\n<\/p>\n
A rental property<\/strong><\/a> falling into <\/strong>foreclosure<\/strong><\/a> is a sad sign. \u201cWhat happened to that landlord?\u201d you might ask. Did a tenant do extensive damage<\/strong>, leaving them with a too burdensome repair bill? Did the landlord forget to pay their mortgage?<\/strong> What could have caused this? Well, if you\u2019re like Ashley Kehr<\/strong>, someone else may have caused your home to (almost) slide into foreclosure, without you knowing.<\/p>\n Welcome back to this week\u2019s Rookie Reply<\/strong>. Wait, scratch that. This week\u2019s Rookie Confession, featuring our own Ashley Kehr<\/a>! Many listeners know Ashley as a fast-moving, quick-thinking, real-life monopoly player, but in this episode, she opens up about a mistake that almost lost her multiple properties<\/strong>. It was an easy real estate mistake<\/a> to make, but even veterans in the game get caught now and again. Want to avoid what happened to Ashley<\/strong>? Tune into this episode!<\/p>\n If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group<\/a>! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).<\/p>\n Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: \u00a0<\/p>\n<\/div>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/i>sponsor page<\/a><\/i>!<\/i><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is Real Estate Rookie, episode 222.
My name is Ashley Kehr, and I\u2019m here with my co-host Tony Robinson.<\/p>\n
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey.
I want to start off today\u2019s episode by shouting out some folks from the Rookie audience. We got another five star review. This one says, \u201cI\u2019m a small time real estate investor with one property, and I want to get to three to five. This podcast is amazing because they focus on the basics.\u201d
So if you haven\u2019t yet, leave us an honest rating and review on whatever podcast platform it is you\u2019re listening to. The more reviews we get, the more folks we reach. The more folks we reach, the more folks we can help. And that is our ultimate goal.
So, with that out the way, Ashley Kehr, what\u2019s up? What\u2019s new? Tell me how things are.<\/p>\n
Well, to be honest, today I\u2019m going to use the Rookie Reply as my own confessional. I\u2019ve had something just weigh me down on my shoulders and I just need to get it off my chest, and hopefully it will help some other people and everyone will realize that I am not perfect and bad things can happen. This bothered me so much, and I feel like I just need to get it out there in case it happens to someone else, that you know you\u2019re not alone in this.
So at one point in time in the past year, I hired somebody to do my payables for the business.<\/p>\n
A bookkeeper.<\/p>\n
Not even a bookkeeper, just paying the bills. So not even entering in any of the data, so just paying the bills. They would go and get my mail from the PO box. They would open the mail, they would scan in the mail, and I\u2019d be able to look at it from there. And then they would write the check. They would bring the checks to my house that they wrote, have me look at them, compare them to the bill, sign them, and then they would make the envelope and mail them out.
So, first, I know you guys are all thinking that, \u201cWell, why don\u2019t you set all your things up on autodraft and automatic withdrawal?\u201d Well, when you invest in small rural towns, sometimes there\u2019s no online system. The only form of payment is walking into the place or mailing a check, unfortunately.
So there was things that would come in \u2026 or if a contractor, vendor, or something, something that\u2019s an occasional occurrence, or the property tax bills, even the water bills. For in the small towns, the electric bills, they have their own utility company, and they only will mail out a bill and accept a check payment.
Anyways. So I got a letter in the mail about a month ago, and it said that my property taxes were not paid on one of my properties. In bold print across the top, foreclosure, property tax foreclosure, across \u2026 I seriously had a heart attack. At this moment I can\u2019t even recall exactly what it said because all I did was panic inside. And it said: past due, nonpayment. These were due, I mean, like six months ago, that this happened.
And at the same exact date that I got that letter, I got an email from my bank that I have the loan with, saying, \u201cHey Ashley, just wondering what\u2019s going on? This third-party company we check, to make sure things are paid on a property, said that the property taxes were not paid. What\u2019s going on?\u201d
Immediately, I felt embarrassment. I got sick to my stomach. I felt anger. What happened? So this person just did not do what they were supposed to do. So we went through the scanned documents, things like that. There was property taxes that were scanned in. Never paid. There was some that were never scanned in. Did she not get them? Things like that.
So I had to go through a lot of my accounts and just make sure everything was paid. Go through every property and pull up \u2026 And it ended up there was two properties that the property taxes were not paid for. Actually, no, I\u2019m sorry, there was three. So one of them, what happened was that the property taxes were actually added to my next round of property taxes, and they were re-levied, they call it. So it was actually included into that bill. So they ended up being paid.
