Will water issues be the death of my rental business?
Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes
Will water issues be the death of my rental business?
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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes@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!
27 Replies
- 6yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
@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!
Water is the most insidious element when it comes to properties. You buy insurance in case a fire burns down your house, but the odds of that happening are probably a million to one. But insurance won't cover water damage which is probably the most common cause of property repairs and deterioration.
In Baltimore, you have the added pleasure of a dilapidated water system that can cause sewer back ups into your basement (ask me how I know about those). On top of that, the water billing system is inefficient, incompetent and overpriced. City residents pay more than Baltimore County even though the county residents get their water delivered by the Baltimore City system. Plus, tenants don't report leaks or running toilets and then don't have the money to pay the outrageous water bills.
When I was doing more rehabs, I learned that it paid to put in a waterproofing system even if the house never had problems. It was worth the extra cost for peace of mind and made for a good selling point since my waterproofing company came with a transferrable, lifetime guarantee.
As one of our presidents said, "I feel your pain."
I had one experience with water damage in one of my duplexes. The tenant living at unit installed an incorrect size bath tub spout and it was slowly leaking water into the walls over a course of a few weeks before they notice drywall damage on the floor below. Luckily I have AAA insurance. They came with a leak detection and determined it was the bath tub spout. (We never told AAA anything in terms of my tenant installing the incorrect spout info). Its possible if we did then the claim would of been denied. At the end...i paid a 1k deductuable and AAA paid me a 15k check base on what their contractor estimate it would cost to repair. I had the choice between using there contractor or receiving the money and hiring my own people. I ended up only spending about 6k, pocketed the rest and got brand new floors, new tiles in bathroom and patched up damaged drywall. The water mediation crew was also covered where they brought Servpro to do demo and set up fans everywhere to prevent mold growth. That alone is very pricey if you were ever to do it yourself. I expected my yearly premiums to go up but its been 2 years and it hasnt changed at all so AAA has served me well.
For my own home, i had a small roof water leak and also my first floor was taking in water during rain storms...i later found out it was because my home had no gutter system and has a flat roof. So the ground was absorbing too much water and my walls were not able to take it so i would get puddles in my basement floor. Luckily that floor is sealed concreate but it did cause some damage to the seal. State Farm on other hand sucked and denied it right away and said they don't cover any water damages. From here on out im going switch all my properties to AAA overtime.
- Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes6y
@Julie Hassett
My Baltimore County basement rentals always leak. I’ve had the best luck with the plastic FRP Wall Boards secured directly to the concrete walls, French drain and sump pump. It seems to be a permanent fix knock on wood. But my walls leak every time we get a monster storm and the water absorbs through the porous concrete, hits the wall board and down into the French drain and sucked out by the sump. Also check grading outdoors and seal any large cracks or holes with epoxy or polyurethane injection.
- Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes6y
I bought a brick house built in 1900 at an auction site inside unseen. It was not brick face, but real brick. It was built with a basement type room under the back half of the house.
Looking in the house after I won the bid, I was surprised, original hardwood floor in the living room and 2 bedrooms. The other bedroom and hallway was plywood. Kitchen and baths were vinyl, upgraded at sometime in the last few decades. Not bad. Thought we lucked out!
But when it rained the basement area flooded. Looked around and found that most of the water was coming in from the basement wall that was under the bedroom with the plywood floor and had a sliding glass door. hmmm. More research when it was raining and the rain gutter above that side of the house was not installed correctly. It did not drain and dumped the water over the sliding glass door, where it went into the house at the door bottom and down into the cellar. Wow! that was easy!
Next rain storm, some water in the house, but not much and this time it was by the cellar door. Watched the water and it ran down the hill and into the cellar all around the door. The door and frame were on our list to replace anyway, so we recontoured the hill to direct the water away from the house and replaced the door with a new pre-hung. Easy enough. Still too good to be true.
So we watched it every time it rained. Then a high torrential rain came and we had a swimming pool again. This time it was coming up from a crack where the cement floor joined the wall. The water was moving up from the floor this time..... Looked outside --that rain gutter we fixed was bringing the water to the corner of the house and the water flow had made a hole down the wall under ground. Apparently the gardener removed the piece of the rain gutter that moved the water away from the house. We bought another extension and put it on the end of the rain gutter. We filled in the hole. Water did not go up any more. Drained the water in the basement. So its been about a year. Basement is dry. All easy fixes.
Was ready to list this house to rent. Water in a bathroom sink was slow. Plumber I trust looked at it. Plumbing was original to the house. All the water lines were almost solid with built up muck. So I bit the bullet and replumbed the whole house. Decided it was better than having constant issues.
Sometimes its a slow money and time bleed. Sometimes it hits hard and fast.
- 6yOzzy SirimsiBusiness MemberReal Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
I had to change a main sewage line ones, it was keep backing up in the basement, got quotes like 5K, ended up using home serve USA insurance, and cost me very minimum.
These issues always come up though, sometimes it is a roof issue, sometimes something else. Then you will not not hear anything for sometime, then you will start hearing them, it is the business we are in.
