Learning from Real Estate Deal Challenges

Hey, what's going on guys? Joe McCall, Real Estate Investing Mastery Podcast. What's going on? Hey, this is episode number 16 of the Deals Gone Bad series. And on this episode, we're going to be talking to an investor out of Phoenix. Her name is Lisa Even, I believe. I should have asked her. Yeah, she's nodding her head. All right, I got it. Good. She's in Phoenix. She's a full-time real estate investor, and she's got this very interesting deal. adverse possession that was a complicated probate. I intentionally didn't ask her any questions about this deal yet, except little preliminary questions. I wanted to dive deep into the details of her business, what kind of business does she do, and then talk about this specific deal because we're going to get out of this. And this is something that's so awesome with this series of deals gone bad that we're doing is we're learning from lessons learned from other folks. And the cool thing about Lisa is she didn't just quit and give up. when this deal happened. She rebounded. She's still at it. She's still doing deals. These are the kinds of people you want to learn things from. You don't want to learn from people that have never had a bad deal, never made a mistake, or have only had success and haven't had failure. I would much rather trust somebody who has a skin to their knee, who has been bruised, beat up a little bit, but has come back and still fighting. There's some really encouraging things through stories like this. I'm hoping that you get a lot of value from this interview with Lisa here in just a minute. But first, we are doing this video right now, audio podcast, whatever, live on Facebook and YouTube and Periscope, maybe LinkedIn. I don't know. But if you're watching this live right now, please say hello. Comment below the video. Give us a thumbs up and subscribe to the YouTube channel, please. I'd really appreciate it. Let us know that you're. listening, paying attention. And also if you have a question or a comment for me, or at least as we do this podcast, if you type it in the comments, we'll be able to put it on the screen. If you've got a good question. Second thing is if you're listening to this on audio podcast and you want the notes for this episode and all the other ones that we're doing, I got about another eight or 10 or so lined up. I'm going to be putting all of this together into a resource. Right now, it's in a mind map. Pretty soon it's going to be in a PDF. All of the notes and lessons learned of these deals gone bad, and every one is different. But if you want the notes and the resources from these podcasts, text the word bad to 313131, or go to joemccall.com slash bad. Again, text the word bad to 313131, or go to joemccall.com slash bad to get details on these bad deals, and more importantly, how people recovered from them and came out of it. Cool. All right. So let's bring Lisa on right now. Lisa, how are you? Can you hear me? Okay. I can hear you. Great. Yeah. Thanks for having me, Joe. I'm glad you're here. Getting some comments here. Landlord coach. I think this is Mark, right? Great show, Joe. Fantastic series. Jan, tried to follow most of the deals gone bad. Great content. Good. I'm glad you guys are liking it. I'm glad you're commenting on the YouTubes and Facebook. So Lisa, you're an investor in Phoenix. Tell us a little bit about yourself. So I've been investing in the Phoenix market for about six years now, full time. And I work mainly with distressed properties and distressed property owners. And so things like foreclosure would be my area of expertise. But also things like city violations, you know, weird clouds on title, someone having difficulty selling a property that they want to get rid of that type of thing. Okay. And how did you get started? You know, I fell into this completely accidentally. I actually was in education prior to this, and I was laid off. I wasn't sure what to do next. There just were not a lot of jobs in my area of expertise. So I started going to an entrepreneurial meetup group with intention of trying to find, you know, some kind of interest in what kind of business could I open. and met a couple of other real estate investors that needed boots on the ground at the time. They were expanding their business and we hit it off. So I joined their team and worked with them for a few years and then went solo. All right. Nice. And so you learned, I love that. You learned from somebody who's actually doing deals already. Yes. And you just kind of like, were there boots on the ground person that went out and found the deals for them? Yes. They taught you what to look for, how to make the offers? Yes. Yeah. all of those things. So it's great mentorship. Good. And you're in Phoenix, a real tough competitive market, right? Yeah. Phoenix is a little saturated. You got a lot of people doing investing here. And we've got, this year's challenging. We've got real low inventory. So that raises the stakes a bit. Good. All right. So let's talk about this deal. This is a unique property. It sounds like it's a probate deal. So how did you find it? So probates were, are one of the, you know, business models that we utilize. And so here in Arizona, probates are actually public record. That's not the case in every state, but so you can go down to the courthouse and get a list of probates. And so that was something that we did as a company. We'd go down and get our monthly list of vet. you know, out what was on the list and see who we wanted to contact and go from there. So this property was actually vacant for a number of years. So not only was it a probate, but it also had a lot of city violations. So having those two things stacked on top of each other were, you know, made it a hot lead. Nice. So you get these, by the way, the harder the lead to get, the better it is, right? Typically, yeah. The less competition. Yeah. And so you get the address, you get the name, you know, what do you do then? So, at this point in time, our business model was to physically go and knock the door. Yeah, which is its own interesting set of challenges. So, we had the name of the person who filed probate. And this is actually one of the areas that was a