Have you pursued a dream that turned into a nightmare? Like that perfect home that morphed into a money pit. As with many big decisions, the path to home ownership can take years to see the gains, not only in your bank account! Our real estate investments all had their share of unexpected drama but paid off in the end, making the pain worth the gain!
Scene of the Crimes
When my husband and I started the home study process to adopt our first child, we decided to upgrade from a second story condo with a small balcony to a house with a yard. But real estate values had plummeted, so we opted to rent out our condo for a few years first. I placed ads with local rental offices and quickly received a prospective match. In eager anticipation, I coasted up to our complex after work to meet the prospective tenant. This was in the days when tenants signed paper contracts in-person. The ink had barely dried on the rental application, when a black coroner’s van pulled up. Unbeknownst to me, a homeless woman had just been murdered in the wooded area behind our unit. What had initially been a selling feature would become the scene of another crime a few years later…
After years of renting out the condo, we decided to take advantage of rising Bay Area home prices and re-invest our real estate equity into a home in Southern California. I had dashed off after church, to peek at our open house in progress, hoping to see streams of potential buyers headed towards our condo. Instead, I noticed with alarm that three police cars had pulled up in front of our complex. When I returned later, I saw six cars, a swat team, and a helicopter hovering overhead! A robber had chosen that afternoon to hijack a Brinks Armored truck, and police officers from several cities were in hot pursuit. The perpetrator then attempted to escape onto the scenic running trail bordering our unit. In the end, we somehow received two offers, and managed to sell it for over the list price. God was looking out for us!
Setting Sights on San Diego
After we sold the condo in Mountain View CA, the hunt for our next rental home began. There are strict time limits for identifying a new place when rolling over an investment property. We chose the north coast of San Diego, as it would make a good retirement area one day. And we reasoned that if relocated there sooner, we would be that much closer to water sports. We had been avid windsurfers and the Baja Peninsula beckoned us. At the time, we had two young sons who we hoped to raise like beach bums, assuming they would embrace our windsurfing passion.
We no longer windsurf. The sport has been taken over by a hot new trend. Our boys never surfed or sailed. And we sold the camper van that we had fantasized about doing overnight trips with. One of the few windsurfing outings that I attempted as a mom turned into a fiasco, escalating into a 911 call, a fire brigade, a zodiac boat and a hook and ladder. One person, whose name I won’t mention, got stuck in the muck at low tide, but managed to self-rescue. But that’s a story for another day! Whatever our dreams are, they can change with the tide, fade away, get stuck, and still contribute to our overall growth.
Letting Go of the Dream
Sometimes we are faced with obstacles that force us to change course. Our 10,000 square foot lot, two miles from the beach, became saturated with water after a series of 100-year storms caused record rainfall. “We had to put sandbags all around the house,” our tenant informed us. She thought she had saved the family farm, but the real danger remained lurking in the walls. “Every time it rains for more than three days, the carpet in the family room gets wet.” She proceeded to share how the whole family had developed bronchitis and pneumonia that winter. My heart sank and dollar signs sprung before my eyes. The tale only got worse.
“I first noticed a musty odor in my daughter’s bedroom— I thought the smell was coming from an old lunch left in her backpack.” I held my breath. “Then I lifted up the mattress…” Her first grader was afraid of monsters under her bed, so she had no bedframe, just a mattress under the floor. It turns out there WERE monsters lurking under the bed! Mold was starting to sprout on wooden furniture and spread up the walls and into unsuspecting lungs.
When we had purchased the home, the realtor and home inspector had failed to notify us that the house sloped, ever so slightly, towards the house. And the house had no drainage system in place. As record-breaking rains continued to pummel the region that historically wet winter, grassy lawns quickly became submerged with water. Moisture spread towards the home and started seeping up the concrete slab. The lawn had no drains to divert water away from the house. This is a big problem with slab foundations in low-lying communities. Busses sported signs encouraging tenants to sue landlords in the event of mold outbreaks.
