I Was SUED For $150,000...

here's a copy of the lawsuit that i got in the mail it says that my tenants are suing my real estate company for a hundred and fifty thousand dollars because they claim that they slipped and fell in the bathtub because they say that it was too slippery when the water was on and so now they want me to cover emotional damages they want me to cover their back rent and a couple other things and so they are asking for a hundred and fifty thousand dollars what's up everybody i am justin singh from the minoritymindset.com where money minds rethink rich there's a saying in the real estate world that goes if you are a real estate investor and you haven't been sued then you haven't been in business long enough lucky for me i got sued pretty early on in my real estate investing career lawsuits are not fun i mean i felt like a criminal when i first got the lawsuit even though i did everything i could to make sure that my property was in good shape because i hated the idea of being a slum lord so i would do everything i could to make sure that my real estate investment property was tipped up when i got into real estate investing i didn't really have a mentor or guidance or anyone to go to i didn't grow up with real estate investing parents or real estate investing family members or friends i just kind of read about it in books and decided this looks like fun so i got into it i started investing in real estate when i was 19 because this was when we were coming out of the 2008 real estate crash so real estate prices were dirt cheap so i was able to get into real estate for pennies on the dollar the first real estate investment property that i ever bought was this condo right here now the interesting thing about condos is condos don't really require a lot of maintenance because the exterior the building is taken care of by the condo homeowner association so all you really got to take care of is the cosmetic stuff on the inside because the big stuff is taken care of by the condo association so the roof the foundation the grass the parking lot that's all taken care of by the condo association you're paying a monthly fee for this and everything inside the four walls of your condo unit that's you ever since i got involved in real estate investing i wanted to make sure that my properties were a good investment not just for me but for the tenants living in there as well because i wanted people to feel like home i mean if you enjoy the home that you live in and it's a nice home and it's taken care of chances are you're going to want to live the longer as an investment and for me it makes me feel better because i feel like i'm giving somebody a nice home where you're getting a really good value for the home that you're living in and so when i bought this condo i made sure i renovated it and made it really nice upward and stainless steel appliances even though that wasn't the norm for properties in the area and so i made sure this property was tip top made sure it was really nice make sure it was ready to go that way if you were the one living in there you were getting a steal for the condo that you were living in at that price here's how real estate investing works so you have this property and you can come in let's say this is me i want to buy this property my drama a nice mustache so i'm gonna come in and i'm gonna buy this property now instead of me actually living in this property myself i am going to rent this property out to somebody else or a family and they're going to come in and they're going to be very happy because they get a nice home to live in in exchange for them living in my rental property my investment property they are going to pay me rent every single month so i bought that condo for just eight thousand dollars that wasn't the down payment that was the actual price of the condo because this was coming out of the 2008 crash and property values were dirt cheap at the time and i rented the condo out for six hundred dollars a month i hired a property management company from the get-go and a property management company's job is to one lease the property do the credit check do the background check make sure that the tenant that they're moving it is good and then once the tenant is in your property their job is to make sure the tenant pays their job is to pay the property bills the property taxes the insurance and their job is to make sure the property is in compliance with the city so their job is to make sure that the investment runs smoothly that way you don't have to do anything that way it can be passive for you and so you hire the property management company to do all the day-to-day stuff where i messed up was i got really excited i hired this property management company and they put the property up for lease but i was really excited because this is my first rental property and i just wanted to get somebody in there that way i can start making this passive income this cash flow from this investment property and so i went on craigslist and i listed this property for lease myself and as soon as i put it up on lease i found this old couple who wanted to live on my property they sent me a message and i responded to them and i said sure i'll show you the property myself that way they don't have to go through my property management company and that way i don't have to pay my property management company their first month's rent because if they lease my property i got to pay them the first month's commission like so 600 a month i got to pay my property management company 600 i was like you know what i'll just do it myself so i showed them the property they really liked it and then i connected this couple to my property management company that was my property management company could do whatever background checks or credit checks they wanted to do and they said that everything was fine and then they approved the tenants and then they signed the lease with the tenants and they moved the tenants in for 600 a month and i got to keep that 600 in my pocket because i found the tenants myself now the whole point of having a property management company is to make your life easier because it kind of puts this boundary between your tenants and you the tenants typically are not going to know who you are because they're dealing with a property management company and so if the tenants have an issue they gotta call the property management company they're not gonna be calling you now this is where i made that mistake where i found