Back when I was a relatively inexperienced investor, I got a 2 am phone call from a tenant. The finished basement (which included bedrooms their children were occupying) was flooded with 6 inches of water! Worst of all, it was ground water--coming up from underneath the slab, and there was no easy way to stop the flooding.

Adding insult to injury was the fact that this was the third time in six months the house had flooded. After the first flood, I dug some French drains around the exterior of the house. After the second flood, I dug out a standard-size sump and installed a pump in the basement. No dice. Clearly, I needed to pull out the big guns.

Every bone in my body wanted to sell the house, sell all of my properties, and quit RE investing. The next several months were extremely stressful; the tenants left, I watched my bank account get lower by the day, and I spent every waking hour trying to figure out a solution. ...for weeks, I thought I was headed for bankruptcy, and I assumed the entire house would need to be razed (who would buy a house that has regular, unpreventable floods?). Plenty of people made fun of me for this debacle... It was one of the most demoralizing experiences of my life.

I hired a hydrologist who helped me understand how water moves underground, and potential solutions (best few hundred bucks I’ve ever spent). Unfortunately, none of the solutions he proposed were easy.

I stripped the basement of its finishings, jackhammered through the slab, and dug three sections; one was about 15x5, another about 12x5, and one about 20x5. All of them were dug about 4.5’ deep. Worst of all, the basement had no exterior door, which meant that approx. 30-40 tons of water-logged clay had to be removed by hand, one bucket at a time, through a window! (I put my gym membership on hold that winter).

Then, I installed industrial-grade perforated pipe that was roughly 3’ diameter (the type of thing you might see kids crawling through at a playground), and three industrial-grade sump basins, each of which were 65+ gallons (large enough for a full-grown adult to crawl into). The pipe and basins had to be sourced from a company that provides supplies for city infrastructure (this ain’t stuff you can pick up at Home Depot). I added an industrial grade pump to each of the three basins, each of which I plumbed separately.

Then, I back-filled everything with sewer rock (which, again, had to be brought in by hand, one bucket at a time, through a window), and then I re-poured the slab and re-finished the basement.

THEN, I dug a pit along the exterior of the house: 10’ x 20’, and about 10’ deep. Again, all dug by hand (this was back when I had no money, and couldn’t pay for an excavator). Added more industrial-grade perf pipe, and a vertical access pipe so I could drop in another pump if needed. Backfilled with another truck load of sewer rock.

As luck would have it, that Spring was the wettest on record in our City—rain, rain, rain. Every day, I held my breath waiting for the new tenants to call me saying the house was flooding (talk about anxiety!). ….aaaand….nothing.

Many years later, and the basement has remained bone dry (knock on wood).

Even more astounding—I got a call from a neighbor who owns a house across the street, about 50-75 yards away. He told me he’s owned his house since the 1970s, and that his unfinished basement has flooded almost every Spring since he bought the place…until, you guessed it. He’s never had a flood since I finished my little project…So, it seems that my absurd drainage system is not only draining everything under my house, it’s also draining the entire surrounding area!

Today, the “flood house” is the best cashflowing property in my portfolio (the cashflow potential is a major reason I put in so much effort to fixing the problem).

Every time I hear someone mention REI as a "passive" form of investing, I smile and think back to when I was knee-deep in mud, excavating truckloads of clay by hand, one bucket at a time through a basement window. "Passive" lol.