learning curve in this particular deal. We had never seen before. a person file a probate against a property that they weren't actually a legitimate heir to. Usually when you see someone who isn't an heir of the property, it's like a business that's trying to collect. And so they'll file probate in order to have a legal interest so they can collect some funds that are due to them. So we thought that we were dealing with the actual heir to the property. And when I went and spoke with her, What I found out was that her mother did live in the property for a long period of time, over 20 years, but she never did own it. It was they were friends of the family that originally owned the property. And they initially rented the property to this woman's mother. And then, you know, life things happened. And, you know, they moved around from the Phoenix area and things like that. And she stayed and continued to upkeep the property. And at one point they had a verbal agreement that they said, you know, you've lived here for so long, you can just have this property. We don't want it anymore. Now, the issue with that is that if you don't deed things correctly, you know, this is all hearsay. So this was the story that we received. And so she said, I actually filed a probate to try to sell the property and a title company told me that I couldn't because there was an improper quit claim. So the mother who had been living there. in an effort to legitimize her stakes in the property, quit claimed it to herself, which is not a valid deeding process. So did she forge the owner's signature? No, she literally just quit claimed it from herself to herself. Okay. Yeah. So, you know, I mean, you can go into like an office depot or whatever and buy like a quit claim form and people use them. the wrong way all the time because they don't know any difference. So this is what happened. And so the title company said, no dice, you don't quit claim a property from yourself to yourself. And the names don't line up in terms of who might be an heir. So this woman said to me, the only reason I was trying to sell the property is because I keep getting letters about these city liens. I just found out that there's also back taxes. I don't want the responsibility. because I never lived in this property. I don't want to be financially responsible for it. I'm just trying to get rid of it. And she said, according to the title company, it doesn't even belong to me. I want nothing to do with it. So-She's still living in it, by the way? No. So this property was vacant and in pretty bad condition. The roof was in. It had squatters for a number of years. It was in rough shape. So this is another reason that she didn't want anything to do with it, right? Because it's not even a livable property. And by the way, if you see me looking down, I'm taking notes. I know that look is rude, but I was watching some of my old videos and it's like, it looks like I'm not even listening, but I am. And I'm just taking notes. All right. I appreciate that. That's awesome. So yeah. So basically, you know, that was the first bit of information that we got when we reached out about this property. And I said, Hey, you know, do you know if there are any actual blood errors that we can go speak to? Because look at, here's the situation. The city doesn't care who pays off the liens. They just want to pay. And they don't care who pays the taxes. They just want the taxes paid. So if they have found that you, they think you have a connection to this property, they'll continue to send you things and you're not necessarily financially responsible. But if you want them off your back, the best thing to do is to fix this title issue and get this property out of your way. And so she said, you know, as far as I know, these people, you know, they're children. They're in their... adult children have already passed away and I don't know if they had kids. So we had to go back to the drawing board and do some more research. Um, and this is, uh, this is where it gets into, uh, kind of the more complicated, you know, now you're not just searching, uh, doing like a title search and doing skip tracing, which a lot of investors are familiar with. Now we're into ancestry.com trying to find the right people. We're looking on Facebook, um, to see if we can find some, you know, trail from the names of the original owners. And we did, we tracked down a grandchild. Really? We did. And we were able to see through the different subscription services that we had, that there was a high likelihood that she actually was a blood relative. And then we skip traced her, got her information. And I spoke with her on the phone. She was out of state. And she said, yeah, that was my grandparents'property. And she even remembered the friends of the family as well and said, oh, yeah, that lady lived there for, you know, 20 years or something. And, you know, she said, I don't live in Phoenix, but, you know, yeah, I'm happy to help with whatever I can do, you know, to stop whatever's happening with this property. And, you know, of course, we offered her a little bit of money, you know, because we. there was some space there to do that. And so as far as we were concerned, at that point, the information we had was the original person we spoke to wanted nothing to do with the property, she just wanted to alleviate financial responsibility. We found the appropriate heir, which is what the first person, you know, said, I would love it if you would find the appropriate heir so that this can be off of my plate. So we thought, great, full steam ahead. Now that we found the right person, easy peasy, we know what to do. Um, and as soon as we got the paperwork going and, um, we did a new probate with the appropriate person and that got filed with the court, we opened escrow, um, and we got everything started. And then we got an email from an attorney, um, that said, I have someone with legal interest in the property. You need to stop everything that you're doing. Um, this person wants to claim the property and we're going, what in the world are you talking about? And it was the first woman that I had spoken to. So this was our first sort of complication that we've ever had with what's called