Real Estate Horror Stories: The Spooky Side of Rental Property Investing

🎃 In this spooktacular episode, I am diving into the dark, twisty tales of real estate investing gone wrong. From non-paying tenants who ghost you (literally) to property managers who disappear when you need them most, I am spilling all the tea on real estate's scariest mistakes. 👻

Ever dealt with a realtor that gave you nothing but nightmares? Or maybe you've had a tenant who thought rent was just a suggestion? We've all been there, and today, we're sharing these horror stories with a sassy twist to help you learn from our boo-boos so you can avoid your own.

Grab your pumpkin spice latte, because it’s about to get real spooky in here—without scaring you away from building your empire. Let’s laugh through the chills and get back to confidently crushing your real estate goals! 🎃💀

Chapters

• 0:00 Real Estate Horror Stories and Tips
• 10:22 Property Management and Real Estate Lessons
• 21:38 Investing in Class C Properties

Transcript

Speaker 1: 0:00

Hola, hola, violeta here. If you are interested in getting started in real estate investing, but you don't know where to start or what to do, I have the perfect resource for you. It is my how to buy your first rental property guide. It is a free ebook, it is linked down below and it will guide you through six steps to you know, put you on the road to go buy your first rental. So make sure you check it out. From non-paying tenants to tenants, just leaving your property a mess to you know, not so good property managers and realtors. It is spooky season and I am sharing my horror stories from when I first started investing in real estate to now.

Speaker 1: 0:48

Hola, I am Violeta, a real estate investor, entrepreneur and host of the Money Chisme podcast, and this month I am sharing my tips and tricks and, just you know, my experience from when I started real estate investing to now, in hopes that it will help you overcome your fears when it comes to starting investing in real estate. So when I first started investing in real estate, I actually did it by accident, because it was actually my first home that I purchased and I didn't go into it thinking that I was going to rent it out or anything like that. I just wanted to buy my first home. Now, this is my first horror story and it is because I didn't know what I was doing when I first bought my first home and I actually ended up buying a flipped home which, to be quite honest, wasn't too bad, but it did cost me a lot of headache and a lot of money, because the first two years that I was in that house I had a lot of issues and I didn't even know about it that I could have prevented had I known to look for these things up front. And some of these things included like not checking around the doors, because I ended up having a lot of drafts throughout the house which ended up costing me a lot in electric, because it was freaking cold in the house and no matter what I did, like it was just freaking cold and I couldn't figure out why I had to turn up the heat so much and it still was cold, it was drafty and finally, you know, by the second winter I was like you know what, let me figure out what's going on and I started like uh, going around the house with like a candle to try to kind of figure out where some drafts were and a lot of it was around the doors and a lot of entrances and like windows, because they just didn't properly seal around it and there was just like a lot of gaps and stuff. So that was one of my first issues that I had to deal with. Now, along with these issues, I had other things that I just didn't think of at the time, like the deck was newly constructed but it wasn't sealed and it didn't occur to me to seal it. So that came to play later on when I actually rented out the property, because after a while that started to decay because of moisture and snow. I, you know, I live at that time in Virginia, so every time it, you know, it rained a lot and it was, you know, snowy during the winter, so a lot of that would sit and like. All that just ended up causing that deck to start to decay and I ended up having to repair that later on. Now, with this home I did house hacks so I was able to kind of like cover some of the expenses, like, for example, the heat and all the fixes that I needed to do throughout the time that I lived in it. But eventually I moved out and rented that place out.

Speaker 1: 4:03

And this is where my second horror story comes in, and it was with the property manager. And my mistake was that I ended up hiring someone that I knew he was a former supervisor that you know was retiring and decided to get into, you know, property management and you know real estate investing himself. And so I was like, okay, sure, you know, um, I'll let you be the property manager for this property. And you know, and that was it, I failed to do my due diligence and asking him, you know things like you know, how does it work? What maintenance do you do? You know, how do you, you know, handle the property? And this caused a lot of headache and problems later on. Uh, at the beginning it was kind of like easy going because you know he was able to find, uh, a tenant and it was easy, right, and so I didn't really have problems at the beginning.

Speaker 1: 5:08

But eventually things started to, you know, go downhill, especially after COVID. There was the tenant that was there, started having, you know, late payments and like there was little communication between me and the property manager, uh, on what was going on with that tenant, because it was kind of weird that I had for a year a really good tenant and then COVID hit and, yes, you know there was, um, you know I was patient because of that. You know I understood that, uh, due to COVID, you know, people weren't just paying, you know, being able to work and all that, so, um, but then after that, once things started to come up, um, you know from COVID, like then he just stopped paying, and then there was like an issue with, you know, trying to get him relief and everything. So I did like everything I could at that time. It was, I can't remember off the top of my head, but there was like a program for rent relief due to COVID and we even tried to do that. But the tenant was just, you know, giving us a hard time.

