If you’re in the biz long enough, you may just see and experience just about everything. Some of those experiences are going to be great teaching tools, and that includes real estate horror stories. I’ve collected similar tales from active real estate investors in order to pass them on to you. Read on to learn from others, and maybe you can avoid similar situations.
Michael Beeman and a Rotten Contractor
Michael’s first investment was a large single-family home. The plan was to follow the BRRRR (buy-rehab-rent-refinance-repeat) strategy, as it was a distressed asset that required approximately $25,000 in renovations.
Unfortunately, nothing went according to plan. Because he hired a terrible contractor who botched the renovations, Michael had to tear down everything and start from scratch. As a result, he went $25,000 over budget. While he technically didn’t lose any money, this did wipe out any equity he could have pulled out with a refinance.
Michael did learn a valuable lesson (always screen a contractor), and consequently, a year after this incident, he had built a portfolio of 31 cash flowing units as a successful and active real estate investor.
Glen Sutherland and the Flood
Glen had a troublesome tenant who broke the terms of the lease and wouldn’t voluntarily vacate the premises. He successfully filed for an eviction. But, one week before the scheduled eviction date, the tenant decided to leave. Great news, except for the fact that, on the way out, without Glen’s knowledge, the tenant opened the valve on the hot water heater. By the time Glen realized what had happened, over three feet of water had accumulated in the basement.
Lucky for this active real estate investor, the basement was unfinished, which mitigated the damage. One dumpster, three days of shop vacuuming, and a few dehumidifiers later, the basement was usable again. But, being a tenant-friendly real estate market, Glen was unable to take legal action against the tenant…
Julia Bykhovskaia and the “Philanthropic” Contractor
In this real estate horror story, Julia purchased a fully furnished property with the intention of using it as an Airbnb. It did require a few renovations, so she hired a contractor to perform the work. When she checked in on the status of the rehab, she noticed that all of the living room furniture had vanished. She asked the contractor what happened, to which he responded that someone stopped by and really liked the living room furniture, so he let them take it all – even though Julia explicitly told to keep the furniture.
After a week of screaming and yelling, Julia and the contractor negotiated a solution. She withheld money in lieu of the furniture from the contractor’s payment. As a result, she was able to purchase furniture of a higher quality for the living room.
Theo Hicks and Niagara Falls
Theo’s first deal as an active real estate investor was a value-add duplex in Cincinnati that required around $25,000 in renovations. He closed on a cold and dreary Thursday afternoon in February. His intentions were to begin the renovations that Saturday but decided to take the weekend to celebrate his first deal instead.
Theo showed up on Monday to rip out the carpet and paint the walls. But, once he opened the front door, he heard an unexpected noise – a faint whooshing sound. As he approached the stairwell to the basement, the sound became louder and louder. He walked down the stairs, turned to face the bathroom, and was confronted with a waterfall!
Being his first deal, Theo didn’t understand what the real estate agent meant when she told him to “put the utilities in your name.” As a result, the heat was off the entire weekend. The pipes froze, thawed, and burst, leaving him with a mini Niagara Falls in the basement bathroom.
Grant Rothernburger and the Kentucky Derby
The winner (or I guess loser) of the worst real estate horror story is Grant.
Grant was touring a prospective investment property in Kentucky that smelled like a barn. He walked into the basement and discovered the source of the smell…HORSES! That’s right. There were three horses wandering around the basement. The property was located in a small town, but it was not a rural area. There shouldn’t have been horses in that area in general, let alone the basement.
Needless to say, Grant decided to pursue other investment opportunities, but did walk away with a pretty hilarious story!
Are you an active real estate investor with a horror story to share? Comment below! Want even more actionable real estate advice? Check out these investment books.