adverse possession. Let me rewind a little bit. The first person you talked to, refresh our memory, who was that again? So she was the daughter of the woman who lived in the property for the 20 years that tried to claim it to herself. Okay, right, okay. I know there's a lot of characters involved. Is it making sense? Yes. Okay. She started seeing dollar signs. She didn't care about the property before. And all of a sudden, when an investor's involved, she's saying, oh, wait, I can actually make some money with this thing. You got it right. Yeah. So when we started moving forward and found out what was happening and she went, wait a minute, is that why would somebody be going after this property? Is there money here? And so that's, that's what she was after. And so she did hire an attorney and this was a lesson for us. We had never come across adverse possession. We kind of knew a little bit about what it was, but as far as we understood, it was something that one is kind of difficult for the court to prove one way or another. And two, it's fairly rare. So we didn't think anything of it in the beginning, but. She came back to us and said, you know what? I want, I want this property. My mom lived in it for 25 years. And as far as I'm concerned, that should be part of my inheritance. She does have a right to it. Legally speaking, she actually did. So this is what gave her the right to it. Had this woman only lived there and paid rent, even for that really long amount of time, there really was no proof of legal interest if all she did was pay rent because the family that owned it never did deed it to her, even though they verbally told her that she could have the property. However, when they told her she could have the property, she started paying property taxes. And so in the state of Arizona, that is enough to have legal interest now in the property. So that tied us up because now we have a blood relative who does have legal interest because the ownership chain is there from a title perspective. And we have someone who had a history of a long term living in the property and paying property taxes, which were something that are on file that can be looked up. So they both had legal interest in the property. And this is a mess because, you know, if you've done any number of deals, you know how people get when money is involved. Yeah. So how much time and resources have you been into this so far at this point? So at this point, I'm going to say we're probably three months in. And, you know, anytime we get contacted by an attorney, you know, we like to get our attorney involved as well just to make sure that. everything is going the way that it should. You know, you don't, you don't want to talk to legal counsel and say something you're not supposed to say. Um, you know, so you want to have that representation. So let me ask you something first, like how big of a deal was this? Was this a small little deal or was it worth pursuing? What were the numbers like? It was, it was definitely worth pursuing. So, um, the ARV at that time was about 180 and, uh, we had offered 60 for the property. So, you know, there was plenty of room. At that point, we were still deciding, actually, if we were going to purchase the property outright and fix it up, even though it was in pretty bad condition. But it was something called block construction, which we have a lot of here in Phoenix. So you got four walls that are you can't, you know, without a bulldozer, they're not coming down. So, you know, we had room there for either a flip or for a nice assignment fee if we ended up wholesaling it. Um, so we were still deciding. All right. So then what happened? So, um, once this woman got involved with her attorney, we had to, of course, check with our attorney and see what was going on. And he looked things over and said, okay, you've got two people here who have legal interest in the property. So there's a couple of things you can do. You know, we had it under contract. So luckily we were attached to it, but the two of them still had to agree to keep that contract and agree to sell it to us. You know, they could have gone to court and said, we want to do something completely different. And that would have been up to a judge at that point. The blood heir, the blood relative did not have funds to hire her own attorney. So she was really frustrated because she said, how am I going to fight this? You know, there's nothing that I can do. So we ended up hiring our attorney to represent us to keep our. contract in play here. And our attorney negotiated with their attorney and said, look, here's the thing. If we take this all the way to trial, number one, it's going to take a really long time. Do we want to do this? Number two, have you seen the condition of this property? Because if you take the property and you turn around and try to sell it, you're just going to be selling it to another investor. You might as well go ahead and sell it to these people you've already. talked with, you know, because nobody else is going to buy it. You're not going to put it on MLS. The roof is caved in. It's, you know, not feasible. So that, that was lucky for us that the property was in that condition because, you know, that, that gave us some leverage. And, you know, then, then the third point that the attorney argued was, look, if you're willing to split the money, then you both walk away with something, all of the issues that you said you wanted off. your plate are gone and you know, everybody's happy and you've given it to someone who knows what to do with property to get it fixed appropriately, you know, and, and it's a win, win, win. So let's do that. And, um, it would have been really nice if they would agree to that immediately, but instead they went back and forth and argued with each other about who should get more money, you know, why one of the, you know, how are we going to split it 70, 30, 60, 40. And so this went on and on, um, for a number of months. And we ended up finally being able to follow through on our contract and close on the property, uh, nine months after the initial contact. So it took them, it took them six months of a back and forth, um, and six months of the, the, um, I don't even