Speaker 1: 6:21

And on top of that, there was issues going on with the property. Um, that had been going on, which I mentioned earlier about the deck. But part of that was also that, um, I had trees in the backyard because I my backyard went to, uh, a kind of like forest, you know, some woods back there, and so there was a lot of trees and leaves would fall into the yard and onto the deck and the tenant wasn't properly cleaning them and the property manager wasn't like checking up on my property. So this just went on for like about two years that that tenant was there and you know. So the leaves were there just decaying and further fed into, uh, the deck you know having issues, and the wood start to decay and me and the property manager had kind of like a fight at one point and we kind of hashed it out and my miss, my second mistake, was that I gave him a second chance because again, uh, he was someone that I knew and I had formerly trusted and so, um, part of that was that I had, you know, uh, I guess let my emotions get with me, cause I felt bad to, you know, fire him, which you know is another mistake and one of the reasons you don't really want to hire, um, someone that you know, a friend or whatever, without proper, like uh, expectations being, you know put down, like, make sure that you set some expectations and contracts and stuff like that and procedures, so that way, um, you know what to do if you do want to hire someone that you know.

Speaker 1: 8:10

And, uh, we, we had some issues and had some fights and everything like that, but eventually, like, I got frustrated and I was like you know what I'm just done? Um, because after we got rid of the tenant, we ended up doing like paying uh, cash for keys. So I gave him like I think like 200 or $500. I can't remember right now and, um, what you know, he moved out, we kicked him out and everything, and that was the second issue was the turnaround for getting the property back on the market. Like you know, there was a lot of junk that the tenant left behind with their move and it was just kind of like dragging feet and so eventually I ended up firing that property manager, like dragging feet, and so eventually I ended up firing that property manager. And that leads me to my next two horror stories which, like all of these, kind of ended up happening with this first property and it was over time, right.

Speaker 1: 9:15

So it wasn't like right off the bat that when I first, you know, rented out the property, like I said, I had actually, you know, rented that house for about a year and a half before issues arose and, um, a lot of it could have been prevented. But some of these things just can't Like. For example, when I had to evict this tenant, like you know he left a lot of junk behind. So then there's junk removal and then there his kids, um, like wrote all over the walls which is not a big deal, whatever you paint over it, whatever, um, but just a lot of things that I had to kind of like fix, like broken doors and things like that. And you know in hindsight is not wasn't really that bad. Um, it just was, you know, shocking to me at that time because it was my first time dealing with it, and now that I have a few more years and experience with dealing with these types of things, it's not as a big deal anymore, um, it's not as big of a shock anymore.

Speaker 1: 10:22

But at that time I was like, oh my God, like I have to pay for a junk removal, I have to pay to paint the whole house, which is was like a few, you know a few thousand dollars and you know it was a few hundred bucks to get the junk removed and you know fixes and everything like that. But they were dragging feet and I ended up switching to another property manager and the killer thing is that I actually told this new property manager my my issues with the old one and why I was getting rid of that one and you know what? I kind of expected everything. And she was like, yeah, I will take care of you, I will get this done and everything like. And she was like, yeah, I will take care of you, I will get this done and everything like that.

Speaker 1: 11:08

But still, when I took, uh, when this new property manager took it over, like she still took her time, and my, my failure in that was that she was actually a part-time realtor and property manager. And so one tip for you is that if you are looking for a property manager and realtor, like, make sure they are not part-time, and if you do want to go with somebody like that, make sure that, again, expectations and timelines are going to be met, because she, um, she was doing it off, you know, on the weekends or whatever. And so, um, it was very little communication again with you know getting contractors to go fix stuff and, um, the problem was that she was using her handyman and, you know, going off his timeline. And I was like, no, eventually, when I figured that out because I didn't realize this at the beginning I was like, uh, no, find another contractor that is available now. I'm not going to wait a month and a half for him to come paint the freaking house or fix the deck or whatever, because he has other projects. And so there was some fighting between there and by this time it had been like three months since I had uh, evicted this tenant and everything like that.

Speaker 1: 12:36

And I was like you know what I am overwhelmed, I am done. I am going to just list the house for sale, like I, I got what I needed from the house. I want to just like, move on and use that money at the uh to, you know, pursue other investments. Um, because around this time was when I was buying my first duplex and I was already having the mindset shift of going to um switch my strategy for to multifamilies. So I was already like you know what, uh, I just wanna, I wanna, just, you know, leave and drop this house. And in hindsight I wish I had not left my let my emotions get to me, you know, and that frustration um me. Now I would have still, you know, kept that house. I would have fixed it up and everything, because it had a low mortgage, it had a low interest rate, it, you know, it was in a good location for rentals and stuff like that. Um so, uh, hindsight I would have kept it, but it is what it is.

