I LOST 50K! (Worst Property 2024)

When a seemingly solid brick duplex turned into a financial disaster, I learned an expensive lesson about the hidden costs lurking beneath investment properties. This candid breakdown reveals how my worst property of 2024 generated $17,803 in annual income while racking up a staggering $50,425 in expenses – creating a negative cash flow that would make any investor cringe.

The culprit? A basement issue I drastically underestimated. What I thought would be a $10,000 fix ballooned into a $40,000 structural repair, effectively erasing any profit potential from this $90,000 wholesale purchase. The numbers tell the painful story: after adding taxes ($2,744), insurance ($968), and mortgage payments ($8,186), this property became an expensive education in thorough due diligence.

This experience highlights the critical importance of comprehensive inspections and maintaining substantial cash reserves. Had this been my first or second investment property, it could have derailed my entire real estate journey. Instead, it serves as a powerful reminder that even experienced investors can misjudge repair costs, and that portfolio diversification provides essential protection against single-property disasters. For new investors especially, taking your time with property assessments isn't just good advice – it's financial self-preservation. The $40,000 that disappeared into this basement could have funded additional profitable properties, a sobering reality check about opportunity costs in real estate investing.

What's your experience with unexpected property expenses? Have you encountered similar renovation surprises? Leave a comment with your stories or questions about real estate investing – I'm creating customized content based on viewer interests and would love to address your specific concerns in future videos.

Chapters

• 0:00 Introduction to Worst Property
• 0:16 Financial Breakdown of Losses
• 0:55 How the Property Purchase Went Wrong
• 1:31 Weathering Financial Storms
• 2:40 Closing Thoughts and Viewer Request

Transcript

Speaker 0: 0:00

Welcome back everybody. As promised, this is a video about my worst property of the year 2024. Last year we compiled all the numbers. Here's a duplex $17,803 in income. It's a two-bedroom, one-bath, upper-lower brick duplex, Nice building. The income was $17,803. The expenses was $50,425.79, so a whopping negative for the year. On this one, that's not. We haven't even gotten to taxes, which is 27, 44, and 26 cents Insurance very light on this one $968 and 23 cents. And then we got our principal interest payments. This was on a hard money deal to start. Then it got moved to long-term financing Principal interest $8,186.16. So a terrible year for this property. And I'll explain where this expense has come from, because I'm sure somebody's listening to this.

Speaker 0: 0:51

Like how in the world did they manage to spend that kind of money on this property? Bought this property for $90,000. Originally it was a wholesale deal. Like I mentioned, I've dealt with wholesalers. I actually don't hate their deals generally.

Speaker 0: 1:02

I looked around at this one from the basement up, actually from above the basement beautiful property, pretty simple fixes on it and it was going to have pretty solid rents. It's a brick building, good for the long term and it was known to have some basement issues. And I was looking around the basement I was like I've seen worse than this and I had seen worse than this, but I hadn't tried to fix worse than this. Got somebody out there, got the quote and it was 40 grand to get it. I mean we could have done some stuff to just patch it together and get it limped along, but to really do it right was $40,000. And that's a capital expense that you're never going to see back. The only hope that we have is we keep this property for 30 years and I don't die in that time and somehow we eventually can make that money back.

Speaker 0: 1:41

But it was a mistake on my end. I totally owned up to it. I was like I told everybody like, hey, yeah, I thought this was going to be maybe 10 grand, it's 40 grand. So now we're basically even on what we paid for plus the expenses and what it's worth on the market. We're pretty much even on that. But we had to take that 40 grand that we could have used to buy more properties and tie it up in this one.

Speaker 0: 2:00

So when I talk about mistakes really hurting you and potentially putting you back quite a bit, it's not coming from a place of ignorance, it's coming from a place that I've been there and seen with my own two eyes. So I would really recommend to take your time, especially starting out, because we were able to weather the storm, because we had other properties and we had other things going on. But if this was our second or God forbid, our first property, that would have been a tough one. So this is the worst property of the year. I'll include some pictures of it and whatnot for your pleasure, but it was an expensive repair, most expensive repair I've done for a single thing in a property and I won't be looking forward to doing that again. That is our worst property of 2024. There's everything in between, from negative 44,000 to the last one I talked about was a positive 13,000. There's everything in between.

Speaker 0: 2:45

So we'll go through some of the other ones, if people find this interesting, and we'll talk about the portfolio in 2025. Anybody that's watching this video right now I truly appreciate the viewership and the interest. Leave a comment if you can. I don't think I've gotten any comments yet, which is totally cool, but if anybody has a comment on what they would like to see, I would love to make some customized videos for that specifically. So if you have an idea of something that would be interesting to see and talk about in this space, I'd be more than happy to provide it. So hope you guys have a great afternoon and I'll talk to you soon. Thanks,