The realities of real estate investing - even if you own turnkey properties

[Alan Asriants]

This post is going to highlight the events that took place over the course of a month for one of my rental properties. 

Keep in mind this property is relatively turnkey with most capital improvements completed within the past 5-7 years

In the middle of the month of May, I get a call from my tenants saying that their electricity got cut out and the oven and air conditioner don't work. Of course, this was on one of the hottest weeks in May. 

It turns out that the meter panel outside that holds the meters had a burnt out lug. This could've been caused from exterior water, penetration, or a poor connection over time. What I meant was that there was only 120 V going into the property and not 240. So basic things like lights, outlets, switches generally worked but higher voltage appliances like ovens and air conditioners did not. 

Again, this was a very hot week and one of my tenants was eight months pregnant. So, making sure the place had air conditioning was very important.

Apparently getting a meter panel replacement is not as straightforward as it seems. This is because my property is a duplex, and meter panels for duplexes are very expensive and not always readily available. On top of that, finding a licensed electrician, who could do the work in a timely matter with permits, is also not so easy to find in a time crunch. 

This was a project that I needed to get done quickly rather than get it done cost efficiently. My tenants we were without AC in the hottest week of may, and their oven wouldn't operate.

Long story short, I did end up finding a great electrician, who I can gladly recommend who got the job done. Disinvolved replacing the meter panel entirely and running to new service lines to the breaker panels. The total cost of the job with materials was $2700.

This was a sigh of relief at the moment.

The tenants on the first floor were vacating the property and have already put in the notice months before. They were set to move out May 31st. I quickly found tenant to move in within 10 days of the previous tenants vacancy, June 10th. 

Just like a normal turn over all that was really involved was a quick refresh of the apartment a light cleaning and that's it. With the cleaning and the paint refresh, it cost me a total of $850. 

With only a 10 day vacancy, that was a win.

While the cleaning lady was at the apartment, finishing up her job, she noticed that there was a severe leak coming from the upstairs suddenly. The leak was coming into the kitchen and on top of the refrigerator. 

When she went to the basement, she saw that the water was pouring very rapidly. We quickly got on the phone and I instructed her how to turn off the water. 

It turns out that the upstairs tenant had their garbage disposal clogged, and the backflow of the water started pouring into the dishwasher and overflowing onto the floor and into the first floor apartment. Then the water made it all the way into the finished basement. 

Luckily, for me, my cleaning lady was there turned off the water and for a small extra fee of $50 cleaned up the rest of the water. 

The damage to the sheet rock in the basement wasn't bad, and I set up a bunch of fans and ventilation in order to prevent mold from growing.

I went to check on the first floor apartment to see if there was any damage and luckily there wasn't. But when I went over to the fridge, I noticed that it was off. I tried multiple attempts and I investigated it into the refrigerator to see what was wrong with it. 

After about an hour of playing with it, I came to the conclusion that likely water had entered into the refrigerator from upstairs. Later, and appliance technician confirmed that this was the case. In fact, it was a very unfortunate way of getting damaged. The water managed to perfectly get into the control panel and fry the entire unit. 

The cost of replacing the control panel was closer to $500. After a quick Home Depot search and a pre-Fourth of July sale I saw a similar model that was selling for $1100. Instead of paying $500 to keep a seven year old fridge, I added on top of it and got a brand new one to avoid any trouble in the future.

A couple days later after getting the refrigerator, I get a call from my Upstairs tenant saying the garbage disposal is leaking. I verified that in fact, it was a faulty, garbage disposal, and it needed to be replaced. I made sure to add an extension hose to the dishwasher and angle it up so that backflow in the future could be somewhat prevented. Total cost: $282

Now it seems like my worries were over. 

All I had to do was disconnect the icemaker line and install the shut off valve onto the existing line so that the Home Depot delivery crew could install the fridge seamlessly. 

When the install crew came and turned on the water for the icemaker, the icemaker copper line started to leak. From moving the refrigerator back-and-forth, they kicked the line which caused a break. 

We install the fridge without the line and I would later to go back to replace it. Materials cost around $50 total and I would go back in and put in the tubing connected to the refrigerator. 

While installing the icemaker line, my tenant downstairs decided to do laundry they put their clothes in the washer, turned it on and left. I started to notice a large puddle appear. Making a quick decision, I realized that the drain line was disconnected and I connected it back and started to clean up the water. The leak was pretty severe and ended up going into the garage, so we had to dry out and ventilate the garage as well. 

The line disconnected likely when the cleaning lady move the washer to address the leak before. 

Luckily, I was there at the time. 

After drying out the leak, I installed the icemaker line.

I checked for leaks and left it on for 30 minutes or so, and left the property. 

Finally, I thought to myself, this has to be it. 

Two days go by and I wake up to a text message from my tenant of a video of the basement flooding with an active leak at 6:50AM. I was sleeping pretty well that night, because I was sick with a fever. 

I only got to read that message at 7:30 AM. 

I quickly left and got to the property by the time I was there it was already 8:30 AM and the leak must've been going on for hours.

The entire basement was flooded with water. The carpet in the finished area was completely soaked, as well as the underlayment, and the garage was filled with several inches thick of water. 

It took the entire day to get all the water out of the property. I had to rip up the carpet and buy a shop vac and suck all the water out of the underlayment and the carpet material. I later dropped off a dehumidifier and several large fans and left them overnight. 

The culprit? The wrong material hose for the icemaker was recommended to me for install. $11 fix...

I went back to Lowe's spoke with a professional plumber, and he indeed confirmed that I put in the wrong material. I bought the new parts for 20 bucks and installed it seamlessly. 

Remember, I was doing all of this with a fever. 

Finally, I put in the proper refrigerator line and I went to go check the icemaker and water dispenser on the refrigerator. Everything was working properly, and as many of you might know the first batch of I should be thrown away. After the first batch of rice was ready, I decided to throw it into the sink launch the garbage disposal, because why not just clean it and go from there. I flipped the switch from the garbage supposal and smell of burning mechanical smell. Garbage disposal after all those years Fried right then and there. $250

all in all after one month, my total expenses were: $6253.45

That is not included some expenses I had not included here (Washing machine fix, landscaping, etc)

The moral of the story is that S*** happens. Whether your property is perfect or not, something can always go wrong, and it is up to you to know to always be ready and be poised so that you can handle the situation properly.

Lessons Learned:

- when replacing your breaker panel, you should always update your meter panels as well.

- when you have small issues, no matter how small they are address them as quickly as possible

-  just because someone at Home Depot tells you to use some thing double check for yourself.

- teacher tenants how to shut off water. Show them where all the utilities are, and a brief overview of how things work.

- don't panic and stress. It's a normal reaction, but it's not going to help you solve the problem and deal with it. It will only make you more stressed and bring more negativity.

Happy Real Estate Investing