(Real Life) Real Estate Investing Horror Stories


Ok well horror is a relative term I suppose because I’m obviously not talking about zombies or monsters raiding your investment property (but of course if you’ve experienced any of those then by all means share). Horror stories in terms of either critical mistakes you have made that cost you a lot of money, a crazy bad experience you have had with an investment, or any other experience you can share that you feel investors could learn from.

Mine isn’t necessarily a horror story (although my wallet would highly disagree) but rather a lesson learned. Surprise, surprise, I’m talking about those two back-to-back evictions I always refer to. I only use that as an example because it’s so straightforward and gets right to the point, but I have had other properties with similar problems which all tie back to two issues: tenant quality and property management.  I learned the very hard and expensive way that both poor tenant quality and poor property management (which often leads to poor tenant quality) will tank an investment faster than you even know what is happening.

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My Horror Story

Again, no zombies or monsters, although I would not be hesitant to call my property managers in this case monsters because they cost me a fortune. Basically they were letting any Joe Blow who filled out an application move into the property. When I bought the property it came with tenants, and the first rent check they owed me they bailed on paying.

Really? I’ve only owned this a month, a&%holes! At least that what was going through my head at the time. I didn’t fret too much though because the seller had sold me the property with a 90-day rental guarantee, meaning I’d get paid the full rent regardless if tenants were in it or not. No problem, evict away! They covered the evictions costs too. Sweet! They finally placed a new tenant about a day shy of the 90-day mark, which means I’m pretty sure they must have forgotten to advertise the property for rent because 90 days was a stupidly long time, but I didn’t care, I was still getting paid because of the guarantee.

New tenant moves in, second month, late payment. Third month, no payment, eviction.  No rental guarantee this time so I was out payments as long as there was no tenant, but at least I had a 6-month tenant guarantee so I didn’t have to pay the placement fee for a new tenant which was nice. What wasn’t nice was the maintenance crew, and I still have no idea why, didn’t get around to starting repairs on the property until about April. All the while they refused to give me an invoice for the costs I was paying which totaled about $2400.

Stupidly high for the work they did might I add. I don’t think the cost was the only that was high during that deal… Oh well, whatever, keep trucking along. They didn’t place a tenant in that house until, get this, July. July? Clearly they forgot to advertise again. New tenant moves in, and guess what! Pays rent on time every month! Get out. Oh well, hold on, that’s exactly what that tenant ended up doing six months later. He apparently got a job offer and bounced, didn’t call anyone until he left a voicemail saying where he had left the key (although we never did find the key). Leases mean nothing, in case you were wondering.

Summary of that property management company running my property, and keep in mind as I tally that the only reason I kept it under that management company for as long as I did was because the property management fee was only $50/month but more importantly they kept giving me a six-month tenant guarantee so I never wanted to change managers until after the six-month mark with a tenant so I could save a pending tenant placement fee. Turns out that paying $150/month in (good) management fees and even paying $1000 for a new tenant once, or twice for that matter, would have been significantly cheaper and with less headaches. Am I sure about that? Let’s see. Two turnovers: one $2,400 and one $2,300, less security deposits, so $4,300 in turnover costs. Nine months of no payment, so $9,000. $13,300 total and I feel totally justified in just rounding that up to $14,000 to account for a few miscellaneous eviction fees and other repairs that happened more than once. $14,000 in a year and a half. Yeah, no, pretty sure that well tops what I would have paid extra for the good property manager.

My lesson learned from that is the importance, and criticality, of tenant quality. I no longer have any desire whatsoever to invest in a property that is more likely to attract bad tenants. I have every desire to pay substantially more for a property if it means the likelihood of good quality tenants is that much higher.

Your Turn

What is your best lesson-learned story? And what was the lesson you learned?

Just think. If every real estate investor compiled a log of their lessons learned, and then all of those logs were joined into one, and a new investor sat down and read it all the way through? They’d be a genius and never have to nosedive like the rest of us!

Photo Credit: verityatthedisco

About Author

Ali Boone

Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.


  1. I have two good stories both on flips.
    1. We buy house at trustee sale. House is occupied , we work out cash for keys deal, occupant gets busted by police for having meth lab. He got gas, drove off without paying, cops saw him, followed him to his house where he left the door wide open. Cops walk in and discover meth lab. He goes to jail, while in jail his friend breaks into the house and sets it on fire. Total loss except for the foundation. We get interviewed by cops to make sure we didn’t donut after discovering it was meth house. Insurance pays us 6 months later and we still made a little money after the house was rebuilt.

    2. Purchase house at trustee sale. Looks vacant, but there is new Beemer in garage when we rekey. Turnabout old owners filed suit against the bank right after we bought it. They want house for free because bank foreclosed wrong. Long story short case gets dismissed over a year later because it took the judge that long to look at the case. He threw it out almost immediately after he saw it. We lost money on that one.

    • Wow, Mark, those are crazy. So would you have gotten an insurance payout had the house not burned down? As far as I understand insurance companies won’t cover meth labs, so it sounds like the friend may have saved you? Did the friend ever get caught? And then holy cow on the second one. Did you end up owning that one after all was said and done? Where did the money loss come from exactly?

      Thanks for sharing! Those are nuts!

      • No, we wouldn’t have gotten anything if it was just a meth house and didn’t burn down. that is why the police interviews us and made sure we didn’t burn it down! They never caught the guy, they weren’t really sure who it was, but assumed it was his friend.

