The Perils of Real Estate Investing Part II
It was later in the year when I wrote about my past real estate investment saga. Since the revelation of the marijuana grow house I have had a number of additional tidbits to tell you about.
On the outset I had a couple of friends help me from time to time to clean up the mess left behind by the marijuana grower. The plants left a very spicy and pungent smell. Many times we would leave the house after an evening’s work with a headache and a bad case of the munchies. I know it sounds like I am joking, but I was very hungry when I left.
On the day of the raid, I asked the lead police officer if they were going to clean up the leftover leaves, dirt, and pot planters with the stubs of marijuana. They acted like it was no big deal and told me to just throw it all away.
After I loaded the leftover debris in the back of my truck and I was about to take off to find an empty dumpster at an office park, I stopped momentarily to think. If I get pulled over by the Arlington Police with all of the remnants of the marijuana grow shop in the back of my truck, they could legally throw me in jail, take my truck and really make a mess of my life if they wanted to.
I quickly cast caution to the wind and proceeded on to find a dumpster.
We had large sheets of Mylar taped and stapled to the walls. As we pulled all of this off we found they had used what seemed to be tens of thousands of staples. This was tedious to remove. Disassembling all of the light fixtures, electrical, and grow racks was quite an ordeal too. By the way, I do have a lot of equipment still for sale if you wish to start up your own new business venture (This blog is old and the equipment is long gone).
I also had to address the problem of the illegal electrical tap into the main electrical power line. The grower did this to steal power from the electrical company.
I could go into depth about the beating I took to remedy this problem with the electrical company and the service company, but I had a friend on the inside who was a great help and I do not want to bite the hand that helped me. But just so you know, it took $1,000, five weeks, and over forty phone calls to get the power back on to the house. Not fun!
I then took upon the task of patching the many holes left from the ductwork, electrical, and cable hangers to direct the lights onto the plants. I had everything patched except for the sanding and texturing of the holes. Then a surprising stroke of luck was bestowed upon me.
If you recall in part one of the story I had sold the house under a wrap note contract. Since the grower/tenant was now delinquent and still on the lam (to my knowledge the police are still looking for him) I had to cure the default on the note to me. I hired my attorney to do this.
He had to file the original note with the county courthouse. We then went through the process of foreclosing on the loan. There are a number of steps in the process of foreclosure that I will not bore you with, but it was not until the first Tuesday of August that I was able to complete the foreclosure. Approximately three months after the process had begun.
Tuesday morning August the 7th I met up with my attorney to make our way to the Tarrant County Courthouse. As we approached the courthouse you could see a hundred people or so were milling around and standing in line here and there hoping for a screaming deal on a foreclosed property. Other poor souls were there to attempt to save their home from foreclosure or buy more time until they could catch up on the payments.
It was about a hundred degrees outside and there were many ice chests lying around full of water to manage the morning heat. I had to pop off to my attorney “Yes you too can make millions in real estate! Just attend my free seminar and I will teach you how!” I got a good laugh.
We found some distant parking and meandered our way to Court House steps. After asking if we needed to check-in or sign in, my attorney began reading the foreclosure document. Somewhere in the process, an older gentleman asked about the address and my attorney’s name. After verification, he waived a young man up.
I actually did not realize that someone else might want to bid on my house. But there he was.
Once my attorney finished reading the document I bid in my debt which was $160,000. The young man chirped in at $161,000. I thought to myself, I might get my attorney fees covered if I play my cards right!
I put my game face on and promptly upped the bid to $162,000. The young man wavered and said that he meant $160,001. I quickly explained to him the bid was $162,000. Seeing the challenge, he upped his bid to $163,000.
Rather than to tempt fate I kicked back and shut up. The house was his and he could have it. And he got it!
I was so ecstatic I could do cartwheels! No more repairs, no more note payments, my attorney fees were pretty much covered, and my head was out of the trap!
Now, here is something that I learned. When you win the bid on a property the funds are supposed to be cash or cashier’s check funds payable immediately. We did receive a cashier’s check for $175,000, but it was made payable to the wrong attorney. We did not realize this until we were in the car leaving. And on top of that factoid, the phone number we were given was not being answered.
My attorney reached them two days later. We found that they were a company based in California. This company would establish an LLC for each house they were going to buy. They would give an incorrect cashier’s check to hold the property until they further researched it. If they did not want the property they could void the cashier check and walk the purchase. This is wrong and should be illegal. And you had no recourse. If you were to sue for damages or force the purchase, you would be suing an LLC with zero assets.
It was two weeks until we received the correct cashier’s check.
I waited a couple of days until the note was paid off and everything had cleared to call my attorney for my remaining funds. This is the funny part. I spoke to his son and he read out to me that the sales price was $164,000. I corrected him and stated that the sales price was $163,000. He was silent, “yeah, I told them the wrong amount and filed the forms that way, so we received $164,000”. I belted out a very loud laugh and exclaimed “you got me an additional grand?! That’s great!”
So this ends my historic saga of real estate investing. I still own a couple of properties. I have owned many many more in the past.
I think I am done now.
Corey N. Callaway
Soon to be non-real estate investor