After several panicked phone calls, I found a contractor who enthusiastically assured me he could fix the problem. His crew arrived sporting HAZMAT suits. I can only imagine what the neighbors thought. The repair that enfolded resembled a crime scene or an Ebola outbreak. A steady stream of workmen trooped through the house, hacking freshly painted walls to the two-foot level, to eradicate toxic mold. After a few weeks, a mold remediation company arrived to give final clearance on the project. We did not realize the contractor doing the repair owned the certification company. He was approving his own work—so much for avoiding a conflict of interest!
And then we had to install the French drains. Who says it never rains in southern California? “No problem, we can do that too!” the confident contractor assured me. “It’s not rocket science.” That should have been my first sign of trouble. After spotting some plastic piping for sale in a nearby yard, our contractor purchased the necessary materials at bargain basement prices. (The seller was a woman who was divorcing her gardener husband, and also ditching all his supplies- which she spread out under a “For Sale” sign.)
A few days later, our property manager informed me that our lawn resembled a patchwork quilt. Some patches glimmered a lush green, like a golf course. Other squares sported various shades of desert brown. I questioned our contractor about his workmanship, and he replied “Your gardener is sabotaging the lawn because he is upset that he did not get the job. There is the dusty outline of a shoe in the sprinkler unit…” You can’t even make this stuff up! During those stressful times, I often wondered why we ended up buying that home. The reason did not become clear until years later.
Thank God for Unanswered Prayers
Initially we had planned to buy a different home with a smaller lot, and a distant view of the lagoon. I am a sucker for water, provided it’s not seeping into my walls. But the selling agent convinced one of his clients to buy it instead—who opted to back out at the last minute. So, the listing agent asked us, as we were about to drive to San Diego to sign closing documents on our second choice, “Do you still want the house?” Suddenly conflicted, we chose to pass on the first property, thinking that maybe God was leading us elsewhere. Instead, we walked into what turned into a soggy moldy mess. Had we misread the signs? Or were we being protected from even greater financial harm?
It turns out we were. My husband’s job field had shifted to biotech, an industry prone to layoffs. We ended up selling the home a few years after the costly repair, and the profits carried us through the layoff period. Had we maintained two mortgages, it would have been a big financial stain. Later, the San Diego market took a downturn, which would have impacted us even more. A family from England was thrilled to purchase it and didn’t notice the musty smell that lingered in one bedroom. They were accustomed to damp climates in England and still live in the home after many years. Our prayers were answered, not in ways I initially hoped for, but in ways that helped us in the long run. Losing the first offer was a blessing in disguise. As my friend likes to say, “Rejection is God’s protection.”
Home Ownership Hazards
We did our best to alert our son to potential pitfalls as we reached the final steps of his home purchase. Like many first-time buyers, he dealt with overstretched loans, problematic properties, limited inventory, exorbitant prices, and rising interest rates. And that was just the beginning. We could not convince him to buy a condo in the concrete jungles closer to home, with unpredictable homeowner association fees. He was determined to live in the beautiful but disaster-prone Santa Cruz mountains. Because we were assisting with the down payment and taking partial ownership on the title, we were heavily involved in the property search.
Thus, we immersed ourselves in disclosures reports to assess natural hazards. There are scores given to different hazard zones. A FEMA score (Federal Emergency Management Agency) calculates the flood risk and a FRAP score (Fire Resource Assessment Program) uses forestry maps to highlight the fire risk. All these factors will have increasing significance in these times of climate change.
There are also Geo Disclosures to determine what geologic hazards your home might be prone to, from fires to floods, but also debris fields, dam breaks, and earthquake faults. Regardless of what measures you take to “harden” your home to reduce fire risk, or prevent floods and landslides, you may still be subjected to higher premiums. Some specialty insurers offer discounts on policies, with more fire-prone properties. Others offer flood or earthquake insurance. There is a policy for just about calamity; it just comes with a hefty price tag. But just know that some claims may still be considered an “Act of God,” and denied. We discovered this while repairing the mold and water damage in our San Diego home. As restaurant owners with flood insurance in Capitola, CA battled, after tsunami-like rains flooded their storefronts.