know what to call her, the friend of the family, um, paying an attorney, you know, to, to argue back and forth of what percentage they were going to get of, of the. 60K. Of the how much again? It was 60, 60 that we were purchasing it for. Okay. So then what did they finally agree to? So they finally agreed to a 50, 50 split if we slightly raised our price. And so we went and took a lot of photos of the property and presented them and said, 65 is the highest we can go. This thing needs 80 to 100K in... repair. And at that point, neither one of them had actually seen the property. So even though the one person was here in Phoenix, she lived about 45 minutes away, never bothered to go look at the property to see what they were even dealing with. So once they saw the pictures and saw how bad it was, they decided that they wanted to cooperate. Wow. And it took nine months. Nine months. Nine months. Yeah. So then did you buy it? We bought it. Is that the end of the story? Well, we decided to wholesale it, actually. Once we messed around with it for nine months, and then finally we're able to take possession at that point. Now we've got our crew working on other projects, and we're going to have to wait on this one. And to be honest, it was in kind of a rough neighborhood. So we didn't want to risk squatters getting back in after we just... finally took possession. It had been kind of enough. We just wanted to be done with the deal. And so do you mind if we, how much did you wholesale it for? So we made about 35K. Good for you. Nice. So no complaints there. Well, this is a bad deal gone good. Ultimately, yes. Yes. Not bad. And so most people would have quit and give up though, wouldn't they? Yes, absolutely. I know I would have. I wouldn't have had the patience to stick with that, you know, just too much of a hassle. Forget it. It was a big hassle. And, you know, had the spread not been there, you know, you have to you have to sort of weigh your options. Right. If you've got a property that isn't worth a whole lot in the first place, then you shouldn't be putting your time and resources into it because your ROI isn't there. But, you know, we had a nice spread on this property and we had a lot of options of what to do with it. So we decided we were going to stick it out. Would you have done anything differently on this deal? Yes, I would have done a couple of things differently. So the first thing in our research, you know, seeing, so we saw clearly that the person who opened probate didn't appear to be a family member. And we probably should have looked further into that to see if there was someone else that we should contact first. I really don't know from a legal standpoint if it would have made a difference or not. if this person still may have come forward and initiated the suit. You can't know. You don't have a crystal ball. But it may have been easier to sort of start with someone who legitimately had that legal interest in the property, see what they wanted to do with it, and move from there. Because we may have had some other options given the title company's opinion at that point. point we may have been able to do like a quiet title action as they didn't see really very much legal interest from a title standpoint that they were willing to get involved. Explain what a quiet title action is. So quiet title is when someone has like either a lien or some kind of attachment to the property. So in this case, this person had opened a probate against it. But they're either there is no real legitimate claim to the property or the claim that they're trying to make to the property gets, basically they don't respond when the title company tries to come to them to clear whatever it is they need to clear for title. If they can't remedy the situation, then the title company will do a quiet title action, which means clearing everything up without involving this party since they're not responding or they don't. have the correct interest. Yeah. Okay. What else would you have done different? Um, so I think the other thing I would have done differently is, um, from the point where the attorneys got involved, um, I think that I would have been a little bit more aggressive in terms of, I want you guys to see this property condition. I want you to understand what you're dealing with. And I, I need you guys to understand that we're professionals that handle properties like this all the time. And, you know, you guys are lay people who wouldn't have the resources. to repair this properly property appropriately. And explain more about that side of it. Because, you know, everybody gets these kind of big ideas. And like, well, I watch HGTV, like I can, I can fix up the house. And this was well beyond, you know, this wasn't just like a carpet and paint situation. So that was good leverage for us. But I had business partners, you know, and they wanted to be a little bit more relaxed with it. And I had a different opinion. So had that just been my deal alone, I think I would have been a little bit more aggressive with the attorneys to try to get it closed up earlier. That's interesting. So maybe sending them more pictures or making the pictures more obvious. Yeah. Yeah. I think, yeah. And you can really pile on a lot of information. We had all the records from the city. We had the back pack. tax records we had um you know we we could have gotten better photos of the property and you know when you're juggling different things and you know because this isn't you're not just working one deal at a time you know so sometimes you're not thinking of all the things you can do to keep it moving along and um i think that we took for granted that once they kind of saw all these things that you know the two people that were heirs might say, wow, this is a lot of work. I don't really know if I want to take this on. You know, but they weren't realistic about certain things. They didn't really understand what it would take to fix it. You know, they're thinking they can make a whole lot more money on the back end if they can figure out how to get the property. But oftentimes, this is just outside of, you know, the resources really available for a layperson who doesn't really know how to manage a project