the tenants so the tenants were working with the property management company but they also had my phone number they had my information so if something wasn't going right guess who they called me so these tenants for lack of a better word were very needy they kept calling up the property management company every single day with complaint after complaint after complaint and then they would call you like i would be coming out of my chemistry class because i was still in college full-time and then i would get a call from my tenants and i would pick up and i would have this hour-long conversation with my tenants with them crying and talking about whatever they think was wrong like to give an example one of the biggest headaches of my entire real estate investing career was when this tenant was cutting vegetables on the countertop directly she was cutting cucumbers and as she was cutting cucumbers on the counter top she ended up somehow scratching the countertop i guess she was cutting these cucumbers really hard and so now she was so upset she was crying she was frazzled she calls up a property management company in tears bawling talking about how she scratched the countertop saying that she needs a brand new countertop because she scratched the countertop and so she was so demanding saying that she needs a new countertop immediately the property manager company naturally said no we're not going to put in a new countertop because you scratched it while cutting a cucumber how about next time you use a cutting board she didn't like that answer so she starts calling me and i'm coming out of my chemistry class and she calls me bawling like the world is going to end telling me that i'm a slum lord because she scratched the countertop and that the property manager company has not given her a new countertop and she's like you are not a good person you're such a bad person you're not taking care of me and on and on and on now i'm feeling bad because i hate the idea of being a slum lord so i called up my management company i'm yelling at them why are we not taking care of this issue what's going on here the management company was like why would you want to put in a new countertop and spent hundreds of dollars if not thousands of dollars doing that when they could just use a cutting board and the scratch is like not even an inch big and so this went on and on eventually we just put in a brand new countertop to make this mess go away but these were the type of issues that we were dealing with one time the tenants called me freaking out because they said there was this major electrical issue with the property and they said the property is not safe to live in it could burn down this electrical issue is going to cause a whole bunch of circuit issues and so now i'm worried i'm like what's going on with this property they call up an electrician and i go to the property with the electrician and we're at the property and we see what's going on and it turns out one of the bulbs had fused at the property and all they needed was a new four dollar bulb i felt bad so i paid their electrician out of my pocket because i did not want them to feel unsafe living in my property anyways this goes on and i changed property managers and now i got an even better property management company who is more sophisticated they have more tools they have better contractors and they have better resources to take care of tenants and so we're just kind of dealing with issues here and there and both property management companies that i have worked with both told me that this tenant that we were dealing with was one of their worst tenants ever and these are property management companies that are dealing with thousands of tenants and so that was kind of like oh all right so it's not just me who feels like i'm getting abused here i don't know this for sure but if i had to guess i think that these tenants just thought that oh this real estate investor the landlord of this property must be this really rich person and so they're going to do whatever they can to kind of squeeze money out of this person even though i was just a 19 or 20 year old college kid trying to figure out how this whole real estate investing thing works and i was definitely not loaded with money now before i get into the actual lawsuit itself i want to do two things i want to go over the legal structure of the property so you understand kind of what this lawsuit was all about and second i need you to do me a quick favor and smash the thumbs up button below okay so you remember this example that i gave you earlier where this is me i buy this property and i rent this property out but that's not exactly how it works what actually happens is this is me the guy with the mustache and what happens is now i buy this llc this company so this is my real estate company that i created now i own this company and this company is what owns this property i don't actually own the property this company that i own owns the property the reason that is is because now when this tenant comes in and they live in this property they're living in a property owned by my real estate company not owned by me so if something bad were to happen like let's say this tenant slips and falls and they sue the owner of this property they're not suing me they're sowing the owner of the property which is this company my real estate company and so if worst case scenario they assume a real estate company and they go past insurance or insurance doesn't cover this lawsuit the most that they can take is not everything i own it's everything that my real estate company owns and in this situation the only thing that my real estate company owns is this property and any other properties that my real estate companies own so they cannot go after my personal assets all they can go after is the assets in this real estate company and so this is kind of like a legal shield that you want to create if you are investing in real estate because we live in a litigious country okay people can sue you for anything and so you want to have kind of boundaries to protect your personal assets by using something like an llc to own your real estate properties because now you have this barrier between you and these lawsuits these legal issues because your properties are not owned by you they're owned by your company which is owned by you now quick disclaimer although i am an attorney i am not your attorney so if you have specific legal questions or real estate questions talk to a