What we learned when our employer was arrested on drug charges

In my last column, how we became real real estate investors, I explained the simple methods we used to analyze potential investment properties. We were looking for a steady stream of private equity funds, and we looked at a rental property or four in our area that was perfect for us. We found a nice duplex in a quiet neighborhood with an existing face. I ran the numbers and thought we would go back to our investment.

The twist of the building came at the end of the story: two days after buying the property, dozens of government and federal agencies descended on the property and arrested one of our tenants for drugs and guns.

This may not have been included in my calculations. Since I’m here to both entertain and inform, I’ll give you an update on what’s happened since some of the lessons were read. The biggest lesson for some people is that it won’t be profitable for them to rent real estate, so this will apply to general investing.

What happens next

Our two-day employer is now in jail awaiting trial for smuggling heroin, cocaine, fentanyl, and three popular assault rifles (the nine other guns found are inconclusive evidence). He won’t be successful anytime soon. Strangely enough, we had to evict him legally, because the drug charges did not affect the lease and he still had legal rights to the property as long as the lease began.

This also meant that his girlfriend, who had been living in the apartment, had to. He wanted to stay and, after much discussion with our lawyer, we agreed to give him a month-to-month lease. But first, we needed to fire them both to end the existing lease. This brings me to my first lesson:

Some things you should not do yourself

We live in a fairly friendly environment, which means it can be difficult to exclude someone. We were pretty sure that the tenant allegedly running drugs in his (our) living room violated the terms of the lease, but we didn’t want to run because of the housing code. The situation was also complicated by the presence of a young woman. So, we paid a flat fee of $2,500 to our attorney to handle the whole thing.

We had to pay another $ 75 for the Sheriff to serve the share of dismissal from the employer in jail, but on the bright side, it was easy to find. . . because he is in prison. I sent the girlfriend’s eviction notice by certified mail, and our attorney did it right.

I am, in general, a do-it-yourself fan, and everyone should understand where and where their money is invested. Releasing your money to a financial advisor does not absolve you of all responsibility. That being said, sometimes you need skill sets on your team. You don’t want to suffer, or you might be in over your head. If you are unsure of your next steps and the consequences of getting it wrong, it may be time to hire someone.

More details here:

How We Become Star Wars: Converting a Primary Residence to a Rental Property

How to check an employer

Hope for the best, plan for the worst

We will still be net positive on this asset in the long run, even after unexpected expenses. That’s because we only saw buildings that were going to be built from scratch, and I used a lot of conservation numbers to check them. My list of only one expense was one of the more pedestrian areas than “the tenant is a suspected Felon,” but it could have been a new chimney, a new furnace, or a previous space that threw a burner into our calculations.

Your investment and investment plans should include a safety net. If your plan only works when one thing passes, go back and make a different plan.

Stick to the plan

I spent a lot of time, at least five years, learning about real estate investing. I read books, listened to podcasts, searched Internet forums, and talked to people already in the business. I thought I was ready to take the leap when I understood what was being said and could confirm it with more than one source. I had that “oh, I get this” feeling that we all experience along the way in our medical or professional training. This is a “comprehensive ability” to learn, which is not the final destination but is good enough to do something.

I trust my plan, and I’m still going. When the girlfriend – decided to move out, I went back to my sources and learned about finding a new employer. What I heard again was not “no employer is better than a bad employer.” So, we decided to find the best employer, even if it meant giving up a month or two of rent. We have invested nearly $10,000 in new levels and paint. I talked to a friend who knows about the best places to list your apartment. I learned from employers’ evaluations. I rejected the first applicant because, as tempting as it was to find a warm body there, he did not meet our criteria. We followed the plan.

As of this writing, I have two eligible applicants, and hopefully by the time you read this, one of them will be taking the property.

More details here:

5 rules for evaluating rental investments

6 Reasons We Lost Money on Our First Gate Hiring

Know yourself, your goals, and your situation

My husband and I believe that turning some of our money into real estate is the right thing to do for many reasons: Tax benefits, steady income over time. I was willing to throw in some time and energy. Taking on these legal issues would be very difficult to deal with where I live or have small children at home. I have more bandwidth now than I did then.

If real estate investing was not done carefully, this could have made me go out. I didn’t go out.

Don’t go out

This Dumplex is still a good property and a good investment.

If your financial plan was solid to begin with, you don’t need to worry about short-term challenges. When the stock market goes down, you expected that, right? And your stock mix is ​​appropriate for your age and risk tolerance, right? If so, stop checking the stock market news every day and go back to whatever you are doing. If not, recheck your plan.

Real estate investment still has a place in our financial system. Our next project is to expand our clinic space in the same small town as Duplex. I’m still baffled by the real estate listing. We even found humor in the situation. A friend of mine told me what a terrible employer he was who let his pet Bunny loose in the basement.

I said, “I think I can force that.”

If you are a real estate owner, what was the worst tenant you ever had? How did you deal with it? What other issues do you have when renting property?