So what I did, was I went online to pay the property tax bill. And it says that they\u2019re no longer accepting online payments. So I go into the town clerk in the small town and I go to pay the property tax bill. She\u2019s like, \u201cOh no, I can only accept payments until June 30th.\u201d And I was like, \u201cOkay. How should I pay this?\u201d And she goes, \u201cWell, I don\u2019t know. I\u2019ve never been in this situation.\u201d My embarrassment just overloaded even more. I\u2019m like, \u201cOh my God.\u201d<\/p>\n
\u201cI\u2019ve never had any bum landlords be this late on their property taxes.\u201d<\/p>\n
I know. And I was just like, \u201cOkay. Yeah. I\u2019m sorry, I\u2019m not sure what to do. I was just asking for some guidance.\u201d And she\u2019s like, \u201cWell, I guess I could Google it for you.\u201d And this clerk is the one that you would write your check out to, to pay your property taxes. I just assumed they would know \u2026<\/p>\n
Know what to do.<\/p>\n
\u2026 what to do if someone\u2019s paying late. So my embarrassment was awful. I had to work up the nerve to even go into it. I tried to make Darrell do it, but it would\u2019ve had to wait another day until he was available because I didn\u2019t want to walk in there. So it just got 10 times worse.
But what you ended up having to do was \u2026 she\u2019s like, \u201cYou\u2019ll have to go downtown Buffalo and you\u2019ll have to pay it to the county now,\u201d or whatever. So I got back in the car, I did my own Googling, and they actually accepted the payment online. So I didn\u2019t even have to go into the clerk\u2019s office, I could have paid it online. It was taken care of.
And then I learned that it\u2019s actually two years of back taxes that you need before they will actually come and take your house and put it up for auction. But that was just a horrible, horrible feeling for me, is having that happen. So my biggest things that I learned, is that if you hire and outsource someone to do something \u2026 and I learned this with my property management company too \u2026 is that that doesn\u2019t mean that you can forget about it. You need to still stay on top of things.
So that was my biggest takeaway from that. And if a bill is not paid, like your property taxes, it\u2019s not the end of the world. But maybe I need to implement some kind of system, where I have a VA that\u2019s going in and: check, check, check. Okay. All these property taxes are paid. Because if I don\u2019t get a bill for something I don\u2019t know to pay it. I can\u2019t remember all of the property tax bills that should be coming in for my properties.
So if there\u2019s anybody else out there who hired somebody that missed a payment, or maybe just forgot or something and missed a bill, I\u2019m right there with you and felt the embarrassment.<\/p>\n
Yeah. Well, first, thank you for sharing, Ashley. I appreciate you sharing this super embarrassing story. I\u2019m embarrassed for the both of us. I\u2019m embarrassed that we\u2019re even associated with one another now because I don\u2019t want people to think that I don\u2019t pay my property tax bills.
But, I guess, a couple questions. So, for me, I never have to worry about paying my property tax bills because my property taxes are impounded with my insurance payments for literally every single property. Is that not the case for your properties in New York?<\/p>\n
So you have them in escrow?<\/p>\n
Yeah, all my payments are escrowed. Yeah.<\/p>\n
Okay. So yeah, I have a lot of commercial lending on my properties, where they usually don\u2019t require you to escrow your property taxes. So the nice thing about that is my monthly payment is low. Yes, I have to save up to make a payment, but a lot of my commercial loans, they don\u2019t offer it or they don\u2019t require it.<\/p>\n
Have you called to ask them if they would be able to do that on your behalf?<\/p>\n
No, because I don\u2019t know if I would actually want to. I mean, maybe now would be a good example. But I like that I\u2019m just paying my insurance bill once. Because I have had it happen \u2026 this has actually happened twice now with a hard money lender \u2026 where I paid, at closing, for my insurance upfront, and they took the check and they were going to pay the insurance themselves, just for that one year, with the hard money lender.
I got notices stating that they have no record of the insurance, blah, blah, blah. So I\u2019ve had a lot of issues with that recently. But I\u2019m sure if they wanted to \u2026 I do have one commercial loan that has it in escrow, but that\u2019s it.<\/p>\n
Yeah. For me, like you, there\u2019s too many things going on, I think, for me to be able to keep track of that. So, for me, being able to escrow all that stuff has been super helpful.<\/p>\n
Maybe that\u2019s something I need to reevaluate going forward, is make sure that they are all escrowed. Yeah.<\/p>\n
Yeah. So my second question: did they send any notices before then about the nonpayment, and was this person who was in charge of that just not catching that? How do you think it went that far without it being brought to your attention?<\/p>\n
So, actually, they would\u2019ve received the bill a month before I let them go. So there was other things that were happening. So I had let them go, and then somebody else took over. And no, there was no bill received. This was the first notice that we got in the mail. And the bank had found out the same information at the same exact time. Which I thought was weird too.
But also, the next round of taxes for that property is coming up due now. So maybe they sent a notice before they re-levy it onto the next set of taxes for that property? So it\u2019s like the school taxes are all coming up now. But yeah, I don\u2019t know. But we thought that was really strange too, was that this was the first notice of it. And coming up too, is the big county auction for properties that they\u2019ve taken for properties tax.<\/p>\n
So you\u2019re like, \u201cOh no.\u201d<\/p>\n
I was like, \u201cOh my god, it\u2019s going to be on the list. My LLC.\u201d Oh my God, I was just sweating. People are probably Google satelliting the property, like, \u201cOh yeah, we want to bid on this one when it comes up to auction.\u201d<\/p>\n
But luckily you avoided that.<\/p>\n
Yeah. Yeah. Yeah.<\/p>\n
Crisis averted.
