Out of State Investing Gone Wrong? Columbus, OH

[Qasim Naeem]

Hi BP fam - 

Earlier this year, I jumped on this out of state investing bandwagon and got a an off market deal. It is a SFH which was going to be a long term hold for me and a couple of partners. Here are the details on the property:

3 bed 1.5 bath - 1346 sqft., Purchase Price: $110,000

The initial plan was to keep this property as a rental after doing some slight fixes and the plan was to not spend more than $6-8K on those fixes. Also, the hope was that this would comfortably rent out at 1100-1200 per month once we do some minor repairs and cleanup. We inherited a tenant who was paying $775 per month on a month to month lease. When this tenant moved out after a month of closing and when our PM sent in a contractor to create a move-out inspection report, they notified us with a lot of issues with the property where some of them were quite major. They noticed termites, rodents and a ground hog issue. We got a few more opinions from other GCs and they confirmed those issues and one major issue that was highlighted was with the structure/foundation of the house. There are some major issues there. The estimated repairs we have received are ranging from $25K-35K. We were never planning to spend this much on the property and it is hard to instantly come up with this much cash, and it is even harder to drop that much money when I am not sure if I would be able to recoup it.

Moreover, we are not 100% sure that the Scope of Work we have would take care of all the issues especially the structural ones. After a lot of back and forth between us partners and GCs we have decided to sell the property. It has been listed on the market for almost a month now. There have been a lot of showings but no serious offers as yet. Our agent who got us this property in the first place has also suggested that we do some minimal repairs however, I personally think that the structural issue has to be taken care of before we do anything else and that alone is not cheap.

In a nutshell, we pulled the trigger too quickly, did not do enough due diligence that we should have done and gave in to the opinion of others, and let emotions take control of our decision making process. However, I think the agent should have done some part of their job and should have kept our best interest at heart as well. They could have steered us away from it or at least highlighted these issues for us but it could be a possible that they were rookies too and did not know exactly what they were doing. But primarily it was our duty to thoroughly pencil out what we were buying. A lot of mistakes made and lessons learned. I would like to figure the ideal solution for this property and that is why I am turning to BP community for their knowledge. Please let me know if anybody has any specific questions on this deal.

Thank you all in advance! - Qasim

@Dustin Thomas @Account Closed @Lex Wilridge @Henry Zhu

[Ed W.]

@Qasim Naeem  You've certainly earned my respect (not that you need it) for being so frank about your errors.  One of the most important lessons here for you and for others is that this is a very unforgiving business. The costs of mistakes often have thousands of dollars associated with them and you cannot rely upon anyone but yourself to determine value (and how condition, location, and other factors can affect that value). It is a mistake to rely upon real estate agents for this.  Even the most honest can make mistakes and, unfortunately, my experience is that most don't have the knowledge to make the determinations that an inspector, for example, would have and, at least some of them will care a lot more about the commission and what happens to you after the sale.  I had an agent tell me one time that house identical to all the other houses on the street was worth what all of the others were worth (about $200k) but I was certain it was worth about $40 - $50k less.  Time proved me to be correct.  If you can't afford to fly to protect your potential investment, I strongly urge you to not purchase.