis, IN · Member since 2015 · 393 posts · 116 votes
    10y

    Although I have not done business yet with @Ryan Mullin, I know many who have and can attest to their positive experiences and to FS House's great business practices. FS Houses is a large part of Indy's real estate investing scene, and you don't have to search far to talk to pleased investors who have invested with them; many of them from out of state, much like the OP. I do personally know Ryan, and can only speak highly of his character; moreover, his company co-hosts/sponsors one of the biggest REI Meetups in the city and have a become a tremendous source of value for many local (and non) investors.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Vincent Crane  your post is ridiculous you have no way of knowing if this company is bad or good based on hearsay from a Public Web site..

    could this have been handled in a different manner for sure... but one thing we all have the right to do in real estate is choose who we do business with... I know in my earlier years I damn near got into fist fights when I fired buyers I did not like.. I have had them get out of my car before we ever got back to the office... this totally cuts to two sides.

    Some times its fun to blow off steam and tell it like it is, we all have a certain amount of pride in our work and there is nothing wrong with defending one's position.. Either the buyer in this instance and the seller like we have seen...

    Now a days that I am much more mature ( matter of opinion of course) I am like @Jerry W. my choosing not to work with someone is done with more of a take away than in your face .

    AS for FS, I have probably known them personally as long as or longer than anyone on this board I first met Ashley way back in 2005 ish  when she was comptroller for one of the largest PM companies in Indy and I did well over 150 transactions with that company and worked with Ashley on a monthly basis ..  they know there stuff when it comes to the market and tenants and such.. Also they are responsive to me when I have had a problem loan etc in that market etc etc.  And that in itself separates them from most TK operators who will not give you the time of day when you need some help on a transaction that they will not personally profit from...

    One thing though that I like about were TK has gone is people are getting home inspections and all and all better product is being sold to the public

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Sean Kremer
    Real Estate Investor · Milford, NE · Member since 2011 · 201 posts · 140 votes
    10y
    Originally posted by @Jeff James:

    @Jerry W., I was once fired by a prominent national company that is often mentioned in BP posts that used your first method to do so.  It was over a minor dispute where I pursued a refund for what I thought was an inexcusable omission on their part and if they had denied my request in a professional manner I would have let the matter drop.  However their response basically called me an idiot.  Because I am an emotional guy I dug my heels in at this point and I admit that I made a mountain out of what was really a molehill.  However, instead of sending me an e-mail that fired me by your second method they sent several more similar to their original response with each one more unprofessional than the previous one.  I will accept responsibility for not handling the situation correctly but I will never understand how a company could treat a customer in the manner it treated me and yet achieve and maintain prominence.  I would have a lot more respect for that company had it employed your second method to end our business relationship.  I know better than to think that every business relationship will be successful but it is ridiculous to treat a customer in less than a professional manner.

        It may not be PC enough for some, but I believe that if you feel you are being wronged in some way, first try to resolve it amicably, then if that doesn't work, raise hell. I absolutly don't subscribe to the notion that one must swallow ones pride to appear "proffesional".  Its not that hard to hold ones composure in sticky situations, to work torwards a deal, but in my opinion one should never let themselves be walked on, or disparaged without calling a spade a spade.....you know the old saying...."if you mess with the bull, don't be upset when you get the horns." 

    0Reply
  • Steven S bond
    Professional · Astoria, NY · Member since 2015 · 30 posts · 4 votes
    10y

    Some guy in dunkin donuts said he was short 2500.00 on a comic book collection his friends wife had. So he asked me for the money, but I was not allowed to see the books. Do not even ask why. Of course he said the books were worth millions and he wanted me to sell them. I am just bringing up the point that there is a due dilligence to all transactions. I hope people learn that from elongated silly posts. Enough is enough.

    Steve Bond -- 

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Natalie Barber:

    Indy has a good market, you don't need to deal with this property... moving on may be best

     Thanks Natalie.

    0Reply
  • Courtney Merricks
    Investor · Fort Lauderdale, FL · Member since 2015 · 172 posts · 30 votes
    10y

    @Laurence Walsh-Hodson, you have to take heed to what's going on. Run, Run fast! Every property that look good on paper isn't always good. You have been given many signs that this just may not be the property for you and your husband to invest in. What is the worst thing that could happen if you walk away?

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Alain Perez-Majul:

    Although I have not done business yet with @Ryan Mullin, I know many who have and can attest to their positive experiences and to FS House's great business practices. FS Houses is a large part of Indy's real estate investing scene, and you don't have to search far to talk to pleased investors who have invested with them; many of them from out of state, much like the OP. I do personally know Ryan, and can only speak highly of his character; moreover, his company co-hosts/sponsors one of the biggest REI Meetups in the city and have a become a tremendous source of value for many local (and non) investors.

     Well, I wish I was one of them. From the first time that their employee, our agent, misspelled my husband's name on the contract to her rushing me through the properties because she had to get her pictures done (after I flew to Indy to spend the day with her) to her blithely telling us one window per room would open and then Ryan having to explain that 'no' that was too expensive, our experience has been a poor one. I can name lots of other incidents, but apparently this treatment has only happened to us.

    1Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @Courtney Merricks:

    @Laurence Walsh-Hodson, you have to take heed to what's going on. Run, Run fast! Every property that look good on paper isn't always good. You have been given many signs that this just may not be the property for you and your husband to invest in. What is the worst thing that could happen if you walk away?

     Thank you Courtney. I appreciate it.

    0Reply
  • Laurence Walsh-Hodson
    OP
    Real Estate Agent · Santa Clarita · Member since 2015 · 57 posts · 11 votes
    10y
    Originally posted by @John Arendsen:

    Mold is a very messy issue overall and we tend to avoid it like the plague. It's really hard to determine without a thorough inspection, often if not most generally including destructive inspection which can be extremely costly, just how pervasive a problem really is. 

    I've found after 3 plus decades as a general contractor specializing in insurance claims which include mold issues and a real estate broker and investor that sometimes the greatest deals on paper i.e. CAP, ROI, NOI, etc. aren't always what they really are in the real World.

    Additionally, I have yet to invest in RE out of my farm or comfort zone. Long distance RE relationships can be just as arduous if not more that a long distance romance. My 3 cents adjusted for inflation 

    Have a very Merry Christmas and a Happy, Healthy and Prosperous New Year.

     Ha ha, very funny. It's good to hear your perspective as we didn't know if mold was a big deal or not. Merry Christmas and Prosperous New Year to you too. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free