So I know you mentioned trust would verify, which I think is a big thing. And for folks, even if you just have one property, if you\u2019re not doing everything yourself, I think there does have to be some kind of checks and balances in place to make sure that the things you\u2019ve delegated to other people are actually getting done.
Just a quick backstory. So, for me, in my old W2 job, I was in a manager level position, so a lot of my information came secondhand from folks who were on my team. And obviously I had to trust them, that they were giving me the right stuff. But a lot of times I would just go back and I would just randomly pick different things that I would double-check, like if they were sending me data on how their shift perform for the last day, I would look at the email they sent me, but then I would just go into the system myself and pull some of that data to see if it all lined up.
So those little spot checks sometimes, I think, help catch some of those issues. And typically, what I\u2019ve found, is that if you have someone that\u2019s a low performing employee, if you find one mistake there\u2019s probably some other mistakes in there as well. So it might be a telltale sign that there\u2019s some other things you might want to dig into.<\/p>\n
Yeah. And there\u2019s probably things that are still going to come up from this too, I\u2019m thinking.<\/p>\n
Yeah.<\/p>\n
So we\u2019ll see. But I had to get that off my chest. I had to do a real estate confessional of mistake.<\/p>\n
Yeah. And like you said, I think it\u2019s helpful for the rookies to hear as well, because they hear our voice, they hear our stories every week. I know there\u2019s this maybe misconception that things just always go right for us.<\/p>\n
Yeah.<\/p>\n
But I shared my story about the Shreveport house that I lost money on. And things like this happen. As you\u2019re building your business, things don\u2019t always go right. So it\u2019s not necessarily about maybe not letting those bad things happen, because sometimes it\u2019s out of your control, but it\u2019s about: how do you respond and how do you take those lessons and put them into your business so you can continue to get better?<\/p>\n
And I think those are the people you want to have in your network too, who are open and honest about those things. While I was waiting for my kids to get off the bus today, I was on the phone with my friend Layka, who\u2019s an investor in Seattle, and I was just telling her how some things were going wrong. We just found out this morning we have to put a new well on a property. And just every day there\u2019s new costs, and it\u2019s just like you\u2019re moving money from the good properties to support the bad properties.<\/p>\n
Totally.<\/p>\n
You never seem to have money because you\u2019re always buying stuff.<\/p>\n
Buying stuff.<\/p>\n
She\u2019s like, \u201cYeah, you really get to enjoy real estate when you actually stop buying things and you just live off your rental income because you\u2019re not putting it towards more properties.\u201d
But she just rattled off all these things that are going wrong with her properties and then things that are going right with some. And it\u2019s like, those are the investors you want to put yourself around, to share the good and the bad.<\/p>\n
I just want to share one thing that\u2019s gone wrong in our business. So one of our cabins in Tennessee, summer is usually one of the busiest times of the year. Last summer we absolutely crushed it. And our second biggest cabin, there was a small leak, a little pinhole leak, that no one noticed. But we only started to notice because the floor was a little uneven and a floorboard started to pop up.
So our handyman went, he popped up the floorboard, and saw that it had just been leaking for who knows how long. So we had to cut out a big \u2026 I don\u2019t know, like eight by eight square. And he replaced the subfloor and then put new flooring down. So this was two weeks ago.
We get a message from our cleaner on the same exact property, a few days ago, that they walk into that same lower level where we just replaced the floor and it\u2019s soaked again. But this time it\u2019s because the bathroom was clogged, the toilet in the bathroom down there was clogged, and literally re-damaged that whole section of floor that we just replaced.
So we had to block the calendar two weeks ago because of that first issue; we have to refund guests. And we have to do it again this week because of the second issue. So things that are totally out of our control. But like you said, it\u2019s all-<\/p>\n
And does that hurt getting super host, when you have to cancel people too?<\/p>\n
Yes, it definitely does. But if you have a cool guest and you just explain to them what happened, it\u2019s like, \u201cHey, here\u2019s what happened. You can stay if you want to. But just know this little section\u2019s going to be unusable.\u201d And if they cancel on their own, then you\u2019re fine. But if they go to Airbnb and said I canceled on them, then automatically we would lose super host status.<\/p>\n
Okay. I think that little tip is worth anyone listening to that episode because that\u2019s great advice. Because my first thing was, wow, you had to cancel all these people. But no, you tell them what\u2019s happening, and then you say, \u201cI\u2019ll give you a full refund if you choose to cancel,\u201d so it\u2019s on them. Ah, that\u2019s a great idea.<\/p>\n
Yeah.<\/p>\n
I mean, hopefully I don\u2019t have any major \u2026<\/p>\n
Yeah. Fingers crossed you never got to use that one.<\/p>\n
Yeah. Yeah. Okay. Well, thank you guys so much for listening to my real estate confessional this week. We will be back on Wednesday with another Rookie Reply.
I am Ashley at WealthFromRentals, and he\u2019s Tony at Tony J. Robinson. Don\u2019t forget to check out our YouTube channel, Real Estate Rookie. And we\u2019ll see you guys next time.<\/p>\n