Entry 24 - Popcorn Ceilings & Other Dastardly Deeds to Be on the Lookout For

If anyone makes a comment about ending that title in a preposition I'll reach across this computer and slap you. True story.

It occurred to me, late last night while floating on a nimbus of hookah and wine, that it's been a long time since we really talked about the basics of how to be a good slumlord. I'm talking old school, like why-not-to-install-central-air-conditioning (Entry 1, mofos!). So, without further ado, we're taking it back to basics.

One of the shadiest real estate investors I've ever met (and I've met more than my fair share, I assure you), used to buy properties that appeared in desperate need of a $50,000 overhaul, and put them in rental shape with $4,000. After signing a rental agreement with the first over-paying crack addict that came along, he would sell the house to another investor, for a steep mark-up because of the high rent.

You might think of this as the old carnie trick with the goldfish. "Step right up, pay $5 to play, it's easy, and win a goldfish to take home!" Never mind that the game wasn't REALLY easy to play, or the fact that those goldfish had a life expectancy of 72 hours.

There are some lessons to be learned here for you, my dear budding landlord or real estate investor. First of all, do your homework on the property's history and the tenant's history before buying a rental unit with a tenant. If the wholesaler bought it a month ago for $23,000, and is now trying to sell it to you for $75,000, I promise they didn't do $40,000 worth of work in that month, and you can bet that tenant was qualified for the rental agreement based solely on their pulse.

But most real estate investors know that already. Here's something you may not know: one of this guy's tricks was popcorn ceilings (and walls), to cover up all the rotting plaster, uneven walls, water-damaged ceilings, and (worst of all) structural problems in the property. If you see popcorn ceilings, you RUN. And maybe give the guy a good ol' manslap for good measure.

Alternatively, you could always take out a huge insurance policy on the property, and make it easy for the crackhead tenant to burn the place to the ground. Not saying it's a good idea, just saying it's an idea.