Slip Slidin’ to Slumlordin’ – Part One

I think I know how slumlords are born. At least some of them. Because I’ve felt the temptation. In the next series of posts I’ll explain how I’ve gotten myself into the position of potential slumlord, and how I’ve managed, so far, to avoid succumbing to the scumbag urge.

Our first two properties were deliberately bought as investments, unlike our third property, which was originally our own residence. These first investments were a pair of (potentially) cute little bungalows on a street full of like designs, and they were the last remaining rental holdings of what was once a huge real estate empire but had been frittered away by the founder’s wastrel heirs. They had been neglected and run-down. The rest of the houses on the street were nicely maintained. To my mind, it was a respectable little blue-collar neighborhood. My perspective was potentially skewed because I had spent summers running the streets not far from this one, under the care of my grandmother. Literally a few blocks away. So although many of my current acquaintances, in the unlikely event they should ever enter this neighborhood, would reflexively reach for their car door locks, I looked around and thought, “This is okay.”

The owner was the daughter of the aforementioned mogul, who, from what I’ve heard, was a decent, hardworking man. His kids were a bunch of slimeballs. One of them, now 87, is a convicted child molester residing not far from me in a toney waterfront community. Here’s his mug shot:

My impression is that all of these kids were spoiled by their inheritance. So it is no wonder these two houses had become run down. I doubt the owner, one of the patriarch’s daughters, had ever visited them.

The real estate agent who answered the number posted on the extremely faded “For Sale” signs lived and practiced, it turned out, an hour away. I don’t even want to speculate about the negligent path that led the owner to employ such an unsuitable agent. All I know is that it worked in my favor, because he didn’t give a rat’s ass about the properties. He was extremely reluctant to even make the drive out to show them. “They need a LOT of work,” he said. I was persistent. At the time I was pretty ballsy about my DIY capabilities. I was the son of a master plumber and general contractor. I had built a boat. I was still, back then, pretty energetic, and I tended to overestimate my available time resources.

After inspecting the two houses and confirming that, yes, they each required major intervention, the agent and I got down to business. The owner wanted $80K for each house, which represented a significant discount on comparable sales nearby. However, these were fixer-uppers, and the agent strongly hinted that a lower offer might be entertained for one of them. He suggested making an offer on the one near the corner because it had the potential to go commercial down the line. “It could be a home run,” he said. He suggested she might go as low as $70K.

Now this is a guy who is supposed to be representing the interests of his client, the owner. I was surprised by his forwardness, but not in the way you might think. By this time in my life I had learned the hard way that there are no such things as “seller’s agents” or “buyer’s agents.” There are only “agent’s agents.” But the way that usually played out was that they all wanted the sales prices to be as high as possible, no matter who they claimed to represent, because their commission was based on that price. So that is why I was surprised that this guy was encouraging me to lowball.

The thing is, as I figured it out later, we were in a very strange market at the time. The year was 2004, and real estate was booming. This guy’s primary business was in a pricey, beachfront market which, as mentioned, was an hour’s drive away. At that point in time, the dude was listing $500K properties and having buyers go into bidding wars over them, driving the prices up to $600K or higher, and he didn’t have to work for those sales AT ALL. So at that particular, admittedly strange point in time, this guy was on MY SIDE. He wanted these silly crumbs, these $80K ugly ducklings, swept away. Holy crap.

So I offered $100K for both properties. Package deal. Take it or leave it. And I hoisted my humongous brass balls into my vehicle, and I drove away.

Thirty minutes later, I got the call. “She’ll take it!” The guy was obviously pleased that he had talked his “client” into accepting the deal. And thus one real estate empire met its end, and another, I hoped at the time, was launched.

I’m going to leave off here for this post, because I see an opportunity to wrap things up into a nice little, easily digestible, life lesson, and that’s what blogging is supposed to be all about, right? Today’s pithy epigram is this: There are ALWAYS deals to be had. In 2004, that was not supposed to be the case in real estate. But I found those faded signs, and I was persistent, and I prevailed. So there.

All the disallusionment and temptations toward slumlording would come later. Stay tuned.

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