We had a bit of a bad trot with a residential house we bought in Rivervale, about 4km from the Perth CBD back in '97.
Thought we had got a bargain, a nice 3x1 fibro tile house on 683sqm of dirt, with a fantastic rear yard. Looking back, I think we got swayed too much by the yard's presentation, and with my wife being from outback Queensland, she was highly influenced by the pawpaw and mango and fig trees growing healthily out the back. Lawn looked a treat and everything seemed OK.
We checked the title out, and saw that the same family had owned it for 15 or so years, with one change 3 years prior, and that was when the husband and wife divorced. The husband had kept the house and the wife moved on, so he was living there alone, and obviously been "tinkering" on the inside for quite a while.
Asking price was 129K, and we put an offer in of 120K. He came down to 127K, and then we upped our offer to 122K. To be pedantic, he came back with 122.5K, which we were very happy with as he'd moved heaps. We signed the dotted line and thought we'd got a bargain.
Just at this point we shifted over to the Middle East to work and left the property in the hands of no less than 3 'reputable' PM's. Four months later one of them finally notified to say they had found some great tenants, 3 young lads and everything was great.
Tenants moved in, rent payments immediately stopped and parties immediately started. We had neighbours complaining to all and sundry about parties going on 'til 4 in the morning, drug deals happenign left right and centre....you get the impression - party central.
We kept getting reports from the PM saying everything was just great, at $20 per month postage and petties on the accounts, as an example. Tenants were looking after the place and the gardens were a treat.
We'd also ticked a little box or two on the management form saying the PM was authorised to take out CR / WR / LT / Ins / Maintenance / PM Fees etc out of the rent and to credit our bank with the surplus. After a year of leasing out, we hadn't received a penny.
Came back to Australia, and the wife and I decided on our first afternoon back to drive past the place and have a look at "our lovely house". We sat outside in the car on the opposite side of the street and the wife instantly burst into tears. I got a tad miffed.
Where our front lawn had been, 3 dead cars were upturned, with their bare axles exposed. You couldn't see the front door for garbage and car parts piled high. The garage was far worse.
Despite a "no pets" policy on the PM form, they had two adult bull terriers in the backyard, and they'd just had a litter of 6 puppies, with full reign throughout the house. There was a further 4 cars in the backyard in varying stages of being torn apart. They were operating the place as a "chop shop", buying wrecks for $ 50, doing them up and selling them for $ 500 to their druggy mates.
All of the fruit trees out the back were dead, having been smashed into by what only could have been a demolition derby conducted in the backyard with the wrecks.
Next day I called a meeting with the PM and her principal, and we met on the kerb outside the front, with a report they had faxed me 8 days earlier stating they'd just performed an inspection (which they charged us $ 60 for) and everything was just as we had left it. Their only comments were "I'm speechless" and a shrug of the shoulders and "What can I say ??"
They reminded us it was our property not theirs, and if we read the agreement closely, it clearly stated that the Owner held the Agent harmless and not liable for any risks associated with the property.
So, after I ran them both off, and quickly physically evicted the 3 hopeless druggies (no Mr Nice guy - trot off to the tribunal for me) I set about, with alot of generous help from the entire extended family refurbishing the place.
Spent 3 hours digging with a shovel just to get to the front foor so I could open it up, 17 trailer loads of their garbage to the tip, both dad and I got rashes under the arms cafter carrying out the flea infested carpets where the dogs had had their puppy litter on the floor of the main bedroom.
My wife was out the front 2 days into the clean up, when a young 15 yr old girl came up and asked if this was the place where she could score a foil. My wife said "A what ?" To which the girl said "Don't worry" and turned around and left quickly.
The next day I was out the front with a wheelbarrow and a big V8 pulled up, with two big heavy looking characters emerged. Instantly twigged they were the suppliers looking for their money as well. They asked where my tenant was. I said "I don't know, he took off and owes me $ 800, if you see him tell him I'm looking for him." They said with a deep low voice "If we catch him first, we'll snap his spine."
So, 3 months of intensive full time renovations, $ 25K worth of capital expense to rectify white ant damage the previous vendor had covered up with masking tape and repainted over (white ant inspector employed didn't find a thing....and his certificate with all of the legal get out clauses was only partially valid for 24 hours after the inspection, thereafter the entire certificate was worthless).
Got the place up to scratch again, re-advertised it, got lots of "ooh, this is lovely", picked out the best of a bad bunch and proceeded to tell them that this was our house and they were to treat it with respect. Signed up the "nice" couple who proceeded to also stop paying rent, and decided just for giggles to trash it again.
We got despondent, gave up on the area and it sowed the seeds for literally giving up on residential tenants altogether.
Put the place up for sale, and the next door neighbours sneakily fooled us via a "undisclosed nominee" offer to our agent via a 3rd agent after initally inspecting the place on the first home open as a normal buyer. We got taken for about 8K worth of losses on the sale price because of that tactic, and when confronted, our REA who was supposed to be looking out for our interests also shrugged his shoulders and said "What can I say ??"
All up, our impression of our experience with this house was ;
Pumped in lots of heavy physical work
Pumped in lots of time
Pumped in lots of money
Received lots of headaches
Received zero financial benefit
Gave the whole thing up as a bad joke, and invested our money in Big 4 Bank shares and haven't looked back. I think CBA were at about $ 14 a share, and WBC were at about $ 8 a share. Cap gains and divs have been a joy ever since....with no headaches and no time and no ongoing costs involved.