My tenants called and said they have a nightmare problem...

they started like any other normal day for a typical 27 year old real estate investor and real estate broker flight nerf gun wars with my four-year-old and my 18 month old around 8 a.m. [Music] and I had plans to go visit a duplex I wanted to buy to convert into an air B&B which I ended up going to but something unfortunately went a little bit sideways before I could get there I got a call from a tenant that works starting on a minor plumbing repair would end up being much more extensive than anticipated and honestly that's probably every landlords worst nightmare is the tenant calling saying there's more work to do so I headed over to see what I was up against now this particular house was the second property that I bought this year about $100,000 a below market value this is what it looked like before you could see the typical acoustic ceilings the older sort of less expensive laminate flooring the wallpaper the original kitchen cabinetry and the older light fixtures everything about it pretty much grass not something a lot of people would generally want to work with if you jump on over to the master side you actually get a little bit more of a glimpse of kind of what this bathroom was and was not the particular tiling wasn't the most beautiful or in the best shape either now the property was purchased for about $450,000 and I spent about 46,000 dollars renovating it and tearing down this funky addition back here and this is what it looked like after now before you couldn't see the outside but we actually ended up pouring a new driveway in the property but you could see inside we did quite the number on it and this is kind of the type of renovation that I teach in my real estate investing course how to spend as little money as possible while still providing a quality product to tenants in fact if we walk on over to the master bath here you'll kind of get a little bit of a feel for what we were able to turn the space into now the interesting thing about this is this particular shower this is all the original tiling that was there we just replaced the finishes the fixtures reglazed Dever ething and kept as much of the original elements as we could and made the property functional again little did we know what was lying beneath this shower also quick note in honor of today's video and what just happened I am releasing new lectures in the real estate investing course linked below in case you didn't know on November 1st I will be releasing 2.0 of the course which will be a free upgrade for all members and as a huge thank you we have a new coupon code called inspect the fish for 23 percent off the real estate investing course the in-person events and the real estate agent course note the price does go up every single time there's a new code well here I am rolling up to the property now this is just the 10 a.m. check-in at this property what I'm gonna do now though is I'm gonna go drive over to a duplex that has multiple offers and then I'm deciding whether or not I want to compete on it is a property that would make an excellent air B&B but I have some concerns about it then we'll come back to this property explain what happened explain the game plan and we'll do a walk-through with a plumber that I have scheduled to really go deep on this issue we want a respirator man I got one [Music] all right this is not bad I kind of like this thing so far now quick note air B&B is something that I've already talked about at length in the real estate investing course but you're gonna see some of my hesitations at this place oh you come outside you get blasted with a smell of hash browns which I haven't had breakfast yet and that sounds really good right now okay I kind of want to go over there I mean this I wonder if this would just make like the perfect vacation rental because it's literally next to a breakfast spot and one of the most popular ones in the city it's incredible whoa the garage needs some love but I really like this place so far this is cool as usual when I see a two-unit property like this I always go to the city to find out if there are permits that actually indicate that both of the structures are legal one of the beautiful things about America is almost everything is a public record which is crazy you can see so much about people's lives you just go to your local government that's crazy great news it looks like both of the units are actually legal and you could air B&B them both oh wait I got a check with this Senate Treasury they said go to the Treasury Department to make sure they can collect taxes on the unit so you have to set up an inspection so let's go to Treasury really quickly right okay now the only other downside that comes along with going to the city is you find out things that cost money like if you own four or more rental units who now need a business license for each rental unit including if they're single families or duplexes tries for is whatever I also verified that it's definitely possible for me to Airbnb out both the front and the back at the same time to separate tenants obviously you just have to pay the licensing fees fun aside back to the plumbing issue all right so here's the gist of this plumbing issue in the garage the plumbing backed up when the tenants went to do laundry this caused us to get the insurance involved and the insurance company agreed fortunately that they would cover our claim which in a weird way had we inspected this and found out about this we would have fixed it on our dime now the insurance is paying yeah well you can also see that that's out bidding on the