Speaker 1: 13:44

I can't, you know, live in the past and uh, like I said, I decided to list that house for sale, which was another horror story. So I went from one bad property manager to another and you know, I wanted out and so I was going to fire the second property manager and just list the house for sale. Well, remember that she is also a part-time realtor and in my freaking contract I was so freaking mad I was like this is the second tip or whatever tip we're on is. Read your freaking contract, because on here it had said it had a clause on there that if I wanted to list the property for sale, she had first dibs to sell my house. And so now I was in freaking under contract with this realtor that I was mad at because she did a fucking crappy job of being my property manager and getting this property and I was stuck with her and I tried to get out of it, like I tried to call her brokerage and all this stuff and like that dude was crap too. He just didn't even listen to me or whatever. He was just like oh well, I'm too booked and busy to hear your complaints and your issues, and so I couldn't get out of the freaking contract. And so I even had a real estate attorney, you know like, look into it and like I was like no, I either like wait, I think it was, uh, I think it was like three, three to six months I can't remember the term um, that I had to wait after listing the house for sale, to uh be able to uh find somebody else to sell my house. So here I go to sell my house with this realtor. Mind you, she's still taking her freaking time. I had words with her and you know we got into it and we're like, um, what is going on? You haven't fixed the house and you know it's going on. We're coming on to the fourth month. And I said, you know what, I'm fucking selling this house as it is because by this time it is, um, the summertime, which is prime time to sell your house. And uh, it was also during the time that, you know, house prices were soaring because of you know, uh, of the low interest rates and all that. So you know what, I saw my chance. I was like you know what, I'm just going to sell it, as is, um, I think we had painted it and did a few fixes, but I, um the handyman still hadn't gone around to fixing the fricking deck and all that stuff. So you know what I, we listed it and you know it sold within a week. I gave, you know, some seller credits and all that stuff and so I was able to, um, get rid of this house.

Speaker 1: 16:44

Now, mind you hindsight, a few things Again. I already mentioned that I would have sold the house. I would have just sucked it up, fixed it up and then I would have recouped my money and would have still been making money. The second thing I could have just listed the house by myself. That was an option I didn't know then. I know that now that I could have just listed it myself and and not have to deal with her and with the market at that time, it would have been like easy to sell and whatever, and I still made money off of that. Even after having had done a cash, uh, cash out, refinance on that, I still made money enough to buy another duplex. So those were some hard lessons with my first property and a lot of headaches and a lot of stress, but in the end, I still made money, even with all of those issues.

Speaker 1: 17:44

Now my next horror story is with my next properties, my next two duplexes, and they both each kicked my butt with the same issues and it was, you know, my fault. It was again my lack of experience, my lack of due diligence. Lack of experience, my lack of due diligence. So with my duplexes, I you know, I think I got lost in the sauce with just trying to get you know going because of the first property that you know I had such a struggle with and I wanted to get you know going. I was like I was motivated, I was eager, I was ready to go, I wanted to start making some money, start making some cashflow, start acquiring properties and everything. And so I hit the ground running with these two duplexes and you know I made some mistakes where these properties. I got them for a pretty good price and good deal and they are still great properties.

Speaker 1: 18:50

The problem is my execution of how I got them, you know, into the rental market, like um, I would do some things differently and my calculations and with my numbers because, um, although I got them for a good deal, these are older homes and they needed some updates that I pushed to later on, which ended up kicking me in the butt. And I knew, you know, some of these things were, and you know, nearing the end of their life and like, for example, the water heater, the furnaces and you know things like that. But I was thinking in my mind at that time was like, okay, I'll, you know, uh, fix, you know, paint them, get, you know, fix some of the plumbing and things like that. So I fixed some of that stuff, fix some of the uh, the deck and you know, the flooring. I switched it out to LVP, so I took all the carpet out and everything like that.

Speaker 1: 19:52

So I fixed a lot of things, but I should have focused more on fixing, um, some of the main components of the property. So instead of you know, spending upfront the money for LVP, I should have just like save some costs, uh, and just put carpet down again, so that way I could use those funds to replace the water heater and the furnace and some of the you know the plumbing and do a better job at that. Uh, because now this past year I've had to replace two water heaters cause they went to crap and I've had to fix two furnaces, which were very expensive and, um, I didn't plan for them like I was planning for them, but I thought that I would have a few more years to accumulate and put that money so that way I could replace it later on, and so I should have just done that off the bat. So those are some things that just like popped up this last year and the next thing was that I'm really miscalculated my cash flow. Now, don't get me wrong, I am still making great cash flow with these properties Not this last year, obviously, because I had to replace some stuff that ate up my profits for this past year and a half, but I was able to still make money with the new calculations. So a few things that I would advise those that are trying to get in similar markets or properties that I am in.

