G,day all,
I’ve noticed a few posts recently detailing some success stories that people are experiencing with positive cashflow properties.
These have been a great source of inspiration and information as they prove to all that these opportunities still exist for those prepared to do the work. So thanks to all that have shared their experiences.
The reason for this post however is to ask people to relate any “horror stories” or deals gone bad that you may have experienced in your persuit of positive cashfow investments.
I feel that we could all learn as much from these stories as the positive ones. Particularly if you could list the reasons why the deals didn’t turn out as expected.
I know it could be a little embarrasing to admit to mistakes that you may have made, but surely every successful invester has a few of these deals in their past. So open up guys it could even be therapeutic!
Cheers
Jay.hi Jay
i’ve got one for you. i’ve mentioned it before on the forum but since there are a lot of newbie i’ll say it again.
6 yrs ago i bought in Hobart in a place called clarendonvale. it was a brick 3brm house and was $33,500, rent would be 110pw. i bought it unseen as an aquaintence was also buying in the area and he checked it for me. i put some new carpet in and presented it to a property manager to rent. the next weekend i flew from Melb to Hobart to check it out. when i arrived the window had been smashed and the carpet (in one room) stolen. this was the start of the worst experience i have had in property. i had one problem tenant after another, if the property was vacant it got damaged. lucky for me it wasn’t the only property i owned so i knew not all property investing was like this. this year i had had enough and decided to sell it, happy to get 40k for it i put it on the market the best offer was 30k which i rejected, the tenant was making it impossible for the agent to show( she abused them) so we had her removed. when she left she damaged the property more doing $5,000 worth of damage.
the story has a happy ending, i got the work done on an insurance claim and sold it for 55k. So sometimes even bad property stories can have a happy ending. (unlike some of my sad share stories). as Dolf de Roos says “property can be very forgiving” if you make a mistake.
regards westanThanks Westan,
Great story.
I’m glad that it had a happy ending, and that even though it was a bad experience you probably were able to learn some valuable lessons.
Cheers,
Jay.hi jay74
yes i did learn some good lesson, like
i don’t like it when a tenant gets $1000 behind in the rent.[
]
i don’t like it when a tenant leaves because someone blow up his car in the drive way leaving me with the expense and hastle to remove it.[]
i don’t like it when my insurance commpany says they are increasing the excess on this property when it is vacant from $100 to $1000.[]
i don’t like it when incompetent agents tell me they don’t want to manage it anymore[] (actually that was the best thing to happen).
and i’ve learnt to find out as much about the neighbourhood as i can, even if the house is good if the area is feral then[xx(] hey but i’ve got some great stories to tell at parties[] so i suppose it was worth it.
westanStory: Bought the wrong house
Agent was confused, had a few houses that looked about the same. Got to look in one, was not able to get a look in the other. Made an offer on the house I had seen and the agent wrote the deal for the wrong house.
The house I thought I bought had a brand new kitchen, new paint inside, and a single garage.
The house I actually bought had a kitchen with the cabinets falling apart, a carport, and dirty walls with ½ height wood panelling.
Tenant then stops paying rent, runs up $1000+ in rent and skips town.
The house has fleas.
Go to clean up the house, 2 mins after walking in the door being bitten by fleas, look down and each leg has at least 200 fleas from the ankle to the knee. Run into the yard, try to brush the fleas off, wont come off, have to pick them off one by one.
Buy 10 flea bombs, set them all over the house. Leave the house and come back 1 week later. Fleas dead, carpet smells like urine.
Pull out carpet and decide to sand back the floorboards. Rent the sander in the city and drive two hours to the country to sand back the boards.
Sander breaks.
Find name of floorboards guy in local paper, comes out, gives quote, hire him to complete the job next week. Job done, clean house, house looks great, tell agent its ready to rent.
2 weeks house not rented. Agent says due to all the investors they have a glut of rentals on their books, can’t get it rented.
Find a tenant.
They find a tenant; the tenant wants the house but wants rent dropped $5 per week. Agree and rent house.
Tenant wants built in robes! The agent made a mistake advertised the house with built in robes, it does not have built in robes, and tenant wants them installed. Told them I would think about it and am still thinking.
