Halloween Horror Stories 2016

Sunshine and unicorns are part of what get real estate investors chasing after that next … great … deal.

Don’t get us wrong.

We encourage you to believe good things will happen to your real estate portfolio. Otherwise, no one would have the courage to try.

But every now and then, ugly, terrible, BAD things will happen, even to the most successful people.

That’s what our annual Halloween Horror Stories show is about – letting you know that nothing’s wrong with you if you make a mistake or get stunned with an upset.

When something goes sideways, learn from it.

Once, Russ heard about a business downfall happening to Robert Kiyosaki. When he saw Robert in person, he genuinely said he was sorry to hear about it. Robert Kiyosaki shot back, the way only Robert Kiyosaki can:

“Don’t be! It’s going to be great. The company’s going to be better, my marriage is going to be better. I’m going to become a better businessman. If you’re not stressed, you’re not growing.”

Hopefully these spooky tales shine some light on what YOU can do when proverbial “haunted houses” happen.

Continue … if you DARE! Tune in to our latest edition of The Real Estate Guys™ radio show with:

  • Your haunted-house-tour-guide host, Robert Helms
  • His ghastly co-host, Russell Gray
  • Host of the Wealth Formula Podcast and real estate investor, Buck Joffrey, MD
  • Mobile home real estate investor, Mike A. 
  • Real estate investor and broker, Randy Hobbs
  • Real estate investor, Paul Anthony Thomas
  • Author of Magnetic Capital and real estate developer, Victor Menasce
  • Real estate turn-key provider in Orlando, Greg Bond
  • Real estate investor, Eric Tate, MD
  • President of Mid-South Homebuyers, Terry Kerr
  • Real estate investor, Sep B. 

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“The Case of the Disappearing Tenants”

When Buck Joffrey, MD, bought his first apartment building, he looked at the numbers. It was a Class-D property, but the rent rolls were full, and the cash flow looked great. Buck found a property manager who owned several buildings in the area and could handle the property management for him.

After making the deal, Buck realized there was very little money coming in. What was going on? On paper, he had a completely occupied building, but he wasn’t seeing any rent collected.

He learned the previous owner, who owned other buildings, had told his tenants if they moved into the Class-D building, they wouldn’t have to pay rent!

That’s right … his building was stuffed full of non-paying tenants!

“A little bit of scar tissue goes a long way,” says Buck, who learned big things from the nightmare situation.

Lesson: Although the numbers looked good, it was a Class-D building. We recommend not buying Class-D for your first property. Wait until you have more experience. Also, do a thorough due diligence on the property manager and make sure you have some track record from the area.

Another thing to consider: Who’s the tenant standing in line to rent? You need to be aware of how easily a property manager can fill up your building if you need to re-tenant.

“What’s that Smell?”

Real estate investor and owner Randy Hobbs owns a two-bedroom, one bath home, where his tenant he says is “like a grandma” to him has lived for 28 years. She’s a great tenant, who sends in her checks like clockwork.

All was going well … until Randy received a call.

His tenant said there was a funny smell in the house, coming from the cold cellar crawlspace beneath it.

He sent someone over to check it.

Aghast! The plumbing had fallen apart under the kitchen sink! Every time his tenant washed dishes or use the water, it was spilling into a huge puddle (more like a lake) under the house. The toxic waste had destroyed the foundational supports, a costly project to fix.

Lessons: Insurance only covers water losses if they are due to a sudden water loss. Don’t let yourself get complacent if you’re managing a property yourself. Make sure you’re checking things like the attic and crawlspace (or hire someone to do it) regularly so you don’t have surprises.

 “Water Park Fiasco”

When Paul Anthony Thomas wanted to get in on the hot trend of water parks and outlet malls in Texas in the 1970’s.

During the due diligence process of a water park and outlet mall combo, he spent $100,000 on a feasibility study, plans, and incidentals. “At the time, that was a lot of money for me,” said Paul. “Any time you pay for a feasibility study, they just tell you what you want to hear.”

Paul happened to get to meet with the top water park developer in the nation, who looked at the plans and told him the reality.

There wasn’t the right mix of population and traffic to make it work. Due to the demographics of the area, the retailers wouldn’t be successful.

Lesson: You don’t know what you don’t know. Before spending any appreciable amount of money, consult experts. When you understand the experts analyze the opportunity, you can study it and become an expert yourself.

