Will water issues be the death of my rental business?

[Julie Hassett]

Hi there, I'm a small-time real estate investor with 6 units under my belt. When it comes to water issues, I absolutely cannot catch a break. Currently, I've got:

One basement with a leak and horizontal crack forming on an outer wall
One garage with so much hydrostatic pressure that the cinderblock wall is bowing 
One basement with water seeping in under the baseboards.

Recently repaired/added:

A flooded crawlspace
A french drain system
Rerouted exit plumbing using a pump to bypass backed up/broken drain pipe

All of these jobs range between $1,000 - $8,000. None of them feel like they can be put off until I get more cash reserves built up.

What answers am I looking for here? I guess I want to hear about a time when all you did was witness an outflow of money and wonder if it was going to take you under... I'd also like to here about your disastrous water and foundation issues and how you dealt with them and solved them.

If you have either of those stories, please share! I'd like to know I'm not alone. 

[Bjorn Ahlblad]

@Julie Hassett Congrats on having 6 properties in Baltimore! I had a rental south of San Francisco for some 30 years that leaked water into the partial basement whenever it rained. I thought it was terrible but the tenants never complained much. There was a sump pump that worked; and one year I spent a lot of money trying to fix the leak by pumping the water away from the house. It worked for a while and then that pump failed so now it was all up to the sump pump; but as I said the tenants never really complained. 

I finally sold the place in 2015 at a windfall profit, and bought duplexes in a small town near Olympia Wa, an area to which I moved in the meantime. One of the duplexes had 2 inherited tenants-one was a jewel and the other one was a witch. The jewel bought a house within a year and left. 

The witch moved out one dark night leaving a terrible mess behind-evidently the PM was not inspecting. There were doors punched in, drywall damaged and drywall missing from the son's bedroom ceiling so he could get into the crawl space.........who knows why. There was all kinds of dog damage-my fault for saying 'yes'.

The night after the witch left was a July 4th. The teenage son broke into the place, set off fireworks inside and got arrested for underage drinking and excessive noise-no kidding! We basically gutted the place and started over. The profits for both sides, and more, were sucked up by that incident. I blame myself for not watching the PM more closely. My wife is now the PM and we have wonderful tenants in the duplexes, and three years ago we scored with a great apartment building in a near by town; we refer to it as "the last great deal in the PNW". 

So there you have it Julie, some bad luck and a lot of good luck as well. If all your Baltimore tenants are paying you should count your blessings along with your water troubles.

But wait! There is more, not water damage but earthquake. We had a big one in 1989-Loma Prieta. Fridge fell over, cupboard doors opened up, all the dishes and glasses we owned were now on the floor along with the fridge contents. Armoires in the living room fell down. Chimney crumbled and fell as well as 95 feet of 6 foot tall historical wall, most of which ended up on the sidewalk at the front of the house. For several nights we slept outside to get away from the shaking that went on inside the house from numerous aftershocks. We actually did well; many houses in the area were bounced off their footings and destroyed. We fixed everything including the historical wall and sold that house almost 30 years later in 2018. REI has many ups and downs along the way, if you live long enough you will come out on top!