My Rialto California House – Was A Problem Factory
It was a challenge finding houses I could buy without qualifying for a loan. However, my Rialto California House was not ne of those and was recommended to me. Normally such situations never show up in real estate listings. My guess is mainly because the person does not have much equity so paying a commission to a real estate agent may not be possible.
Maybe using a real estate agent could easily leave the buyer with little or nothing to show for owning the house. Another reason might be almost the opposite. It’s where the owner had a lot of equity in the home. In such a case prospective buyers could find an equivalent house that required a small downpayment.
Whatever the reason reasons that could make it unreasonable to hire a real estate company to sell your house, it makes the pickings rather small. Because of that, I spent many hours searching through local throw-away papers, flyers and PennySavers for a house.
Southern California has so many cities. There are many editions of local papers and all sorts of flyers with ads in them. That’s where most of the ads for the type of houses I was looking for would be found.
Real Estate Agents Frustrated Me
In the process of looking for houses to buy I met a few real estate agents. In fact I used to be one myself, an independent agent where I could do my own thing. I worked from my home, but my broker was in Downey California, some 60 miles or so from me.
I never had to go into the office unless I bought a piece of property through a real estate company. To my dismay I learned, that many real estate agents are not savvy when it comes to creative financing. As a result some of them refused to present my offers to the seller.
That’s a no no, and the salesman or saleswoman is required to present offers, regardless. I kept having that problem of agents not wanting to present my offer. So I decided to give up my real estate license so I could be free of those problems.
I let my real estate salesman license expire. After I got rid of my real estate salesman license, it was much easier for me to talk directly to the seller. In most cases, that would eliminate real estate salespeople altogether. I found it easier for me since it gave me freedom to find and present my own offers to sellers.
A good Recommendation – Bad Outcome
One day one of the real estate ladies I had met asked me if I was interested in a house in Rialto. She described the property, a 2-story home, relatively new, with 4 bedrooms and two baths. It was right around the same time period that I bought my Bloomington California house.
The situation was such that the lady living there had lost her job and needed to move. It required assuming an FHA loan. The interest rate on the loan was reasonable. I wanted a four-bedroom house because it was easier to resell or rent. So I said maybe, where exactly was the house.
The house turned out to be in an OK area of Rialto. There are some bad areas there, but that house wasn’t in such an area. It was in a nice, relatively newer neighborhood. As I approached the house I noticed a contraption on the roof.
It was a solar water heating system, a series of black tubes the water flowed through, heated by the sun. They weren’t very common and I didn’t particularly like them. But what the heck, it was no big deal, or so I thought.
A Small Stain Requiring Touchup
I checked out the house and it seemed OK, except for a stain on the living room ceiling. I asked about it. The answer was something to the effect their daughter had spilled some water and it had soaked through from the bedroom above.
I didn’t like that explanation, but the spot was small and some touch-up painting would easily hide it. I looked for any other stains or water marks in the house, but couldn’t find any.
No Money Down Terms
Other than that, it seemed like a fair deal if the terms were right. I didn’t have much money so I resorted to using my credit cards for some of the down payment. The deal was $12,000 down and assume the loan. I borrowed cash from two credit cards and bargained with her. She accepted $8000 down and I would pay the remaining $4000 in three months.
That house was essentially a “no money down” deal. I had arranged seeing it through that real estate saleslady who introduced me to her. By borrowing 2/3 of the down payment from two of my credit cards I needed no cash of my own. I promised to pay the other third in three months.
Problems Start Occurring
Let me mention this because it should have been a warning. Although that is probably an afterthought now that I think about it. I had asked the owner if she knew anyone who wanted to rent the house with an option to buy it.
She recommended a friend who was interested in renting the house and possibly buying it. I thought that would save me time finding a buyer. At least I could talk to her friend first before I ran an ad for the property. Usually a referral is a good lead vs running an ad.
When I first went to see that lady she was having a prayer meeting in her living room. There were a dozen or so people there. The house where she was living in was relatively close to the house I had just bought.
After that prayer meeting was over we talked about my property. She was interested in renting my newly bought house. She also liked the fact I offered her an option to buy the house after the first year. Part of her rent payments would be credited to the downpayment. While there, I met two of her grown children who were there with her.
A short time later the original owner of my newly purchased house moved out. The new tenant, the recommended lady that I had talked to moved in. Once the new tenant moved in was my signal all was not right.
Not too long afterward I started having problems with that house. The lady who rented it with a “Lease with Option to Buy” started being late with the rent payments. Those payments came directly to me.
In just the second month’s rent she was late. I ended up getting that payment from her son. The next month was late too and I got the payment from her daughter. There was a pattern forming and I certainly didn’t like it.