Couple times I finished the entire renovation then suddenly roof leaked and ruined the floor or basement got flooded etc..
It is part of the business as long as you buy a good deal, they are okay.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Bjorn Ahlblad - thank you for walking me through your experiences! I swear that the reason I listen to BP podcasts is not for the "tip and tricks", it's for the "here's when I seriously f*^*ed up and thought it was all over" stories. They always remind me that this too shall pass! And you are right about being grateful to still be collecting rent. I am (knock on wood) and that does put me in a fortunate class these days.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Alan C. - so, would you do french drains and the whole shebang in your rehabs? Interesting. Something to consider budgeting for. Last month, we waterproofed a crawl space in Wilson Point (Middle River). One week later, we had the rainfall of the century and the crawlspace was a swimming pool. I thought it was because the power went out and the sump pump stopped. But it turns out the sump pump came detached and lodged in its casing so the bobber stopped working. The company came out and cleaned it up and set it right. Water IS the most insidious element! That is a perfect way to put it.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@David P. - good to know about AAA. I just switched insurers over to Penn National and they will cover water damage in a primary home but not in investment properties. I had similar water damage as you at my old house from a leaking toilet and ended coming out really great with the insurance claim because I had coaching on how to read their initial quote and what to ask for. It made a huge difference in what I ended up getting reimbursed for.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Chris Mcdonald - thanks for the recommendation. One of my rentals (that used to be my primary home) has those wall boards and I never actually knew what they were called until now. Are you installing french drains as a matter of course when you buy a new rental or are you waiting to see evidence of water intrusion and then getting it done? Is there a local company you prefer? We've been using Basement Waterproofing Nationwide and are pretty satisfied with them.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
Thank you for your story @Lynnette E.! This is ringing a bell. Because, yes, the one thing I didn't mention in my original post was that we also have a toilet that is gushing water into the crawlspace every time we flush it. That property is currently being rehabbed so it's not lived in yet, but when it happened the first time, it was like, "ARE YOU KIDDING ME WITH THIS?" Still trying to find a plumber to come fix it. I hope your property has ended up making you money!
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Ozzy Sirimsi - yes! I had just completed a full rehab in 21213 and decided to throw an OLD window a/c unit upstairs to keep the place cool while I was away for a week. Came back and found the living room ceiling caving in. Went upstairs and the a/c unit had been leaking steadily indoors that whole time. My contractors ripped up the carpet and mold had already set in, floor boards had buckled... it was a disaster. But, yeah, got that fixed up and moved on. It really is the biz we are in.
Let me add two suggestions that can help with water problems.
1. Use Niagara's "Stealth" toilet in all rentals. It sounds funny, but I can't recommend this this toilet enough. It will save you thousands of dollars and lots of potential headaches. This unit has no flapper so it doesn't have the problem of a constantly-running toilet. I can't tell you how many times I've been in a rental property and could hear that water running from just about anywhere in the house. On top of that, it uses a minimal amount of water per flush which will save a lot of money over time. Over the past two years, I have replaced all regular toilets with this model
2. In the Baltimore area, I have used Anchor Waterproofing as the best company for price and service. They take care of investors knowing that we will not be a one-time customer.
Full disclosure: I get no financial reward or other benefits from either of the above companies. I just think they are the best value for investors.
- Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes6y
@Julie Hassett
Luckily both of my properties already had the French drains installed. I added the wall boards and they instantly cleaned up the basement aesthetically. Super easy.
Depending on what is done. If I already have the basement framed and drywall I would wait til water shows it’s ugly face. If the basement is gutted I would do it before moving foward.
Also I only tile basement floors, leave a finished concrete look, or space rugs. So if water hits the floor your safe. Also treated lumber or metal studs can save you.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes6y
If you ever go from single family rental to multifamily the water issue can even be more amplified. Been there, done that.
Some investors deal with the headaches and others move on to types of investing without all that daily PITA stuff to deal with. Landlord paid utility on behalf of tenants can be crushing as well as older buildings with constant issues with the property.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Joel Owens - Yes! One of my buildings is a converted SFH into MFH with a lovely Airbnb unit in the basement. So far in that unit, we've had leaking toilet seals, a backed up washer pipe (crushed or corrupted by roots somewhere underground) that we rerouted into the main exit pipe with a pump, a completely stopped up sink drain, and water coming through the vapor barrier causing rusting on the cracks in the vinyl floor planks. It's been a whack-a-mole situation for sure!
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @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!
89 quake was something i was in Palo Alto right on the fault.. I had one broken wine bottle in the garage.. my neighbor next door anything that could break broke her wall like yours fell down ..
AS for water.. If i had it to do over again i would simply not try to buy any houses with basements.. and just really check the crawl. If its a slab I would want to know the soil conditions in the general area.. there are areas throughout the deep south that have horrid clay and your house can end up out of plumb from one side to the other 6 to 12 inchs and those are expensive to fix.. we fund a ton of those.. that get sold wholesale then have the houses re leveled.. But to pay retail then have to re level your in negative equity out of the shoot.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
Originally posted by @Jay Hinrichs:
AS for water.. If i had it to do over again i would simply not try to buy any houses with basements.. and just really check the crawl.
