Generally that starts with the rehabber not having a proper idea of the cost of labor and materials, it then moves on to old construction throwing up surprises you weren't prepared for (plumbing, electrical, structural problems not seen until things are opened up).

These strategies, if properly tested, can produce very good projections with, in practice, very low risk and high return (e.g. more than 10,000% pre-tax return with max drawdown less than 10% for the last ten years).

Given our litigious culture (imo), free and clear ownership is too risky.Yes that's a risk but one that can be countered with the proper management and insurances.

This same thing happened in the movie Tommyboy.Seriously though, I would check to see if the deeds were properly notarized and if the grandpa was in his right state of mind when he signed it.

If it was installed improperly then the whole thing will need redoing.A seller that claims everything Is new and you get in there and find a bunch of rigging that has to be torn out and redone yet the seller still wants the price on everything being repaired properly.

I mean, this property literally hit the market as I was on the MLS and I called the broker right away and had an offer into him within the hour (with all the proper outs during the inspection period, of course--which I'm still good on).

@Steven Hamilton IIThis irks me too when a realtor doesn't know squat about investing or taxes & then gives out information that is not only wrong, but will cost the seller a chunk of money.I guess the lesson learned is to consult with your tax professional first before making any major financial decisions to get the proper information to make your decision.

I perceive your side to be that appraisers have a better knack of picking the right comps to use and then have the better ability to properly adjust those comps to the subject property.

These areas will often have lower cash flows due to the lower cap rates but with proper timing, can have large growth potential.

It's not like you can return the house or do a proper inspection to avoid these pitfalls.