I'm the gal pie or the cast-iron pipe yeah it's all probably rotted out okay it actually looks like do we need to do work to that this is getting replaced oh that is hitting replace yeah we're going back to the garage we're paying the concrete okay where our concrete cuts gonna be so here in the garage where our we go off this patio huh pick up the kitchen sink okay so it's gonna be a line from the edge of this door about this wide okay straight out straight out to this pad so we're gonna cut we're gonna cut this line here to from here to here can you can you match this yeah that'd be great however we then found out that the original plumbing under the house had started deteriorating and detaching from the fixture within the house which you would think a seller would disclose that to us but then I learned this from the plumber the tub drain was broken in half you see with that that pipe with that coming out of the dropping down and coming out of the Nangal yeah that pipe wasn't even connected to the tub Wow I was the tub drain but then undercoats in the shower to the corner shower to the quarter at this shower low so that wasn't even connected and it was actually just Wow and a better than concrete so therefore the concrete most of it was going down but a lot of it was soaking in here the other line is actually under that concrete thickness going to the kitchen sink that is also broke where's the other line you can't even see it it's it's literally in that corner corner where it's going underneath Wow this pipe here yeah main line is also both so that also has a crap in the top of it yeah that's what happens with cast-iron pipe because it was this place empty for a short period of time a little bit of probably yeah yeah like eight months or so I think it was actually an axe what kills houses really yeah cast-iron spike because we're into water the water keeps that cast-iron pipe on the inside dry or moist when soon as it stops being used it swells swell swell it's swell it swells it dries out and swells Wow that's what yeah cast iron and then it shatters and breaks off right wow so so an owner might have legitimately not known of these issues it's vacant for six months they go to sell it no no next person inherits the issues yes so now we have the jackhammer up concrete by the kitchen the master bath the hall bath and the garage in addition to that we are literally losing both of the bathrooms the vanities are going the toilets are going the tubs are going the showers are going there was a possible chance to salvage the hall bathtub but it would have required moving the toilet over and then having a significantly smaller vanity and I didn't want to sacrifice and go cheap on this fix is the problem is you know if that's causing the problem you know I'd almost rather fix that to have like a normal van here because this had the full vanity if we now move this toilet over you know now we're going down to a cabinet that's 60% of what it was and I so part of me is wondering why not just get rid of this thing do a normal tub not move the toilet go back to the vanity that was either there or a new one here and then now everything's modern to code and and good for the tenants good to go is that possible yeah you're probably gonna want to take this service sure and get it up in the attic too because that's on this side of the wall I would do it you're not opening this side you have to go through this side can we go through the same hole yeah yeah I do the exact same thing just Paulie it's just get rid of the galvanized pipe on the wall in the Attic yeah absolutely all right they put a 2-way clean-out in here for sure okay okay sure unless you go down the wrong way so it's gonna be a line from the edge of this door about this wide okay straight out straight out to this pad so we're gonna cut we're gonna cut this line here too yeah can you can you match this yeah that'd be great cool man what's your name man Rob awesome man thanks there are two very important takeaways from this a number one is making sure to do the proper inspections before you get into a property like this I did not do one very specific inspection even though I had the suspicion that I should have I just knew I wanted to buy the property anyway the second thing is make sure you're properly insured fortunately because I was and because there was damage to the property the insurance is actually covering about 95% of what will probably be about a thirty five thousand dollar project to do bathrooms concrete digging concrete you're placing plumbing repairs and I'll have to pay my deductible and a little bit of the plumbing work in fact if you take a look at that course curriculum again you're going to see exactly how one specific insurance loophole saved me thirty five thousand dollars which this should reiterate to you why it's so important to buy older real estate below a market value you get something a hundred thousand dollars below a market value after you fix it up and then you get a $35,000 surprise hey at least you still have sixty five thousand dollars of a buffer in there in this case fortunately there are still at least that ninety five thousand dollars of a buffer in this property just a heads up we did also have licensed plumbers working on all of the plumbing on the property when we initially renovated so this also snuck by them so what's crazy is that's the master bath that we reglazed which I looked really really great unfortunately one of the drainage pipes under the slab not even where the shower is just straight up under the slab like apparently broke and backed up caused some damage so here's what that