like that. Do you think you could have met them at the house? Would that have helped? I think that would have been a great idea. Yes. If they would have agreed to it. You know, so one person was out of state, obviously, and she was much more agreeable to the whole thing. If we could have gotten the other person, you know, yeah, to cooperate a little bit more, you know, and she changed her tune a little bit because she was very cooperative in the beginning. And then maybe, you know, maybe she felt some sense of frustration or sort of betrayal that you know, after the fact that someone was going to take the property. So she wasn't really wanting to work with us, um, you know, in, in the same capacity as before. I wonder if it would have been worth the investment to pay for this other person that was out of town to pay for their ticket and hotel to fly to Phoenix. It may be. Yeah. Yeah. Yeah. I mean, um, it was certainly worth it to bring our attorney in, you know, and, and pay those fees. So. Because I just know, unless you're a seasoned investor, right? When you go in and you see an ugly, bad house like that, that stains, that has all of a sudden, you're just like, oh my gosh, this is a disaster. Changes everything. It does. It does. And this was a total disaster. It was when the roof caved in, all of the insulation came out. And so it was all over the house. And then at some point it had rained in there. So it was just like this black mold insulation, disgusting all over. It was terrible. You know, and the city had come and boarded up with plexiglass, all the windows. And so it was, you know, it was a scary looking property. All right. So what were some of your biggest lessons learned then with this? I know we talked a little bit about what you would have done differently. Yeah. What would some lessons learn that? maybe would help other people listening to this to know what to do when they're in a situation like this? Well, I got to tell you, I sure did learn a lot about the legal process. And I think that that's really important because I see a lot of newer investors, like in the Facebook groups and such, talking about, you know, well, I've got two or three people on the deed and they're all arguing with each other and I don't know what to do. And so knowing the legal ins and outs of a situation like this can be really helpful, because if you know that someone really does or doesn't have legal interest in the property, that's saving you, you know, time and energy in terms of who you're dealing with and who you're trying to, you know, discuss and negotiate this property with. Because if you're arguing with someone who doesn't even belong there. letting them know and being able to give them the evidence that this is not your deal. I'm sorry, I need to talk to this person over here. That can save you a lot of time and headache, first of all. And, you know, it I mean, also just in terms of deciding whether or not you want to continue on with this deal, you know, the levels of complexity, as you said, you know, some people would have walked away. And so you're constantly assessing, do I know enough? about this to make it work in the end or am I going to put a bunch of time into it and it's going to turn out to not be a deal and I could have been working on other things um you know so to me every time I learn something about how the legal system works within you know a situation like this um I'm really happy to walk away with that knowledge regardless of what happens with the deal because that just gives me another layer of understanding for whatever else might come up you know in in my day-to-day business. Yeah. Yeah. And don't be afraid to hire the experts like you did with the attorney, right? Absolutely. Yeah. You know, and that's another thing. I do see a lot of new investors feel kind of a sense of scarcity about, I don't know if I want to put money into such and such, because what if it doesn't work out? Deal with the experts, you know, you are not an attorney and sometimes there's no way around it. but to deal with an attorney or some other field expert that has information and knowledge that you don't have. It's always worth it, in my opinion, to spend the money on those things. Yeah, that's very good. Cool. Well, the deal turned out good, right? You made 35 grand on this thing. When most people would have quit and given up, you stuck with it for nine months and saw this through to completion. You invested a lot of time and energy and money into it. But you saw it across the finish line. Yeah. Love it. Well, Lisa, thank you so much for sharing your story. Appreciate it. How can people get in touch with you? If they're in Phoenix and they got a deal maybe or they want to talk to you and just, you know, chat, how can people reach you? So, yeah, absolutely. You guys can hit me up at lisaeven.phonesites. That's P-H-O-N-E. S-I-T-E-S dot com. Okay. So I'm writing this down here. Lisa Even at phone sites. Dot phone sites dot com. Oh, so that's a website. Yeah. All right. Let me fix this here. Yeah. And it'll just ask you for your email. And that way, you know, we can get in touch and figure out what we want to chat about. Cool. Lisa Even. L-I-S-A-E-V-E-N dot phone sites. P-H-O-N-E, like a phone, sites, S-I-T-E-S, S-I-T-E-S.com. Yes. Cool. All right, Lisa, are you active on social media, Facebook, Instagram, all that? I am. Yeah, I'm on Facebook as well. I'm Lisa with the pink hair. I got that from my clients. When I used to door knock, they would always say, oh, you're the girl with the pink hair. So Lisa with the pink hair is how you can find me on Facebook. Right. Hey, thanks again, Lisa. Appreciate it. All right, guys. Don't forget if you want the notes from this interview and the notes from all the other ones that we've done, go to joemccall.com slash bad or text the word bad to 313131. And we'll get that to you. And hopefully maybe put this into a book. We'll see. I'm getting some comments on YouTube and Facebook. Like Daryl here says, great info. Thank you for sharing. Tom Kroll in the house. Easy peasy, lemon squeezy. So glad you guys are here watching this. And we will see you all later. Take care, everybody. Thanks again, Lisa. Bye-bye. Bye-bye. Thanks.