Hot water heater dies, install new hot water unit, $1500.
All this over a 9-month period.
The good news, even after all this the house has been break even on cash flow and I have seen a $20,000 rise in value.
Yes property is very forgiving.
gday slumlord,
just wondering, why did you go ahead with the other house?
and also why dont you get a new Property Manager? your one doesn’t sound the greatest.[
] Powmow []Guys, they were good stories. thanks for that.
I have only had one problem which seems minro now, tenant stopped paying rent and I went soft and let them, they then skipped out owing about $1800 in back rent. Nothing major as the capital growth going going mad at teh time.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Great Stories,
Slum Lord, sorry but I just about wet myself.
mmmmm landlords insurance !
Powmow,
Once I figured out it was the wrong house I tried to set a time to have a look inside, but was unable to set a time the tenant would agree too. I got a building inspector to go through it and it was structurally sound, the agent told me it looked the same as the other house on the inside.
The managing agents are a problem, I should have dumped them but haven’t, they tenant this is in now seems ok.
When you deal with these bottom of the market properties you are going to have issues from time to time, it is brick ex ministry home I paid 70k for.
Slum Lord
Hi guys,
I’ve had some horror stories (all different tenants) …
1. Ceiling caved in … probably due to the tenants growing drugs in the roof space. Luckily no one was hurt.
2. Had a lease with a mate, who sub-leased with his half brother. My mate moved out and his brother got in boarders, who after a period of time ran him out of the house. When it came to re-lease time, the guys all buggered off, leaving me to try and get my bond back, and a clean up.
3 thru to 999. More of the same with tenants.
I don’t lease properties thru agents as they are a waste of time. They irritate me by not doing what they are supposed to and charging like a cornered animal and irritate the tenant for similar reasons.
I NOW spend at least a couple of hours meeting the tenant during the selection phase because a little extra effort then saves heaps of hassle in the future.
BTW, 1500 bucks sounds steep for a HWS!
Cheers,
DThanks for the contributions guys.
Wow, Slum Lord that really was a “horror story”.[
]It’s incouraging to see that these terrible experiences had all turned out alright in the end,
as this is what i was hoping to find with this topic.Keep the stories coming.
Cheers,
Jay.Ok mine is more a current harrowing story of trying to obtain finance.
Found studio unit which almost fits 11 sec rule. Solicitor says contract is fine. Sign subject to inspections and finance. Inspections come back fine. Use current broker to try and secure finance for this small deal. (This is after said broker stuns me by asking why I would want to buy any more property.) Find out two weeks later finance has been knocked back as studio is less than 50m and bank does not lend on property that small. Try via different bank using same broker. Broker advises a few days later this lender now wants information which broker knows I cannot provide.Whilst trying to obtain loan via second bank through broker I take matters into my own hands and thanks to this forum find lender who does small units. Apply over the phone. Within an hour receive notice no valuation is necessary and I have conditional approval. They only need to verify some details (pay etc) the next day, but all should be fine. Thrilled as I only have extension to 5pm the next day from the vendor to go unconditional.
Next day, this lender rings me to say things have now changed drastically and the whole thing has gone to senior assessment officer and I would find out more tomorrow. Find out the reason being some payroll @q#$ at my employer talked to the bank and told them I work a minimum of 4 hours a week earning a pittance of less than $130 a week(as opposed to working 45 hours per week and earning a decent salary). Furious. Unable to obtain further extension from vendor. Property slips away at 5pm.
Next day: My solicitor rings with the news the vendor decided to give another 5 days extension. More running around fixing up my employer’s lies. Then bank finally realises property is furnished and thus would not be worth what I am paying for it (I know other similar studios in same area have been selling for more) and they need to do a valuation now.
Story is still continuing as I write. What my employer screwed up appears to now have been fixed. Valuation has been ordered and am eagerly awaiting result. Have till Friday to go unconditional and probably have to settle a few days later.Hope this provides some useful information for newbies. Rest assured I have learned a lot from this so far already (this is not my first IP, but it is the smallest so far).
If you don’t stretch your limits, you’ll set them.
]
] so i suppose it was worth it.
] Powmow [
]
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