Crash Course in Permits
Having been previously burned, or flooded in our case, we were extra cautious with this latest purchase. We perused county records for building permits, a rarity in this rustic community of homes patched together from former summer getaways or logger cabins. We always started with the Santa Cruz County septic reports. A mountain property requires a crash course in septic tanks and leach fields. Leach fields are drainage fields with underground pipes that receive wastewater from concrete or fiberglass septic tanks, where it is reabsorbed and filtered in the soil. Leach fields have a life span of about thirty years. Environmental health officers like to know if there is room to expand the drainage area, and if the lot is flat enough to accommodate a leach field. Or else they will require a custom-engineered system, which can cost up to $70,000-$100,000.
Septic fields require periodic pumping about every five years, depending on the number of occupants and the size of the tank. Many owners fail to realize this and forget about such maintenance details until they sell the home twenty years later. And their agent informs them they need a septic report. Or until they find their bathtub full of brown sludge every time they run the kitchen sink, as we experienced with our rural vacation rental. Though septic systems are not unique, they take on special significance when factoring in 100-foot redwood trees towering nearby, rising ground water levels and sloped lots. In suburban homes, the number of bedrooms is determined by the number of closets. In the mountains, bedrooms are based on the size of the septic tank. We learned that “bedroom” is a relative term in San Lorenzo Valley and some are merely converted attics or covered porches.
Our intrepid realtor, Cari, crawled with us under porches to check foundations. And trudged through overgrown grass, peering at drainage hoses, septic covers, and slope angles. Together we studied slanted floors and crooked door jams, cracks in walls or windows and other signs of shifting floors. Homes with pier and post construction are more vulnerable to both earthquakes and fires. Cari was much more thorough than our San Diego realtors, who failed to notice the gradual slope toward the house. This ultimately led to $30,000 worth of water and mold damage, when heavy rains seeped through the slab foundation and up the walls. For our next purchase, we focused on water: how it drains and how it is delivered to the house. In Boulder Creek, CA water is delivered via wells, natural springs, city pipes, or tanks owned by water districts.
For this special home purchase, we adjusted our dreams and our budgets, saving money for the unexpected repair items that crop up the minute you take title- like the wall heater my son is coaxing back to life. He is learning that you cannot experience reward without occasional loss or sacrifice, just as we discovered. There is no perfect choice, and making informed purchase decisions will not guarantee a pass on potential problems.
Embracing the Process
Our realtor always reminded us that each setback was part of the process. Pursuing mountain property has been an education! It is not just the house that requires a solid foundation, the buyers need a solid foundation too- in finances and in education. Disclosures and home inspections only reveal so much. They cover grounds, exterior condition and fireplace, heating/air conditioning, plumbing system, electrical system, bathrooms, bedrooms, kitchen, and interiors (including walls, ceilings, closets, alarms, windows, and basic security). We learned the hard way from past adventures, what to look out for when purchasing a property that might carry extra surprises.
We always felt like Cari was looking out for us- and not just her commission check- though she certainly earned it! She always reminded us of what we had achieved along the way, each time our offer was turned down. That is, until we reached the finish line with offer number five.
A goal is just a dream with a deadline. Each step brought us closer to the dream. First came the offer deadline and the good faith deposit, then the release of contingencies, and last, the remaining funds. Fortunately, our realtor did not leave us at the finish. She continues to supply us with information and recommendations. I share what we learn, and she does the same for us. The experience is teaching my son independence and resourcefulness, as he takes on more homeowner responsibilities. Our past real estate problems has led us to find a peaceful, well-maintained property- with good drainage!
We won’t focus on the draining bank accounts; we will think of our son building memories and friendships in his new mountain community. Maybe we will supply him with extra flashlights or a generator for that next big power outage. But until we spend time in the darkness, we cannot fully appreciate the light!