“The Dreadful Cut”

Developer Victor Menasce has a condo building in Philadelphia where there is very little parking. For one condo project, they needed to create a way to get into the parking level, and the only way to enter from the street is to get over the curb.

“To make a curb cut, you have to apply with the city,” said Victor. “The rule says if you’re sharing with three or more properties, you qualify to do so.”

Although he had the go-head from his architect, Victor learned that because his three properties were adjacent to each other, they were considered “consolidated” into one, meaning he no longer had the required three properties.

In order to make the simple curb cut, Victor would have to shell out tens of thousands of dollars to his lawyer in an appeal process with the city, and he was losing time- which meant even more loss of money.

The horror!

Thankfully, he learned that each condo unit could be considered a unique property, allowing him to bypass the appeals process and move forward with the curb cut.

Lesson: You hire an architect often based on creativity. Sure, you want some curb appeal, and an appetizing mix of form and function. However, when you evaluate your architect, make sure their skill-set goes beyond aesthetics and they understand zoning laws.

“A Luxurious Disaster”

When experienced real estate investor Greg Bond, based in Orlando, had a deal come his way for luxury home, he didn’t want to let it pass by. Already a pro at flipping rental homes, Greg figured it wouldn’t be too different to fix up this stripped-down luxury home.

“I figured I’d buy it and make some money,” said Greg. “I’d just take my crews from other properties to fix it up.”

However, he soon learned this was not his typical rental home! As the rehab costs started piling up, the ghastly numbers told their deal-killing story.

There were much higher costs for the flooring, fixtures, detailing … and Greg would have to use a realtor, which added up more costs.

“There was no profit here,” said Greg. “I was on a different learning curve and walked away with less than the realtors made on the deal.”

Lesson: Get crystal clear on what works for you, your personal investment philosophy. If you veer from your core competency, prepare for surprises.

Horror Stories Wrap-up

This is just a handful of the terrifying tales – listen to our latest show to hear more!

In the end, each of these real estate investors lived to tell their terrible tale. You’ll survive your next blunder, too.

Looking to avoid regrets?

We say the best way is to create your future, and have a goals approach that covers every aspect of your life – financially, spiritually, socially, and physically.

That way you’re prepared for anything – no matter what comes. 


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

10/26/14: Halloween Horror Stories – Terrifying Tales from the Trenches

Real estate investing isn’t always sunshine and unicorns.  In fact, sometimes it’s downright scary.

But in every terrifying trial, there’s usually a valuable lesson…IF you’re willing to push through to the finish and then reflect on the experience.

In this episode, we cobble together a series of interviews with real life real estate investors.  We ask for their most blood-curdling horror story, how they got through it, and what they learned.

In the broadcast crypt for this monster mash of terrifying tales…

  • Your crypt keeper and host, Robert Helms
  • His hunch-backed henchman, co-host Russell Gray
  • Atlanta, Georgia real estate investor and turnkey property provider, Ken Corsini
  • Orlando, Florida real estate investor and turnkey property provider, Greg Bond
  • Grand Rapids, Michigan property manager and real estate entrepreneur, Justin Bajema
  • Lancaster, Pennsylvania real estate investor, Dave Zook
  • Houston, Texas real estate investor, Dr. Eric Tait
  • Atlanta, Georgia real estate investor and turnkey property provider, Michael Keefe
  • California based investor and real estate broker, Jerry Hicks

You can tell by the line-up we have a lot of ground to cover…and we don’t want to spoil the suspense by revealing too many of the details.

So, we’ll just offer the following tips and teases:

When Ken Corsini found himself suffering from a case of disappearing equity, he found out that you always need to do your due diligence…and you should never buy a property just because it has a tenant.

And when Greg Bond discovered that pets and property can be a messy business, he learned that tile could be his new best friend.

Justin Bajema echoes Ken Corsini’s epiphany that you always need to do your due diligence, and adds how important it is to know what you are…and aren’t…willing to do to make a profit.

Dave Zook is another investor who also understand the importance of due diligence.  And when you’re up against something that’s a little deeper than your level of understanding, you’d do well to make sure you have an advisor who’s experienced in the problem you’re facing.

Now up to now, it’s been fun and games.  Even though the stories up to this point have been painful and expensive, we’re only talking about losing time, money…and maybe some hair.

