Mistakes, Challenges, and Obstacles Overcome: It Ain’t All Peaches & Cream & Paychecks

[J. Martin]

While I was able to amass a good chunk of real estate over the last crisis and had some great successes from connections and learning on BP, I also had lots of challenges along the way! Not all peaches & cream & collecting paychecks! A few of the real gems are below. Please share your own challenges, mistakes, or obstacles and what we can all learn from them!

- Had serious water intrusion into a building during historic downpours, and displaced tenants that we had to pay some hotel money for :-/+ My first insurance claim.
- Delayed a pre-xmas flight to see family by a day, to ensure a rehab & tenant move-in was completed successfully (see above – another tricky tenant situation I won’t go into here..)
- Was passively hinted at being sued by one tenant, and explicitly threatened to be sued by a former tenant
- Had 2 tenants cancel their leases early
- Plunged someone’s crap out of a toilet in my Airbnb unit (never again!)
- Missed out on lots of deals because I wasn’t keeping my eyes open

Water Intrusion
We purchased an old building, and I knew it was not water tight. It was built in 1897, and was in fair/poor condition for its age. I had a lot of the siding replaced, some roof fixes, window repairs, and all kinds of little other things, over the course of a few months. Then, the once-in-decades rains came, and caused all kinds of havoc in our downstairs unit. It turns out, the flashing was apparently not installed properly whenever they last re-surfaced the roof, and water intruded in cracks at the edges of the roof.

Lesson: When it rains, it pours! So carry an umbrella! Perform regular detailed inspections. And expect the unexpected! Get that building sealed up! Get those anchor bolts in! And be prepared! A big shout-out to @Nhi Nguyen for helping me get this thing back together quickly! Make sure your insurance is up to date and paid! (ours was, and most costs were reimbursed, after some PITA) *I later heard a flipper tell me their brand new roof on a sold flip leaked during the same storm, and they reimbursed the buyers - so I didn’t feel as bad :-/ *

Delayed Xmas Flight
I was supposed to fly to Phoenix to visit family the day before Xmas eve, but due to coordinating the final rehab, city inspections, furniture & personal items moving, and tenant re-move-in (touchy subject), I had to arrive on Xmas eve instead. My partner graciously offered to finish this last piece so I could fly out on time – but I was responsible for the rehab, and felt responsible to ensure the entire thing was completed and done rather than leave it to my awesome partner. Still got their on Xmas eve, but bummer! I got into RE to spend more time doing the things I like!

Lesson: In this case, I thought it was more important to make sure everything was taken care of for my partner, than arrive without delay for a trip. Take care of your investors! Still had a great xmas eve, day, and more with the family :)

Sued – At least, Threatened..
One tenant passively hinted at taking legal actions if their requirements were not fulfilled. Not going to go too far in to that one. But we always try to get along with tenants first, and it ended up not being an issue. Another former tenant flat out threatened to sue me. She moved out before her lease was over, and there were no remaining deposit funds available to return to her after cleaning, vacancy, re-leasing, etc. All proper notifications were given. I almost considered returning a partial deposit just to get her out of my hair. But I decided to just send her another factual letter referring to the prior notifications, and leave it at that. I believe the circumstances and documentation show that I have acted correctly and in good faith.

Lesson: Do things the right way, in good faith, and with proper documentation. Then you won’t be forced to give in to unjust demands. Also, be prepared to be firm and resolute with tenants, when necessary and appropriate. I maintain good relationships with my tenants, in general. And try to resolve situations amicably. But be prepared to put your foot down when necessary.

Canceled Leases
I have had two tenants terminate leases before they expired. One, I shouldn’t have taken in the first place. And that was a quick lesson learned. The other was a recent couple where one of them just moved in from out of town. It seemed unstable, but didn’t want to discriminate against any family situation, and they qualified, she had a stable 15yr job, he was working, etc. Long story short, that didn’t work out..

Lesson: Fortunately, I didn’t lose money on either tenant because I required a larger deposit than was typical in the area. This risk mitigant saved me from losing money. But, going forward, I include a “break up” fee, like @Elizabeth Colgrove, for early lease termination. For one tenant, they didn’t quite meet my criteria, but I took them anyway on my first property because I need the cash flow while I was doing rehab, and they were willing to take the unit without refinishing everything (another red flag!), and they were from next door where a relative owned the building (another red flag!). Don’t take tenants that don’t meet your criteria! Especially if it’s too easy!!

Plunged Crap out of Toilet

This was the first and last time I will be plunging an Airbnb guest’s crap out of a toilet.

Lesson: Make sure tenants have everything they need to help themselves! Fan, heater, extra blankets, extra toilet paper, hair dryer, and yes, a plunger! Include a detailed list of any common questions, and how to operate anything a true idiot could not operate. If you’ve prepared them to be self-sufficient, you won’t be bothered! I also have a maid and backup (handyman) in place to address anything. I operate this unit like I am out of the country.

Missed Out on Deals

I missed out on a lot of deals because I didn't get on BP and networking sooner. And didn't keep my eyes and mind open enough to see all the potential opportunities out there.

Lesson: Approach every deal like a paycheck! Keep an open mind and consider any opportunity that can be done with a deal.

Please share your own challenges, mistakes, or obstacles and what we can all learn from them!