DONT RENT TO ANYONE WITH TOOLS

My daughter wanted a horse, and unfortunately we lived in a subdivision that wouldn’t allow us own and keep a horse at the house. When I looked into having a horse boarded, I found it very expensive in the Houston area. Moving seemed the only option. We had been living in that subdivision for over seven years. And we had other needs that the house didn’t meet. After a family discussion we concluded that moving was necessary.

I liked the idea of living in the country. I looked for a house near the beltway around Houston. I found a house, but the owner was very shy about selling. The house had problems. Her husband had been the brains of the two. He had built an airplane and stored it in the barn that was included in the property. He had flown that airplane on a test run and the plane burst into flames. I don’t believe they ever found the remains of his body.

After her husband was killed in that tragic accident she found that the rambling one story ranch house, the Quaker style barn, and the four acres was too much to take care of by herself. She decided to move with her two young sons into the city.

Because the price of real estate at that time was not that great in Houston, a real estate agent at Century 21 convinced her that she should rent it. The agent felt, she would make as much money renting it from time to time as she would by selling it. That seemed a better choice for Kathy. It sure would be easier, since big houses were definitely were not selling that year. Making it a rental would give her much needed income. So they rented the property.

The neighbors said they saw cars going into the barn, but not coming out. Overtime they saw more cars going into the barn, but didn’t see anything coming out. Eventually the sheriffs department was alerted to the unusual goings on. The investigation revealed that the barn was being used as a “chop shop”. Kathy’s tenants were stealing cars, cutting them up and selling the parts. Those people went to jail and the house was now empty again.

Kathy instructed the realtor; “You can rent the house again, but be sure the people you rent to don’t have tools. I don’t want that to happen again.”

Eventually the realtor found another renter. These people had no tools what-so-ever, paid their rent on time, and lived there happily for quite a while, until the day the furnace was not working correctly.

The renters called Kathy. Kathy called Jim, a friend of hers who owned a local furnace repair company. He went over to the house, went upstairs into the attic where the furnace was. Then he came back down the stairs, got into his car and drove eight miles to the nearest pay phone. Upon getting to the phone he called Kathy and told her he wasn’t going to fix that furnace … he wouldn’t be caught on the property. He found stashes of moneybags in the attic right by the furnace. He said these people were cutting some kind of white powder, which looks like cocaine right on the butcher block island, in the kitchen. “I’m not going back into that house,”

Kathy immediately called the police. You guessed it, the tenants were drug dealers. They were flying the cocaine into the nearby airfield. They were able to pick it up because it was a private airfield and they could go under the radar, literally. They were doing drug trafficking out of the house in huge amounts to acquire that much money in the attic.

Now Kathy was panicked. This was during a time when the U.S. Marshall’s Office was seizing houses that had been used for drug activity. They were showing their muscles about what houses they could take. The possibility of losing the house scared Kathy to the point of sleepless nights.. The house was the most valuable asset she had. If the U.S. Marshall’s Office took it away she’d have been left high and dry. These enterprising tenants were eventually evicted.

Kathy didn’t know what to do, because the rent she has been collecting wasn’t worth the risk. She’s had rented to two families, that were both up to no good. She didn’t want to rent it to anyone else. She didn’t trust the real estate agent to pick a good family. The reality is, that high-end houses are more difficult to rent. It’s just the way it is. I think this realtor was just trying to get a tenant for Kathy’s house without even thinking about the liability.

Kathy took over. She told her oldest son, who was old enough to live in the house by himself, that he should live there and take care of the property until she could sell it. Her son knew a good deal when he saw it. When mom said: “You can stay there until I sell it.” His friends helped him figure out exactly what to do. Each time a real estate agent put up a “for sale” sign in the front yard, the son would quickly grab it and toss it in the hayloft in that big barn. His friends brought over several non-working automobiles, which they parked in this huge front yard. He didn’t mow the grass either. There was grass growing up around these broken down, beat up cars.

