I screwed up - First SFH Rental

[Nick O.]

Hello,

So about four years ago a family member (mistake #1) wanted to buy a house and due to various reasons couldn't at that time. I made a deal that they would rent from me at about cost (including principle payments) (mistake #2) and they would purchase the house from me in 2-3 years. At the time I was renting in different market and had no intention of purchasing real estate for my own use because the market was horribly expensive.

I trusted the family members judgement ( mistake #3) and bought the house without seeing it. The family member was supposed to arrange for a inspection but did not and it was not conditional on inspection (mistake #4). I got nearly 50k off the initial asking price so of course it was a good deal and if things fell through I could sell it quick (mistake #5). When doing a basic cash flow analysis I used unverified numbers for the property taxes and insurance. Insurance turned out to be $200/mo instead of $50/mo mistake #6.

The family member agreed to kick in part of the closing costs to the tune of $3000 and I trusted that they'd have that at the time (mistake #7). The family member moved in and promptly missed first month's rent (mistake #8).

When I first saw the house I realized there were some significant problems. 

- Kitchen was dated. Thinks 1980-1990 style.

- Appliances were old and built in.

- Previous owner was a do it your-self kind of guy and did a lot of it wrong.

Now the biggest mistake I think out of all of these is not realizing that the family member was an alcoholic. I found out later that the family member had been spending nearly $800/mo on alcohol. (mistake #9)

The family member eventually started to miss payments or short pay. It became painfully obvious that the family member was out of control and she was eventually made to go to rehab. I left the house alone and empty because I didn't have time to deal with it so I left it (mistake #10).  The family member decided that two people they met in rehab would make excellent roommates and because they had no job they qualified for EIA ($500/mo).

I'm not going to go into all the details but over three years there were:

- six different roommates 

- fifteen or so ambulance calls

- eight visits from the police.

- Two doors kicked in  

- one window pried open

I've had to replace

- furnace motor (February)

- furnace logic board (January)

- washing machine

- cook top

- copper supply lines

- taps ($700. Apparently drunks like expensive taps, $300 labor/$400 taps, also contractors apparently don't follow instructions to call)

Current Cash Flow: -1000 to -1800/mo.

Currently Listed for 239k, Paid 282k.

On the market since November, 2017.

In short I made a hell of a lot of mistakes and/or got a very expensive education.