bathroom will looked like when we bought the place here's what the bathroom looks like what do we remodeled it here's what the bathroom looks like and now and fortunately we are going to be getting a new and improved to code better shower now now let's talk about Airbnb hey Lauren you want to buy an Airbnb duplex no how about if it was a yeah but next to a cafe no what if I wanted it Jack you want to buy an Airbnb what is that it's like a hotel however there are a few problems that come up when you're thinking about air B and being the first thing that comes up is you start thinking about doing too many improvements and I really appreciated what my father-in-law bill said when I suggested hey let's do a bigger kitchen remodel here is this a breakfast notice a breakfast note those name could you just make this one kitchen or like what would you do not this is very much along the lines of what I teach in the real estate investing course it's just very interesting how would you look at a project yourself a sometimes you can get a little carried away and excited initially everybody feels that emotion and that's the cool thing about when I analyze people's deals in the course I tell them don't do this and look at things very objectively oh my god I mean this is a look somebody told me this you can you can epoxy coat like a Formica countertop this must be what that is I mean it's kind of funky though it's it's like it looks really cheap because I was I was said in a video like oh you should do quartz countertops or whatever they're like oh just epoxy you don't like I don't know I think that's gotta sound funky now let's talk a little bit more about this Airbnb it's a two-bedroom two-bath in the front although there's some questions as to whether or not the second bath is actually legit that door cannot be well look at that enclosure I think this bathroom is illegal yeah I think this is a this was permitted as a - this was a two in one but I've never seen I've never seen a free-standing fiberglass enclosure yeah you have now on one hand this property is very attractive because if I bought it for let's say $750,000 I would probably have a total monthly expense on the property of somewhere between a 35 to $3,700 and at just 50% occupancy I could probably bring in anywhere between a 4,800 - up to $6,000 per month air being being this property out which would mean my cash flow could be somewhere in the neighborhood of $2,000 but what always comes with an Airbnb its management intensity that is I would have to tenants that it would constantly be dealing with turnover on making sure they got the Wi-Fi password the code making sure that they are able to park which unfortunately well it's kind of cool that the property's next to a cafe parking for breakfast and that cafe is now open for dinner is a complete disaster the property is in an excellent part of town and I'm really really jazzed about this house I'm jazzed about the cash flow but I'm not too sure how much of a wedge deal I'd be getting or how much below market value I'd be getting this deal for especially since we've got these issues with the electrical panel whoo yikes the panel is shot it's totally rusted out oh yeah I DoubleTap the panel it almost looks like we're gonna some of them were just falling out water got in there though this whole thing in like you know I wonder if it's leaking in from the inside like that it could be leaking at the top and they just reroute it in 18 so that could have all been the damage it cost and the plumbing look at this funky stink pipe that was added for the bathroom like that no that's got to be legal also where does it drain did they tie in underneath to they tap incorrectly or is it just draining into the sub area and that's not even to mention the electrical inside or the condition of the kitchen the condition of the back bathroom and just overall other elements that need to be fixed well this one is definitely going to take some thinking and so folks if you've made it this far I'd really appreciate it if you could leave me a comment and let me know what you think about this new style of video I know it's very different than me just sitting in the office we've got voiceover we've got footage of me throughout the day we've got footage of the children I'm not sure if anybody actually cares about this stuff and if there's video bombs I'm gonna be really sad because it took a lot of work so if you leave me a comment and give me your sincere feedback I won't be offended if you liked it hit like smash that subscribe button and make sure to follow me on instagram also use that coupon code inspect the fish for 23% off the courses link below we'll see you there thanks so much for watching Oh get the house oh my gosh Jack why would you do that oh good one jack yeah we're gonna start calling you Jack Cardone [Music] [Applause] [Music] [Applause] [Music]

Channel: Meet Kevin

Views: 488,332

Rating: 4.8762617 out of 5

Keywords: tenant, real estate, airbnb, duplex, single, plumbing, plumbing nightmare, tenant nightmare, real estate investing, investing in real estate, property management

Id: 3wyNvM_Pb_w

Length: 18min 40sec (1120 seconds)

Published: Tue Oct 08 2019

Reddit Comments

[u/stonerjss]

This is from the matterport camera. Post clicking the images at site, it does all of the computation on the cloud and produces a 3d model of the house.

It also creates a floor plan and something popularly known as the dollhouse view! The seamless movement between hotspots is created automatically too.

[u/SunnyFlippedUp]

It's matterport and it has specific usecases. And tbh, you probably don't want it.