Never Judge a Book by its Cover.
Note: This post was originally featured on the Invest San Antonio Blog
One of my clients and I recently had the unfortunate experience of learning a costly lesson about investment properties. Never judge a book by it's cover. I know this goes without saying. Investors (and all buyers for that matter) should always conduct due diligence to the fullest extent before pulling the trigger on a property. This property was no exception, we were just blinded by the fact it was in such good condition.
Here's what happened: The property was a a 2006-build that had been foreclosed on in 2011 and vacant less than a year. Structurally the building was sound, no foundation issues, no sheet-rock or plaster cracking, and the roof was in good condition. The interior was super clean, it really only needed carpet an paint to be ready to put back on the market. The AC condenser was in tact and fully functional, as was the interior air-handler as well as all (visible) copper lines.
Everything appeared to be good shape for a quick easy flip. After closing, I met with both the contractor and the back-end listing agent so each could inspect the property and determine what was going to be required to make maximize profit and sell the home quickly. Fast forward a week, I get a call from the contractor (as my client is out of town). The contractor tells me all utilities were just turned on and there are some leaks coming through the ceiling and he can't get any of the electrical sockets to work. As the contractor inspects further, he discovers that someone has broken into the house, climbed into the attic, removed all the copper wire, pipes, and fittings.
It turns out the thief was a "professional," being careful to meticulously cut and strip-out all the metal without disturbing anything else and leaving no visible evidence outside of the attic. It appears , the thief didn't touch the any of the valuable metal located within sight; all of the copper plumbing, the copper in the AC condenser, and the copper lines for the air handler were left in tact. This allowed several agents, investors, and even contractors to visually inspect the premises without any cause for concern.
Fortunately the contractor caught the issue immediately and took care of it. He was also able to work with the investor to cut cost on the repairs and help keep him within budget. The property should be on the market soon, and ultimately I will be a great flip. However, I will never walk through another property again without checking to see if copper has been removed from the attic, the crawl space, or any spot that someone could potential steal it.
Seth Teel is a licensed agent for New Western Acquisitions. I specialize in investment property, REOs, foreclosures, sales, acquisitions, rentals, auctions, estate sales, and all types of real estate investment. Call: 210-628-9373 or Email: [email protected]
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