Hands On Real Estate Investing

A cautionary tale continues from Part 1 … We decided to approve their application because the federal government pays the majority of their rent, and their disability checks are consistent and dependable income. Before the tenant moves in, an inspection must be conducted by the housing commission. The inspection was conducted a week later and the townhouse passed inspection! Great, now it just a matter of signing the lease and collecting the security deposit. We met the tenants at the townhouse to sign the lease and we conducted a move-in walkthrough to verify that all appliances were in working order and tenant was satisfied with the condition of the home. If the tenant identifies a repair or replacement is needed, the item will be listed on the report. However, the tenants did not identify any such items needing repair or replacement. Therefore, the family moved in a few days later, which was the day after Thanksgiving. The next morning, we received a text message that water was leaking into the kitchen from the upstairs bathroom! We immediately called a plumber and went over to the property to check the damage. The leak had already stopped before we arrived at the property and thankfully, there was no damage to any of the tenant’s possessions. The plumber identified the source of the leak and proceeded to repair the leak. The leak was repaired the same day. A red flag fluttered in our minds because that property never had any plumbing leaks in 27 years of ownership … We thought the water leak was odd because there were no symptoms of a water leak prior to the tenant moving in, and the inspector did not notice evidence of any leak when they performed the inspection one week earlier … nor was there any evidence of a leak during the property walkthrough just 2 days ago. The total cost of the plumbing and drywall repairs was $1,465.00.

We are in the midst of the holiday season. Our thoughts turn to celebrating the holidays with family and friends. A few days before Christmas, the tenant sends an email complaining about frost building up on the windows. They requested that we participate in a weatherization program offered by the state. The weatherization program requires that we sign a Building Owner Agreement (contract) with the Department of Housing and Community Development. This was the first time we had heard of the weatherization program, but the gist of it is that an inspection is conducted and recommendations are made to improve the energy efficiency of the home. The weatherization agreement states ”The OWNER agrees to make all repairs or improvements (if any) specified in the OWNER’S Work Agreement…The Agency need not to commence its work until the OWNER’S work is done to the Agency’s satisfaction. If the OWNER fails to complete, or cause to be completed, the work to the AGENCY’s satisfaction, the AGENCY may complete or cause the work to be completed and charge the OWNER accordingly including charges for support services and reasonable attorney fees.” We are suspicious of programs that appear to offer something for nothing, so we declined to participate in the weatherization program. We notified the tenant and recommended that she speak with her case manager as to how to proceed. The tenant filed a complaint inspection with the housing commission and we were notified that another inspection on the property would be conducted just 6 weeks after the tenant moved in! This cautionary tale continues in Part 3 …

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