Investment Property Gone Bad

[Marlia Stone]

Hey BiggerPockets, I’m here for any advice that you can give me on my current situation.

I recently purchased my fist Duplex property in July 2021. The property seemed like a great investment with minor cosmetic issue to be done. Certain things in regards to the property my realtor didn’t advise me to look further into after the home inspection, such as the gas and electric bill. As I began to work on the property with my contractor. We found more and more issues wrong with the property like the plumbing and state guidelines. A month later I tried to turn the gas on and put the service in my name. One unit was successful and the other wasn’t. The service was off for a year(which I didn’t know) and the unit required an inspector. I hired an inspector referred by PGW and it failed due to it not being up to “Code”. For the unit to be up to code I had to hire an electrician and all of them were mentioning that It would be thousands of dollars to fix.

On another note I tried to put the electric in my name as well. One unit was a success and another unit was not. The repress mentioned that one unit has been off since 2017( which I didn’t know) During the home inspection, for some reason the electric was on for both units and is currently on (Illegal Electric). Being as though this was my first investment property, who was supposed to figure this information out? Was I?

These two are keeping me from listing the property and putting tenants in there. It has been almost 4 months since I purchased the property and it has done nothing, but stress me out to the point where I am considering selling and starting over. I’ve lost more money than was expected. Please share any advice that you may have or any stories that may help.

[Bruce Woodruff]

Not necessarily anyone's fault, welcome to the RE game... Ultimately it is the owner's (your) responsibility to discover all this kind of stuff and make all the calls to the city/county, checking on any restrictions in place. I once (almost) bought a property that had a $500 a day fine on it, totaling $50k+ at the time. A call to the Planning Dept revealed this 'minor' inconvenience. I would have been responsible for paying this fine had I bought the property. You just never know what has gone on with a property, that's why YOU have to do all of the due diligence. Your Realtor and Inspector care, but not that much, it ain't gonna be their house..

As far as your current situation, all you can do is get multiple bids to fix the problems and then decide whether it is worth it to move forward.....if you sell, you have to reveal what you now know, so you will take a big hit.

Factor in the future appreciation that you expect and maybe there is some money to be had in the future....maybe fix these up nicer than you intended and raise the rents as well.....

Bad news all around, sorry for your problems. Best of luck....!