Hey, what's going on guys? Joe McCall, Real Estate Investing Mastery Podcast. What's going on?

Hey, this is episode number 16 of the Deals Gone Bad series. And on this episode, we're going to be talking to an investor out of Phoenix. Her name is Lisa Even, I believe.

I should have asked her. Yeah, she's nodding her head. All right, I got it. Good. She's in Phoenix.

She's a full-time real estate investor, and she's got this very interesting deal. adverse possession that was a complicated probate. I intentionally didn't ask her any questions about this deal yet, except little preliminary questions.

I wanted to dive deep into the details of her business, what kind of business does she do, and then talk about this specific deal because we're going to get out of this. And this is something that's so awesome with this series of deals gone bad that we're doing is we're learning from lessons learned from other folks. And the cool thing about Lisa is she didn't just quit and give up. when this deal happened. She rebounded.

She's still at it. She's still doing deals. These are the kinds of people you want to learn things from.

You don't want to learn from people that have never had a bad deal, never made a mistake, or have only had success and haven't had failure. I would much rather trust somebody who has a skin to their knee, who has been bruised, beat up a little bit, but has come back and still fighting. There's some really encouraging things through stories like this.

I'm hoping that you get a lot of value from this interview with Lisa here in just a minute. But first, we are doing this video right now, audio podcast, whatever, live on Facebook and YouTube and Periscope, maybe LinkedIn. I don't know. But if you're watching this live right now, please say hello. Comment below the video.

Give us a thumbs up and subscribe to the YouTube channel, please. I'd really appreciate it. Let us know that you're.

listening, paying attention. And also if you have a question or a comment for me, or at least as we do this podcast, if you type it in the comments, we'll be able to put it on the screen. If you've got a good question.

Second thing is if you're listening to this on audio podcast and you want the notes for this episode and all the other ones that we're doing, I got about another eight or 10 or so lined up. I'm going to be putting all of this together into a resource. Right now, it's in a mind map. Pretty soon it's going to be in a PDF. All of the notes and lessons learned of these deals gone bad, and every one is different.

But if you want the notes and the resources from these podcasts, text the word bad to 313131, or go to joemccall.com slash bad. Again, text the word bad to 313131, or go to joemccall.com slash bad to get details on these bad deals, and more importantly, how people recovered from them and came out of it. Cool. All right. So let's bring Lisa on right now.

Lisa, how are you? Can you hear me? Okay.

I can hear you. Great. Yeah. Thanks for having me, Joe. I'm glad you're here.

Getting some comments here. Landlord coach. I think this is Mark, right?

Great show, Joe. Fantastic series. Jan, tried to follow most of the deals gone bad. Great content. Good.

I'm glad you guys are liking it. I'm glad you're commenting on the YouTubes and Facebook. So Lisa, you're an investor in Phoenix.

Tell us a little bit about yourself. So I've been investing in the Phoenix market for about six years now, full time. And I work mainly with distressed properties and distressed property owners. And so things like foreclosure would be my area of expertise. But also things like city violations, you know, weird clouds on title, someone having difficulty selling a property that they want to get rid of that type of thing.