But when it comes to the case of Arkansas real estate broker Beverly Carter, there’s nothing to laugh about.

If you’re not familiar with the story, the short of it is that Carter met an unknown prospective client…alone…at a vacant property in a remote area.  In hindsight, it seems like a bad idea.

But for Beverly Carter, there is no hindsight…because she didn’t live to learn the lesson.  Tragically, she was later found murdered.

And even though the alleged perpetrator has been apprehended, that’s a small consolation for Beverly Carter’s family.

One of the most valuable lessons from Beverly Carter’s horrible fate is how important it is to be aware, prepared and trained.  Because you never know when danger may appear.

Next, Dr. Eric Tait explains how a fatal stabbing took place in one of his rental units…and how important it is to have proper policies in place.  He also found out that a group of committed owners and local law enforcement can work together to reduce trouble.

Then, Michael Keefe shares how his attempt to save a few hundred dollars on legal fees ended up costing over $50,000…all for the lack of three little words.  What is that…over $16,000 per word???

Lastly, Jerry Hicks relates the story of putting together a large syndication to do a real estate development project in the San Francisco Bay Area…only to find out his lead investor really didn’t have any money.

Jerry was able to use bankruptcy laws to buy time to get the property sold and make all the other investor whole.  Lots of lessons there, but the big one is to make sure you know your investors are qualified before they are in position to ruin your deal.

Tune in and hear all the frightening details…direct from the investors who paid the price for the lessons.

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.

9/7/14: From Orlando With Love – Tips and Tricks from the Trenches

Let’s face it.  Property management isn’t the most glamorous profession.Property management isn't the most glamorous profession
But your property managers are arguably the most important member of any buy and hold real estate investor’s team.

So we spied out a 20 year veteran real estate investor who self-manages his dozens of properties and asked him to share some of his secrets for profitable property management.

Under the Cone of Silence in a secret bunker hidden beneath a non-descript building somewhere near the Windy City:

  • Your suave and debonair host, Robert Helms
  • His oft kicked in the side sidekick, Robert Helms
  • An international man of mystery, a double “O” as in Orlando agent….Bond.  Greg Bond

The iconic movie spy, James Bond, was cool with a double O.

James Bond would have made a great property managerThough it wasn’t easy, some how, some way, he always managed to come out on top…in more ways than one.

Why?

He was well-trained, had all the gadgets, he had years of experience, and he seldom lost his composure or sense of humor.

James Bond would have made a GREAT property manager.

We tried to get James for this interview, but he was in the middle of a long shoot with a beautiful starlet.  So we connected with his distant cousin, Greg Bond.

Greg isn’t quite the ladies man that James is.  And he doesn’t have a license to kill (though we’re sure there are those occasions as a property manager when he wishes he did).

But he’s one heck of a property manager…which pretty much gives him a license… to print money. 🙂

We first met Greg when he joined us on our 12th annual Investor Summit at Sea™.   When we found out that he owned and managed dozens of properties in Orlando (one of our favorite markets), we couldn’t wait to interrogate him.

Turns out, he’s very focused on single family homes.  He’s particularly active in specific sub-markets and neighborhoods.

He’s developed all kinds of techniques for making his properties profitable over the long term….including thriving through the Great Recession, even though Florida was among the hardest hit.

No surprise his success is the result of diligent attention to detail and consistent application of proven practices.

Of course, those practices were proven in trenches over the last 20 years.  So we asked him to share the things he knows today that he wishes we would have known from the beginning.

Greg is a big believer in checklists and standardization.  When his portfolio was small, he could rely on memory and make decisions on the fly.  But when he started having to keep track of dozens of properties, there’s too much to carry around in your head.

So Greg has a checklist for tenant screening.  He has standards for paint, floor coverings, door locks, etc.

He’s also learned how to buy better, because a reduction in expense is just as good as a rent increase for boosting the bottom line…but it doesn’t risk chasing the tenant away.

He shares a lot in the interview, but we also hit him up to write a report on some of his most important tips and tricks.  You can get it for free here.

Meanwhile, we don’t want to steal any of Mr. Bond’s thunder(ball)…so listen to the interview, then request the report (for you eyes only)…

Listen Now:

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  • Don’t miss an episode of The Real Estate Guys™ radio show!  Subscribe to the free podcast!
  • Stay connected with The Real Estate Guys™ on Facebook!

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.