Before we begin let me once again say I am not opposed to cash flow. For goodness sake, why would I not like one of the 4 Benefits of Real Estate Investing? But have you ever noticed most of these stories go along with low income housing?
Dude sends me an email about 10 days ago saying he wants out of his investment property he bought in a fringe neighborhood in KC. By fringe I mean most nights nothing will go wrong but on some nights you could become a material witness to a crime. Anyway, he tells me his home is freshly rehabbed and he put a tenant in there and he wants to sell because this just isn’t what he thought it would be.
A little research shows me the property had been on the market without any takers for the previous six months. I give him a short answer email back saying he needs to slash the price by about 25%, market it with me at 7% (and believe me, I still won’t make any money) and follow my directions exactly and we might just get it sold. If he never responds, oh well.
Turns out the guy did respond and is willing to listen to me and follow my advice. (Personal aside here: Since speaking with this real estate investor and meeting him I find him to be a very likable guy. He just happens to own a property I would never have sold him. That’s all.) So the guy is willing to listen? Great. I’ll do it.
I meet him at the house on Friday. I do the tour. Meet the tenant. Give her my card. Everything seems amicable but I did sense some dis-trust coming from the tenant. (Keep in mind she hadn’t paid June’s rent yet but was assuring the owner he’d get it.) But nothing was said so I said I’ll be back Monday to put a sign in the yard, take pictures and work with the tenant in any way I could so as to not be an inconvenience to her.
This morning I get an email from the investor who says (and I’m paraphrasing here) “Wait a minute.” Seems the tenant has decided that since the investor is “selling the house right out from underneath her” she doesn’t feel she owes June’s rent. Nor July’s. And to top it off she’s decided that she’s staying!!!
Now, you can tell me this could happen in higher income houses. But it never seems to happen. Neither do the gun shots I’ve heard. Or the missing air conditioning compressors or the, well, I’m gonna stop there before I just get myself in trouble.
I seriously have to get back to my analysis work for an investor from Seattle and another from Olathe. I just needed the break and this keeps replaying in my head. So I thought I would share… Okay. I just have to say it. If cash flow is your only consieration when purchasing investment property this is very likely to happen to you, too. (I feel better.)