professional in your area here's the thing people love suing other people and you can get sued for anything like mcdonald's with sued one time because somebody said that they were upset because mcdonald's put some cheese on their quarter pounder luckily the judge threw out that case but this is just the world that we live in you can be sued for anything if people think that you have money or if people know you have money or people think you have insurance because insurance companies have money then you are a target and so you need to have protections in place to protect your wallets that means having insurance and using legal shields like i just talked about that way you can protect your assets because if you have money people are going to try to put their hands in your pockets so back in 2012 or 2013 the tenants called up a property management company saying that there was a little chip in the bathtub that said it was about a quarter inch by a quarter inch and they wanted to see if you could get the bathtub re-glazed so my property management company says okay they send out my contractor he goes to look at the property he says you know the bathtub really has nothing wrong with it there's a small little chip if you want i can reglaze it but there's really nothing wrong with it a simple solution would be to just put a little mat down on the floor of the bathtub but if you want i can fix this for you it's going to cost a couple hundred bucks and you might want to put in a handicapped hole just because these tennis are a little bit older and they're a little bit fragile at this point things had kind of calmed down with the tenants and they'd been there for a couple years so i said you know what we're gonna have to reglaze this tub anyways so why don't you just do it right now and install the handicapped hole even though they didn't ask for it just to kind of be nice that way we can help them out so while my contract is there he's taking pictures of everything because my property management company requires the contractor to document everything so we have pictures of the small little chip it was like that big there's a tiny little chip in the bottom of the bathtub and so he has pictures of this and then we schedule the contractor to go back out and do the repairs and now my contractor goes back to the property he knocks on the door to do the repairs the tenant opens up the door and she says oh you know what let's not do the repairs today let's do it a different time because my husband's not feeling very well she said that they were at a barbecue the last weekend and they were drinking and her husband had slipped and he fell and he hurt his hips so she didn't want any disturbances coming in at that time my contractor says okay i wish you would have told me before i actually came here but that's fine so he calls back the week after trying to reschedule this she says no don't come back now we'll do this later time he calls back two weeks later she says no i don't want to do this yet he calls back three weeks later she says no i don't want to do this yet the fourth time my contractor called the tenant the tenant says you know what this chip is really not a big deal why don't you just leave it we don't got to do anything about it my contractor tells my property management company my property management company records all these conversations and they say that's their choice if they don't want to do the work that's fine so then things are fine for a few years the tenants are not filing really any maintenance issues and everything is going just smoothly so that happened back in early 2013 then in mid 2016 so more than three years later i got this huge packet in the mail saying that i'm being sued or my real estate company is being sued because those tenants had slipped and fell at my property and so they're suing my real estate company and so i read this my heart's pounding because i had never been sued before i didn't know what this was all about i had forgotten about this whole paint chip thing and so i called up my property management company and i said hey do you have any records of a tenant claiming that they fell in our property so they're going through the records they said no we don't have any records of this and so now i feel like a criminal because i have no idea what's going on i'm really nervous i call up my attorney and i send them these documents and i'm kind of freaking out and he's like just believe first off you need to calm down you have insurance send this to your insurance company so i forward these documents to my insurance company the insurance company connects me to an attorney and the attorney starts reading these documents and he starts laughing because it says that the tenants want 150 000 plus all these fees because they say that the bathtub had caused them to slip and fall and cause injuries because they said the bathtub was too slippery when the water was on and then they have all these allegations a through jay talking about how we failed to inspect the property because the bathtub was dangerous they said that we negligently didn't take care of the bathtub they said that we didn't correct the conditions they say that the bathtub was very dangerous it was very slippery because water makes the bathtub wet and that we didn't exercise reasonable care and that we are very negligent and because of all these things of us not taking care of the bathtub that we should pay the tenants hundreds of thousands of dollars so the tenants are claiming that they want hundreds of thousands of dollars to cover some medical bills and to give them emotional damages because apparently this whole process of having a slippery bathtub was traumatizing this is where it really pays to have a good property management company because their job is to document everything so our property managers have documents of every single conversation that we had with our tenants and they show that our property had been licensed with the city and right before this whole scenario or fiasco happened the city inspectors came out to the property and said that the property was in great shape and before we even brought the property we had our own private property inspector go through the property and even he said that the property was in great shape and he said that nothing was wrong with the bathtub and so now we had three inspectors because we had our private property inspector we had the city inspector before we brought the property and we had the city inspector