Realty Reality: Lou’s lament in 22 unhappy photos . . .

I’ve written a bunch of these stories, and I’ve got a bunch more in me — I did CRS the hard way. Most of them have happy endings. This one does, too, I suppose, but the middle gets pretty morose. I’m telling the story to illustrate how badly things can go wrong in real estate despite the best preparation, despite the best of intentions.

This is a story about Lou, a long-time client whom I admire very deeply but have never met in person. He found us on the internet, and he’s been with us through thick and thin for coming on three years. In that time we have bought five houses, failed to buy many more, and we’ve sold three. There’s one more out there that we’re trying to sell right now.

Lou is a cop, a detective for a police department in a big California city. He makes a good living in his forty-hour week, then double that or more on over-time that never seems to end. Because of this, he has been able to invest in real estate for years, buying, fixing and flipping properties in California. He came to me when the prices in California got too high.

In the midst of the price boom here, we bought five rental properties — one condo and four single-family-homes. Lou was most interested in buying homes with tenants already under lease, but this put us into very competitive bidding situations. We were careful to buy into properties that were either cash-flow positive or at least neutral, so we wrote a whole lot more contracts than we got accepted.

I was working by myself on my end. I don’t know if Lou has ever been to Phoenix, but I’ve never caught a glimpse of the man. He would review listings I had sent by email and ask me to follow-up on those that seemed promising. I would do drive-bys, taking photos and looking for red flags. Then we would run the numbers on the property, and, if it made sense, write the contract. I have worked with a lot of game investors, but none more game than Lou.

We actually went through a lot of grief together. As an example, I had introduced him to a big-talking lender who got him qualified for more properties than anyone else could — but who couldn’t deliver on the loans. We were buying a house that was stuck in litigation, begging day-after-day for another day’s extension, never knowing when the judge might drop the gavel and rule that the house couldn’t be sold.

The house we’re going to visit in detail, Hampton, began with an adventure. This is the first house we bought — and I crashed my car on the way to see it for the first time. This may have been a sign from god…

So we bought houses and Lou was racking up some very nice appreciation figures — our market was soaring. But there was another party to be considered: Lou’s wife. I had represented her, too, all along, but I don’t think I ever spoke to her. Lou was driving things, and she was going along. Until she wasn’t.

I don’t know what happened and I shouldn’t and I don’t want to, but Lou and his wife came to a parting in their paths. It happens. The bad part was, she wanted her share of the equity in the real estate now, rather than later.

Now, when the market is painfully slow — even though the homes were perfectly profitable. Now, even though we could probably do a lot better a year or two from now.

Oh, well. Not everyone can sell at the ideal time.

The fifth home we had bought late enough in their break-up that it was already Lou’s sole and separate property — which is well, because it is the home with the best long-term appreciation potential.

I put the other four on the market, tenant-occupied, drive-by-only — really lousy showing instructions in a slow market. The condo sold on the first day — the price was deliciously low for the market. One of the free-standing homes sold at a glacial pace. One is still on the market. And then there’s Hampton…

The tenant was scheduled to move out, so we were looking forward to the house going vacant — much easier to sell. But then the tenant was toying with the idea of buying the home — even better. But then the tenant vanished in the dead of the night without saying a word. Wonderful…

Lou had a freelance property manager who was supposed to get the place into shape for marketing. This didn’t happen — I don’t think we’ve ever heard from him again.

What did happen is that someone forced their way onto the property.

And stole the washing machine from the laundry room.

The pool was in a rancid state — which is grounds for municipal fines in the age of the West Nile Virus.

Either the wind, a vandal or the tenants had trashed the patio.

This gets a lot worse. In stealing the washing machine, the thieves has simply cut the water hoses with a knife.

The neighbors saw the water gushing out of the property and called me, may god bless their souls unto the last day.

The water damage was extreme.

The power was still on. By some lucky chance the house did not catch fire.

I am not what you would call a handy man, but I took it upon myself to get the pool into something like compliance with the law while Lou arranged for true handymen to come deal with the damage.

Nothing works as well as you might want it to, especially not on Hampton. We weren’t able to get a locksmith out on short notice, so we had to leave the house the way it was — gate broken but doors still locked.

Which of course implies that the thieves, whoever they are, had a key to the doors. That night the dryer joined the washer. The refrigerator must have been too big to take.

But the next day, we got a locksmith. It turned out that he was a really bad locksmith who filed every cylinder by hand, but at least he only charged three times what he should have — cash, no plastic.

Meanwhile, Lou’s handymen were taking care of business.

The gate got fixed.

The pool got cleaner if not completely clean.

The refrigerator persevered in a stable, unstolen state.

And all that soaked sheet-rock was pulled out, replaced, repainted.

But all was not right in Hamptonia. That water on the floor bugged me. I thought maybe it was left over from the drywall mud. But it didn’t seem to dry up.

The next day it was worse.

I took a closer look.

Does that look right to you…?

So we called in a plumber — a true plumber, not a handyman. A few quick cuts with a drywall knife revealed this:

My caption for this photo at the time: Duct tape is for ducts!

This is what those pipes looked like after they had actually been repaired:

But we got the house whipped into shape in time for the Summer heat — in time for that pool to sell it. We got an offer, accepted, went through inspections. The buyer asked for unreasonable repairs, and we didn’t have sense enough to grin and bear it. So we lost a buyer, a bad thing.

Here’s a worse thing: The house was broken into again.

No keys this time. They used a tire iron.

Our second locksmith, the good one, had mounted the dead-bolt in that door extra deep. Despite all that damage, it still worked.

Lou had hired a pool service to keep the pool blue. They had vanished with the money much like the property manager.

The worst part of this is, we were under contract again, just that close to unloading this unlucky charm. We had to disclose everything to the buyers, of course, and we conceded cash to them to push the burden of these new repairs onto them.

The exceedingly not-handy Greg secured the gate and the broken door with hardware from the Home Depot.

The good news is, the house closed on time and Lou and his soon-to-be-ex-wife got to pocket a nice chunk of cash from this disaster-prone house.

I was there one last time on Saturday to pick up my lock boxes. It’s rented already, and everything looked completely normal.

Even so, I crossed myself when I left — just in case.

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