Leaking Lies and More
Meanwhile it turned out the previous owner I had bought the house from had lied. The stain I had seen was a leak from the solar water heating system on the roof. It had been leaking when I had asked her about any leaks and she had denied it. It’s a long story. Suffice it to say, I never paid her the rest of the downpayment money. That’s because it cost me a lot of money to fix the problem.
The water had leaked from the roof two stories down through the wall. Then all the way down to the living room causing that stain on the ceiling. That caused the stain I had asked her about before I bought the house. She assured me the stain on the living room ceiling was not from a leak on the roof. That was what I had specifically asked about.
I had found out about the roof leak shortly after the tenant moved in. Being the fool it turned out I was, I had asked that same tenant, when she first moved there and the leak was discovered, if she knew anyone who fixed solar heating systems. She recommended a contractor who I ended up hiring.
Unfortunately for me he half did the job and skipped out. I ended up having to hire someone else to finish the job and lost money in the process. I later found out the contractor license he showed me was fake.
He had a license at one time, but the address was nonexistent, and the license was expired. He was a scammer apparently. There was a list of complaints about him so he had ripped off many other people.
The rent on the house was always late. Most of the time I had to get it from her children. I decided I needed to get rid that Rialto house because of the rent problems and the solar leak problems. Even though I rented it with an option to buy, I always has trouble collecting rent payments. So I decided not sell it to her.
A Big Surprise in Court
I evicted that tenant and took her to court. She never showed up, however. Unknown to me until I evicted her and took her to court, she had rented the bedrooms. A different person lived in each bedroom. In addition, she had set up an unauthorized daycare center for children downstairs.
Wow! Was I shocked! She had been collecting rent from four tenants. All the while she gave me excuses why she was late paying or unable to pay. In court, the judge gave the tenants, none of whom I knew, 90 days to move out.
One of those tenants had come to court. In court I found out she had rented the house to those tenants. I also found out about the daycare center downstairs in the living room. That court judgement meant I would lose 90 days rent too. Why? That’s because that lady I rented the house to had stopped paying me.
That’s almost the end of the story.
My Renter was a Con Artist
After I evicted her it turned out she hadn’t been there or ever lived there. I found lots of mail addressed to her in the mailbox. Some mail was also in the house after all the tenants moved out. I open them to see if I could find out something about her.
I couldn’t believe what I found. Apparently she was using at least 13 different aliases. She also had a lot of different bank accounts under those names. Some were under her own name, but all were empty or overdrawn.
I had won a $3000 court judgement against her, but couldn’t locate her to try to collect. I went to San Bernardino County (the house was in San Bernardino County) and reported her because of the illegal daycare she had been operating.
It turned out San Bernardino County did nothing about her. Later I found out she had set up another illegal childcare operation in a house around the corner from that Rialto house. I reported that too, but nothing happened.
I never collected on my court judgement and never saw that lady or her children again. Thinking back, I suspect that prayer meeting where I met her was fake and designed to make her look religious and trustworthy. Big mistake on my part. Maybe I should say beware of people who seem too religious.
How much money did I lose on the deal?
Win some, lose some. That’s how it is sometimes in life and in investments too. It seemed like I was going to be a big loser in that deal. Reluctantly, I decided I would use a real estate company to sell my Rialto California house.
That was because it was so far away and the real estate market was in a downturn making it hard to sell. I actually had two houses to sell because I also needed to sell the temporary Bloomington house we were living in. I didn’t really have enough time to deal with selling two houses at the same time.
Selling didn’t go well either. After about 6 months I put the house* up for sale, having finally cleared everyone out of the house. I made about a $30,000 – 40,000 profit.
Nothing to speak of, but far better than my job. My job was a fairly good one considering the low paying area I was working in. It would have taken six or seven months pay to make that much money. So in spite of all the problems I still made money off the property.
Some Mistakes I made Regarding my Rialto California House
Thinking back there were several big mistakes I made. I knew better. The prospect of buying another house with none of my money and creating a long paying Trust Deed on it probably blind-sighted me.
Here are a few big mistakes I made.
- A professional should have verified the stain I saw had not come from the solar water heating system.
- I should have called a company to fix the solar water heating system leaks.
- A credit check should have been run on my prospective lease tenant.
- I should have gone to the house after renting it to verify the tenant lived there.
You can probably think of several more things I should have done to possibly prevent those problems. Hindsight indicates it might have been best never to have bought that house. But then again, I did make a profit, but it was not an easy one.
What advice can you give me about the above situation other than I never should have rented it to her in the first place?
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* Houses and images on this page are not related to any property of mine