This is exactly what I told my husband. I said, "we're only buying condos - second story or higher - from here on out!" On our most recent purchase I was so happy there was no basement, but the crawlspace proved to be just as much of a headache as a full basement. But it should prove to be less of one over time as long as a tenant doesn't move in there and start complaining about the humidity. ;)
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Having dealt with numerous water issues over the years, the two things that help most are:
1. Contour of the land away from the foundation. You want to build up dirt with a steep slope going 3-4 feet out from the foundation. Cover that slope with thick plastic and put rocks over the plastic. Most water intrusion happens right at the foundation and this pushes the water away. Make sure the slope has a path for water to move away from the property. If your property is at the low point in the neighborhood, might as well just sell it.
2. Good gutter system. Rain gutters should used around the entire property with multiple down spouts to keep the water from ever overfilling the downspouts. Use the wider down spouts so the water flows faster and to keep from clogging. Put on gutter guards or clean gutters regularly if leaves are a concern. Run the extension out six feet or more from the foundation.
- Rental Property Investor · Glen Arm, MD · Member since 2015 · 105 posts · 41 votes6y
@Joe Splitrock - great advice. One of my houses IS the lowest in the neighborhood! It's at the nadir of two hills in either direction. But that one has a french drain on one side of the house already, thankfully. I know my gutter systems need improving all around. Thanks for the tip on the plastic and rocks.
- 6yNicholas U.Pro MemberMember since 2020 · 65 posts · 44 votes
So none of my rental properties have had water issues but the places I have lived all seem to have had water issues. At my last home we did a sump pump and trenched the walls so it would flow into it. Solved the problem completely but cost me about $5,000. Also making sure your gutters are properly draining away from the property is key. Bad gutters are something you should not wait to replace on.
Water is the worst thing to homes. Roof/Foundation - if anything is somewhat discouraging it is almost a deal breaker for me.
- Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes6y
Originally posted by @Julie Hassett:
Thank you for your story @Lynnette E.! This is ringing a bell. Because, yes, the one thing I didn't mention in my original post was that we also have a toilet that is gushing water into the crawlspace every time we flush it. That property is currently being rehabbed so it's not lived in yet, but when it happened the first time, it was like, "ARE YOU KIDDING ME WITH THIS?" Still trying to find a plumber to come fix it. I hope your property has ended up making you money!
This house is a good one. I paid less tham $60k, have less than $40k in repairs and appliances. Value is $170k. Hope to rent it in August for $950 a month.
We go slow with fixing the houses because property is going up in value over ten percent each year, so property sitting is a better investment than most. And we buy when we get a deal.
Plus we are working on several at once. Doing floors on 4 apartments and 2 houses right now.
- Property Manager · FL · Member since 2018 · 104 posts · 36 votes6y
Originally posted by @Julie Hassett:
@Joel Owens - Yes! One of my buildings is a converted SFH into MFH with a lovely Airbnb unit in the basement. So far in that unit, we've had leaking toilet seals, a backed up washer pipe (crushed or corrupted by roots somewhere underground) that we rerouted into the main exit pipe with a pump, a completely stopped up sink drain, and water coming through the vapor barrier causing rusting on the cracks in the vinyl floor planks. It's been a whack-a-mole situation for sure!
Basement Airbnb's can be a big mess. I have one and manage another. Both get the occasional guest who thinks flushing wet wipes down the toilet is okay or using a whole roll of toilet paper in one sitting.
We had a nice OOS duplex on the beach sand in Gulf shores, Alabama. We had a professional PM with both units being STR. Things were doing fine, but the value and associated property taxes were going up faster than the STR rents. But it was making some money and it was a great property.
Not sure of the year, maybe 2004, it got hit by a hurricane. Many of the properties were destroyed and would need to be rebuilt. We were "lucky" as ours was not condemned. The condemned properties would need to be rebuilt further setback from the water. Our PM kept indicating that our RE would be worked, but no progress. After months of minimal progress, we went there to manage the work on the property ourselves. Finally the property was ready to be rented.
Shortly afterward it got hit by a 2nd hurricane. A few more properties were destroyed and would need to be rebuilt with further setback from the water. We were "lucky" and our units were not condemned. I would say only ~15% of the RE was still in the location they were at when we purchased the property (~85% had to be rebuilt with further setbacks from one of the hurricanes). Another trip to Gulf Shores to manage the repairs.
We were done, but so were many of the other owners. Those high valuations that we paid property tax based off for years were no longer close to accurate.
We had insurance for much of the damages. We also had high STR rents. Even with the decline in value from two hurricanes that close to each other, the property had some appreciation. We did not lose money, but we also did not make much money. We did not make enough money for the effort that resulted from the 2 hurricanes. I suspect if we still owned the properties today, we would have significant appreciation. It was an awesome location if it were not for the hurricanes.
As the saying goes **** happens! Do no let it get you down. Learn from it.
Good luck
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