The Story Of The Egotistical Real Estate Investor.
It's funny how people let their emotions get away from them and cause them to make illogical decisions. This story is a perfect example of a person being egotistical about their real estate investment and not being realistic. Again, this is a true story, but the names have been changed to protect the innocent here.
The story begins with Juan. Juan was a very successful research scientist in the D.C. area, whom had a collection of real estate homes. His wife was a real estate agent, and Juan had one particular house that he really loved. It was located about an hour from where he lived, and was a gorgeous house. He bought it right at the top of the market, in 2006, and throughout the years, Juan rented the property. He got into it, like most investors at the time, with an adjustable rate mortgage. As the house was rented out, he didn't really pay much attention to it and was more like a hobby rather than a business venture. He didn't really go and check on the house every so often. One day, there was a flood in the basement, and the basement was completely soaked. The tenant at the time brought this to the attention of Juan, and Juan did not aggressively try to find out where the root of the problem was. This went on for months. A lot of information and advice was given from a very common-sense source, a groundskeeper, who actually was quite knowledgeable about water procedures, and quite good at what he did. He knew the limits of his knowledge, but what he did know, you could tell the man knew well. The groundskeeper offered up solutions to the flooding problem, which had to deal with drainage around the house. Juan, instead of taking care of the issue, as per what the groundskeeper said, would keep hiring consultants that would tell him basically the same thing. Juan continued to not fix the basement in a timely manner.
The tenant of the property made an offer to buy it. The tenant, being a business man himself, made a business-like offer and pointed out to Juan the money that would be involved in fixing and maintaining the house. That looking at the tenants offer it was a common sense approach to him and it basically let him know that this would be the cheaper of the two solutions. Juan, however, got extremely upset and didn't even consider the offer. In fact, Juan replied that the tenant was on a month to month lease and threatened to throw him out. Juan asked the tenant to show up for a final move-out inspection and Juan never showed up. As time went on the tenant moved out. Juan, although he said we'll do whatever it takes to maintain the property didn't do it during the tenants tenancy of the property. Juan ended up selling the property and losing a lot more money than if he would have sold it to the tenant. Moral of the story here is listen to reason. Don't ever let your emotions get involved with an investment decision like a specific piece of property.