come back out right before this whole scenario happened and all three of these inspectors said that the property was in great shape and there was nothing wrong with the bathtub and if that wasn't enough we have recorded documentation of the tenants saying that they slipped and fell at their friend's barbecue at their house which is what caused their injuries the tennis hired one of those free attorneys that's always advertising on the news and the radio so they probably thought this was going to be an easy money grab because they can hire one of these free attorneys they can claim that they fell here instead of over there and then they can use this as an opportunity to just kind of go after our insurance and get some easy cash but in order to get to a conclusion that's a very long process because lots of people have to be interviewed a lot of documentation has to be found and so this process takes years and so this case goes to court the judge says there's no way i'm looking at this because you don't want me to rule on this decision why don't you guys go to mediation which is an alternative to court where you have our party and the other party working with a third party person a mediator who tries to come to a conclusion the really interesting thing about this was the tenants claimed all these injuries but they worked very hard with their attorney to make sure that we could not access their medical documents they did not want us to go to the hospital directly they did not let us try to get these documents why probably because they had documents in the hospital showing that they did not slip and fall at our property that they slipped down full at another property and so they didn't want that to go out into the public record anyway so we go to mediation and their attorney is hard balling saying that we're not gonna accept a penny under a hundred and fifty thousand dollars so then my attorney goes up and he gives a very simple five point argument he says one we have documents recorded documents stating that the tenants did not slip and fall at this property that they fell somewhere else second we had recorded documentation showing that the tenants denied work being done again and again and again even though we were offering to go above and beyond the repairs that were required third we had multiple private inspections happen at this property to make sure that this property was safe to live in and the city had just come out to the property and they reviewed the entire property they licensed us and they said the property was very safe and in great shape and they looked at the bathtub and said nothing was wrong with it fourth a little chip in a bathtub is not going to cause you to slip and fall and number five this one might be a little bit extreme but bathtubs get slippery when you turn the water on anyways so this goes on and my insurance company agrees to settle the claim for fourteen thousand dollars now this might sound high but you have to understand this is all one big game because once you get sued you have to fight the lawsuit and so now the insurance company is calculating in their mind okay we have to pay this attorney 350 an hour to fight this lawsuit how many hours is it really going to take if mediation doesn't work where we have to go to court and actually fight this lawsuit and make it go away that would cost tens of thousands of dollars if not hundreds of thousands of dollars so if we can just pay a little bit of money like 14 000 and make this case go away we will save a whole lot of money in the long run than if we actually bought the case and won the case because that's going to be a very long and a very expensive process but on the flip side of things fourteen thousand dollars wasn't even enough to cover the attorney's fees and so the tenants who were suing my real estate company didn't even end up getting a penny because they didn't make enough money to even cover the cost of doing this lawsuit so they spent all these hours and all this time trying to create this frivolous lawsuit and ended up not making a penny out of it getting sued and going through a lawsuit is not fun but if you want to be in business or if you want to be a real estate investor it is something you got to be willing to go through and so what you want to do is look out for your own assets that means have insurance insurance is very important it's not fun paying for insurance but it's a small price you pay to save yourself a huge headache in the future and second use legal shields use entities like llc's to protect you and your personal assets because the reality is people love suing other people you can sue anybody for anything and if you get sued you gotta fight it and so you wanna make sure you're protecting yourself because this is just the world that we live in we are in a litigious country where people sue everybody for everything and so you wanna make sure that you're just protecting yourself the reason i share this story is not so you feel bad for me i mean i've moved way past this and moved on to way bigger and better deals the reason i shared this is because i didn't really have any guidance or kind of had anyone to go to when i was going through this myself and you learn way more from mistakes and failures than you do from successes and so i wanted to kind of share this experience that way if you ever go through something like this that you can understand that yeah it sucks but you will get past it and you will move forward but you just kind of understand that this is a part of the game if you enjoyed this video here's the video that i think you'll love and while you're at it subscribe to our youtube channel and join our free finance and business newsletter and as always keep hustling like 9 out of 10 millennials say that they want to be homeowners but unlike what your cousin bunty says buying a home the right way isn't so simple if it was you wouldn't have so many home buyers regarding their decisions

Channel: Minority Mindset

Views: 282,443

Rating: 4.9595199 out of 5

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, real estate investing, real estate investing for beginners, real estate for beginners, lawsuit, i was sued, buying house, investing, investing in real estate, investing in real estate for beginners, investing 101, investing for beginners, build wealth, wealth building, passive income, investing for passive income, passive income ideas

Id: XlSF4mB5_pA

Length: 20min 54sec (1254 seconds)

Published: Fri Feb 05 2021