New Investor from Ann Arbor, Michigan first deal frustration!

[Dave Homyak]

Hi, My name is Dave and I'm from Ann Arbor Michigan.  I've thought about investing in real estate for many years, but never put in an offer in the past.  Bigger Pockets podcasts have been super inspirational and have let me see some of the truly great deals others are getting.

I thought I had such a deal yesterday.  SO frustrating the way it ended up.  Can't believe how happy I was immediately after to telling a second friend who told me to run away, not walk, due to an issue I had overlooked.

Deal was on a duplex.  Rents came to $1300 a month.  Utilities on the one side averaged $200.  Other side was paid by renter.  Section 8 tenants, in a decent enough part of town.  

Former owner had bought last December.  Building was "city certified".  However, the city showed up a few months ago and handed the new owner a 6 page report of deficiencies.  New owner was overwhelmed and understandably frustrated.  Just wanted out. Looking at report and duplex. they could easily hand out another 6 page report if they wanted to next inspection, if they feel like it.

I met and we were going through the list.  Probably has about $3000 of stuff left on it.  I asked what lowest price he'd take was.  He said $20K.  $1100 a month on $20K, plus $3-5 to fix up sounded awesome.  I told him my agent would get him an offer the next day.

Anyway, part of the discussion was that one of the tenants toddler daughter had been found to have lead in her blood.  They had lived in a place that failed a lead inspection, and had been moved to this duplex by their section 8 agency.  However, the blood test was done after they had been living in this duplex for a few months and the building was definitely pre1975.

My buddy, who has some rentals, told me a story that was almost identical, where he had to pay an attorney $9K to defend himself in a lawsuit for a kid found having lead in his blood in one of his buildings.  They had come from an area known for having lead in the water, but he got sued anyway.  As the landlord insurance didn't cover lead, he had to pay to defend himself.  He had had his place tested by an independent lab, and it ws found to have no lead, but that didn't stop the other attorney from filing suit.

I has no desire to even have a chance of getting  involved in something that may lead to a lawsuit, so wanted to pass until the agency had determined the duplex to be lead free.   Or at least mitigated.

So, went from super excited to have scored what I thought to be a pretty good deal to feeling frustrated I needed to bail.

Still want to profit from real estate deals, whether that be finding and buying, or helping fund if others find some deals.

Huge thanks to the Bigger Pockets podcasts for being inspirational.