Speaker 1: 21:38

These properties are, you know, class C properties, which are older properties that need some maintenance, some repairs and, uh, you know, definitely updates. Uh, you're usually taking over these properties from some you know previous owners that just let these properties just fall off, you know, and, uh, didn't really do proper maintenance and all that stuff. And so because you get them, you know, for a good deal, they have great potential for cashflow. The problem is that you want to make sure that you fix all these things up front, because, um, the last thing you want to do is have, like, water heaters and furnaces going out when you have freaking tenants in there, and so, like, that's the thing that, um, makes me more mad about myself, that I didn't take that into account when I pushed these things further. You know, uh, into the future is that now these tenants had to go a day or so without hot water or heat or whatever, and so those are some hard lessons that I had to learn.

Speaker 1: 22:54

And, on top of that, with the cash flow, to adjust my percentage. At the beginning, when I was calculating the cash flow for these properties before I bought them, I was doing like five percent for repairs, five percent for maintenance and, you know, five percent for, like, vacancies. I have bumped all of those to eight percent now. Just because these are older properties, things are going to break more often, especially plumbing. Plumbing has been a pain in the ass for me.

Speaker 1: 23:25

So make sure that when you go out here and you're looking for your property again, these are good investments, good properties to start with, but you have to, you know, calculate your risk, you know, make sure you're very conservative with your numbers because you're gonna, you know, um, have repairs and maintenance and all that stuff. That's going to be typically higher. Same thing with vacancies. That's one of the things that I had to learn is that I'm going to have more, a little bit more turnaround at the beginning, uh, until you get your long-term tenants. Which is one of the benefits of investing in these types of neighborhoods, the class C neighborhoods, is that these tenants are going to, you know, more than likely stay for a few years, if not longer, just because of the nature of you know, uh, just because of the nature of you know the types of you know tenants that you're going to get.

Speaker 1: 24:28

But it does take a few tries sometimes, you know, sometimes you might get lucky and get uh, that, that one off the bat. But with um my properties, I've slowly had to uh acquire them and right now I'm on my fourth one, the one that I had to evict recently for non-payment. Uh, just, you know, have to be patient and hopefully now I'll have, you know, all four of my units rented out and, you know, good to go for at least a year or so that way I don't have to worry about turnover costs, because that eats up a lot of your money, your profits, throughout the year. If you have a high turnover, because that means you have to paint, you have to, you know, replace carpet or whatever it may be, do repairs, change locks and all that stuff, so that can eat up your profit if you're having high turnover and all that stuff, so that can eat up your profit if you're having high turnover. But sometimes that's just kind of the nature of the beast, especially, you know, for me this past year that I had two evictions.

Speaker 1: 25:35

Now I know hearing about my you know struggles and my horror stories in my real estate investing journey, you know it's kind of scary and, you know, might deter you from investing in real estate, especially if you've been thinking about it Like I know. This can, you know, sound scary and be like yo, I don't want to, like you know, lose money and everything like that. Uh, keep in mind that this was, you know, throughout years it's been since, like, I started investing in 2017. When did? Yeah, 2017 is when I put my first house for rent and then till now.

Speaker 1: 26:17

So it's been years that I had these issues come up and throughout that time I had lots of great, uh, you know, months and years that I was making money and, at the end of the day, most of um, these issues did not really cost me that much. Especially like this past year and a half. It sounds like a lot and with the numbers, uh, with everything that I had to pay and everything like that, you know I still am coming, at least, you know, breaking even because my properties are still getting paid off by the rental income that I bring in and you know some of the things that I have to fix are still going to be paid in the future with future income. So, overall and again, I'm building equity because it's getting paid down and all that so overall, I'm still coming out on top and it's still worth it and I'm looking for my next property. But I am going to be more cautious and you know, keep these things in mind that you know I mentioned and you know, go off of my experience and all the the bad things that you know I went through, and make sure that I am more careful and more strategic with this next property. So don't let these horror stories stop you, because you can be successful.

Speaker 1: 27:46

Just again, do your due diligence, you know. Make sure you assess your risks and what you can handle, and just you know, build your knowledge and just start figuring out what kind of properties you can go for. And all that, and just you know, make a plan. Don't forget that I do have a free guide for you that gives you my six steps. It's a six step roadmap to buying your first rental property. Check it out. It's linked below, it's a free download and it is a great tool to help you get started if you are thinking in, you know, starting your real estate investing journey. Other than that, that's it for this episode. I will see you in the next one. Bye.