I don’t know what he did to change locks, but he figured it out. He changed the locks. Even though there was a lock box, the keys in the lock box didn’t work. That house had storm windows with double panes, and a vacuum seal. The tempered glass kept them from breaking easily.

Getting into that house was a real hard job even when you were a realtor with a prospective client. In addition the son had closed most of the drapery, so you couldn’t peek in. Upon arrival with a real estate agent I was pretty determined to see the house, because I understood the history of it and I realized there could be a real good reward for solving this problem. So I said, quite loudly, to the realtor who was showing me the property, “I’ve got a sledge hammer, let me go get it and break one of the windows. We’ll pay my window repairman to come out tomorrow and replace this window.” All of a sudden that front door opened. It was her son saying: “Oh no! Don’t break the window. My mother would have a fit.”

So now we went inside. The house was in good shape. He hadn’t touched a thing. The only room that appeared to have been used was the master bedroom. There we found mirrors over the master bed. Those mirrors, we later found out, Kathy hadn’t placed them on the ceiling. He had a camera on a tripod aimed at the master bedroom bed. A bedroom equipped with a camera on a tripod, one could only guess, what that was all about.

I told the realtor, “Let’s make an offer on this property.” That’s where it got interesting. I knew what I might want to offer it for the property. I knew what the monthly payment would be, if I went to a mortgage company. That amount was more than what I thought Kathy would ask for in rent.

Once, seeing the inside, it was very easy to make a very good offer. Our offer was as follows: “We would like to rent the property with the option to purchase it at the end of twelve months. We’ll rent it at the same price the previous tenants paid during the last twelve months. At the end of that twelve months, we will pay a certain price.” I added: “Should we not buy the property at the end of the twelve months, we could rent for another 12 months. At the end of 24 months we would pay more for the house.” And there was a clause that was added that said: “There could be the ability to rent for an additional 12 months making it a total of 36 months and the price I would pay for the house would go up even more. Did you notice the rent didn’t go up only the price of the house?

After three years I factored in inflation and still priced the house at 90% of predicted value. I can’t tell you how much money I saved in interest.

Now, we decided that there were a lot of repairs that needed to be done to the house. I figured the rent would be, what the previous people had paid, minus $300 per month for repairs. We would send a check for the remainder and receipts for the $300 repairs, each month.

If you understand math, and you understand logic, you can see that we were not paying much rent by now, even though the market had gone up, the rent stayed the same as what previous tenants had paid. We weren’t even paying that amount, we were actually paying $300 less. We were spending $300 per month on improving property that was going to be ours. Just think of the implications.

The owner’s only reply to our offer was: “Do they have a criminal background? Have they ever been arrested on criminal drug charges?” The answer to all of that was no. We even paid for a criminal background check, which went directly to her.

You see, all of this happened, because we were willing to take a chance on that house. I was the one who really wanted it and could see through the mess, which was all, simply cosmetic. No one else was interested.

I had sold a house to an auto mechanic previously. With one call, he came to take away all the old junk cars. We already had crews of rehab specialists. Some paint and a lot of loads to the local landfill made that house a showplace. Since I was buying the house lease with option, I hired an attorney to draw up the paperwork. I had him insert things into the document that were favorable to Kathy. It allowed Kathy to enter the home for an inspection at any time. By now Kathy lived in a neighboring state and was not likely to take advantage of that clause. I included a clause that said, if I were late with rent there would be a 20% penalty. I’m never late, but it sure sounded good to Kathy. I had the attorney put the lease agreement and the option agreement all in one document with a place for it to be notarized. All that meant, was I could record it in the county court house.

Kathy’s problem sure was a fantastic solution to my daughter wanting a horse and our family needing a bigger house … and making money all along the way. We enjoyed living there,

Until we sold it to the owner of a mortgage company. He had been there at parties and as soon as he found out we wanted to sell he said he wanted to buy.