        We owned the 2nd one the whole time, we just couldn’t sell it because of the lawsuit attached to it. It was almost a year before the judge dismissed it. We hired our own lawyer because the process was going to slow and the courts were just ignoring it. The lawsuit didn’t involve us, but was between the previous owners and the previous bank. We had to hire the lawyers to get us in their to file something or other to get it rushed through(if a year is rushed). We lost money due to the lawyer fees and carrying costs. We only lost $7500 which isn’t too bad for everything.

  2. About two years ago i purchased a nice little property all ready for rehab. I get the dumpster there and get the contractors going. As i always do, I cozy up to the neighbors hoping they will keep an eye on the place in the evenings while it was vacant. One night i was talking to one of the neighbors when he asks, “When are you going to connect to the main sewer”? UH? The city utility bill showed a fee for the sewer, and in my area septic systems have all been replaced. I called the city, we scoped the main line and bingo no connection. Very lucky for me the stub was into my property. $12K later a new sewer line was installed. I think $7K of it was permits. Had there been no stub and I had to dig into the street double the price for the additional 4 feet. What do you think is the first thing I look for when I look at a house now? 🙂

    • Sounds like you got a sh&% deal on that one, Gary! Lol! Sorry, couldn’t resist the pun. So well how was the sewer never connected before? That’s crazy! *notes to self* have home inspector confirm sewer connections…

      • The seller was long gone when I discovered, but the neighbor said the previous owners couldnt afford the hook up when the sewers went in. This was a house built in the 40’s in an area that at the time was in the “sticks”.

  3. Couple of them:
    Drug addicts got into rental, and was threatned by city, may lose my building, had to pay addict to get rid of.
    Property manager, sending phony bills foe expenses, was caught. I was long way away from investment, so took advantage.
    You do not know when you would need emergency funds.

    • Oh snap, Kris. You had to pay the addict to go away? How much? I wonder if that is considered a business expense… (did you get a receipt? lol!). And then for the property manager, ugh, I’m so not a fan of scammers! How did you find him initially?

  4. Crazy story, Ali! Wow!! Sounds like it was quite a roller coaster ride.

    It’s news to me to hear of a “six-month tenant guarantee” offered by some property management companies. Though, I guess it’s used to entice new clients.

    I haven’t had many issues with property management companies. Though, I had a friend who had a very similar story to yours regarding evictions and new tenant placement. It was especially difficult for my friend being overseas and all trying to manage the property manager. There were many missed calls and time zone issues!

    In any case, I do have horror stories when it comes to hiring contractors. I can definitely relate with you regarding the high bill you received from the maintenance crew, eek!

    Over the years, I’ve made many mistakes when it comes to hiring contractors. I used to hire the ones who did fix up work on the side but had a regular job. Let’s just say, I found a lot of these folks “learning on the job” on my dime. I’ve also hired those who say they can fix everything which has turned into many disasters!!

    Now, I usually hire those who specialize in their area of expertise and do it for a living. If I can, I try to see their work on existing projects and may talk to a couple of past clients by getting referrals.

    Learning how to hire contractors has definitely been a learning experience that has cost me a lot of time and money. Though I guess, the experience can be priceless and make for many entertaining stories such as yours. 🙂

    I enjoyed this post, thanks for sharing!

    • Great comment and advice Rachel! There are so many rehabbers on here, and especially new ones, who may be able to save potential ripoffs if they take your advice. I definitely think asking for some references of past clients is key. I have a few contractors that I would never recommend to anyone, so I’d be glad to warn people if I was called!

      Thanks again.

  5. Hey Ali,
    I would definitely call that a horror story! From your previous writings both on your website and BP, I know how much you value good property management and I am lucky to have found a good one myself. I haven’t had any issues with tenants yet and it would be great to keep it that way. Luckily, I live in a small town where there are basically only two major PM companies and I chose the better one (referred by my realtor from her own personal experience). It was only months later that I happened to hear from three different tenants about their negative experience with the other PM company.

    Mark’s area is not too far from mine and we have a big meth problem here too. 🙁

      • My market is Cheyenne, WY. I hadn’t even heard of insurance co’s covering or not covering meth labs but then again, I hadn’t thought of checking…maybe I should check with my insurance company! But I have a fabulous property manager who checks and double checks everything and my rental is in a higher-end neighborhood ($1700 for the rent) so hopefully I’ll be ok.

        • Yeah you are probably fine Michelle in that price range. No guarantees of course, but I would definitely check with your insurance company. If for no other reason just so you know. The only reason I know most don’t cover it is because there was a huge article in the Atlanta paper a couple years ago that talked about it saying most owners don’t realize meth labs aren’t covered. I’m still no expert in it, but I believe they aren’t covered at all. Not sure.

        • Thanks for the tip, Ali. I will definitely check with my agent just so I know.

  6. Ali, your last paragraph would be great if any of us would ever actually listen to others mistakes to learn from them! Somehow the lessons learned the hard way seem to be the lessons best learned! Thanks for the post.

    • Haha, so true Glenn! I know I am always interested in hearing from other people the mistakes they’ve made and try to avoid the same problems myself. Even doing that tho leaves plenty of room for learning my own (tough) lessons, so no shortage there 🙂

  7. Yup, mismanaging tenants can bring your business to its knees…

    As you point out, a “good” property management company is absolutely worth their fees and typically saves more than they cost.

    Managing tenants is not something to be taken lightly.

    Thanks for sharing your story.

    • You aren’t kidding, Karen! I never would have understood the impact of tenants until I got into rentals myself. I think a stellar property manager and a property and location that attracts higher quality tenants are absolutely imperative to having a successful (profitable) investment property.

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