Okay. And how did you get started? You know, I fell into this completely accidentally. I actually was in education prior to this, and I was laid off. I wasn't sure what to do next.

There just were not a lot of jobs in my area of expertise. So I started going to an entrepreneurial meetup group with intention of trying to find, you know, some kind of interest in what kind of business could I open. and met a couple of other real estate investors that needed boots on the ground at the time.

They were expanding their business and we hit it off. So I joined their team and worked with them for a few years and then went solo. All right. Nice. And so you learned, I love that.

You learned from somebody who's actually doing deals already. Yes. And you just kind of like, were there boots on the ground person that went out and found the deals for them? Yes.

They taught you what to look for, how to make the offers? Yes. Yeah. all of those things.

So it's great mentorship. Good. And you're in Phoenix, a real tough competitive market, right? Yeah. Phoenix is a little saturated.

You got a lot of people doing investing here. And we've got, this year's challenging. We've got real low inventory. So that raises the stakes a bit.

Good. All right. So let's talk about this deal. This is a unique property.

It sounds like it's a probate deal. So how did you find it? So probates were, are one of the, you know, business models that we utilize. And so here in Arizona, probates are actually public record. That's not the case in every state, but so you can go down to the courthouse and get a list of probates.

And so that was something that we did as a company. We'd go down and get our monthly list of vet. you know, out what was on the list and see who we wanted to contact and go from there.

So this property was actually vacant for a number of years. So not only was it a probate, but it also had a lot of city violations. So having those two things stacked on top of each other were, you know, made it a hot lead. Nice. So you get these, by the way, the harder the lead to get, the better it is, right?

Typically, yeah. The less competition. Yeah.

And so you get the address, you get the name, you know, what do you do then? So, at this point in time, our business model was to physically go and knock the door. Yeah, which is its own interesting set of challenges. So, we had the name of the person who filed probate. And this is actually one of the areas that was a learning curve in this particular deal.

We had never seen before. a person file a probate against a property that they weren't actually a legitimate heir to. Usually when you see someone who isn't an heir of the property, it's like a business that's trying to collect. And so they'll file probate in order to have a legal interest so they can collect some funds that are due to them. So we thought that we were dealing with the actual heir to the property.

And when I went and spoke with her, What I found out was that her mother did live in the property for a long period of time, over 20 years, but she never did own it. It was they were friends of the family that originally owned the property. And they initially rented the property to this woman's mother. And then, you know, life things happened. And, you know, they moved around from the Phoenix area and things like that.

And she stayed and continued to upkeep the property. And at one point they had a verbal agreement that they said, you know, you've lived here for so long, you can just have this property. We don't want it anymore.

Now, the issue with that is that if you don't deed things correctly, you know, this is all hearsay. So this was the story that we received. And so she said, I actually filed a probate to try to sell the property and a title company told me that I couldn't because there was an improper quit claim.

So the mother who had been living there. in an effort to legitimize her stakes in the property, quit claimed it to herself, which is not a valid deeding process. So did she forge the owner's signature? No, she literally just quit claimed it from herself to herself.

Okay. Yeah. So, you know, I mean, you can go into like an office depot or whatever and buy like a quit claim form and people use them. the wrong way all the time because they don't know any difference.

So this is what happened. And so the title company said, no dice, you don't quit claim a property from yourself to yourself. And the names don't line up in terms of who might be an heir. So this woman said to me, the only reason I was trying to sell the property is because I keep getting letters about these city liens. I just found out that there's also back taxes.

I don't want the responsibility. because I never lived in this property. I don't want to be financially responsible for it.

I'm just trying to get rid of it. And she said, according to the title company, it doesn't even belong to me. I want nothing to do with it.

So-She's still living in it, by the way? No. So this property was vacant and in pretty bad condition.

The roof was in. It had squatters for a number of years. It was in rough shape. So this is another reason that she didn't want anything to do with it, right? Because it's not even a livable property.

And by the way, if you see me looking down, I'm taking notes. I know that look is rude, but I was watching some of my old videos and it's like, it looks like I'm not even listening, but I am. And I'm just taking notes.

All right. I appreciate that. That's awesome.

So yeah. So basically, you know, that was the first bit of information that we got when we reached out about this property. And I said, Hey, you know, do you know if there are any actual blood errors that we can go speak to?

Because look at, here's the situation. The city doesn't care who pays off the liens. They just want to pay.

And they don't care who pays the taxes. They just want the taxes paid. So if they have found that you, they think you have a connection to this property, they'll continue to send you things and you're not necessarily financially responsible.

But if you want them off your back, the best thing to do is to fix this title issue and get this property out of your way. And so she said, you know, as far as I know, these people, you know, they're children. They're in their... adult children have already passed away and I don't know if they had kids. So we had to go back to the drawing board and do some more research.

Um, and this is, uh, this is where it gets into, uh, kind of the more complicated, you know, now you're not just searching, uh, doing like a title search and doing skip tracing, which a lot of investors are familiar with. Now we're into ancestry.com trying to find the right people. We're looking on Facebook, um, to see if we can find some, you know, trail from the names of the original owners.

And we did, we tracked down a grandchild. Really? We did. And we were able to see through the different subscription services that we had, that there was a high likelihood that she actually was a blood relative.

And then we skip traced her, got her information. And I spoke with her on the phone. She was out of state. And she said, yeah, that was my grandparents'property.

And she even remembered the friends of the family as well and said, oh, yeah, that lady lived there for, you know, 20 years or something. And, you know, she said, I don't live in Phoenix, but, you know, yeah, I'm happy to help with whatever I can do, you know, to stop whatever's happening with this property. And, you know, of course, we offered her a little bit of money, you know, because we.

there was some space there to do that. And so as far as we were concerned, at that point, the information we had was the original person we spoke to wanted nothing to do with the property, she just wanted to alleviate financial responsibility. We found the appropriate heir, which is what the first person, you know, said, I would love it if you would find the appropriate heir so that this can be off of my plate.

So we thought, great, full steam ahead. Now that we found the right person, easy peasy, we know what to do. Um, and as soon as we got the paperwork going and, um, we did a new probate with the appropriate person and that got filed with the court, we opened escrow, um, and we got everything started. And then we got an email from an attorney, um, that said, I have someone with legal interest in the property. You need to stop everything that you're doing.

Um, this person wants to claim the property and we're going, what in the world are you talking about? And it was the first woman that I had spoken to. So this was our first sort of complication that we've ever had with what's called adverse possession. Let me rewind a little bit. The first person you talked to, refresh our memory, who was that again?

So she was the daughter of the woman who lived in the property for the 20 years that tried to claim it to herself. Okay, right, okay. I know there's a lot of characters involved. Is it making sense?

Yes. Okay. She started seeing dollar signs. She didn't care about the property before. And all of a sudden, when an investor's involved, she's saying, oh, wait, I can actually make some money with this thing.

You got it right. Yeah. So when we started moving forward and found out what was happening and she went, wait a minute, is that why would somebody be going after this property?

Is there money here? And so that's, that's what she was after. And so she did hire an attorney and this was a lesson for us.

We had never come across adverse possession. We kind of knew a little bit about what it was, but as far as we understood, it was something that one is kind of difficult for the court to prove one way or another. And two, it's fairly rare. So we didn't think anything of it in the beginning, but.

She came back to us and said, you know what? I want, I want this property. My mom lived in it for 25 years.

And as far as I'm concerned, that should be part of my inheritance. She does have a right to it. Legally speaking, she actually did. So this is what gave her the right to it.

Had this woman only lived there and paid rent, even for that really long amount of time, there really was no proof of legal interest if all she did was pay rent because the family that owned it never did deed it to her, even though they verbally told her that she could have the property. However, when they told her she could have the property, she started paying property taxes. And so in the state of Arizona, that is enough to have legal interest now in the property. So that tied us up because now we have a blood relative who does have legal interest because the ownership chain is there from a title perspective.

And we have someone who had a history of a long term living in the property and paying property taxes, which were something that are on file that can be looked up. So they both had legal interest in the property. And this is a mess because, you know, if you've done any number of deals, you know how people get when money is involved. Yeah.

So how much time and resources have you been into this so far at this point? So at this point, I'm going to say we're probably three months in. And, you know, anytime we get contacted by an attorney, you know, we like to get our attorney involved as well just to make sure that. everything is going the way that it should. You know, you don't, you don't want to talk to legal counsel and say something you're not supposed to say.

Um, you know, so you want to have that representation. So let me ask you something first, like how big of a deal was this? Was this a small little deal or was it worth pursuing? What were the numbers like? It was, it was definitely worth pursuing.

So, um, the ARV at that time was about 180 and, uh, we had offered 60 for the property. So, you know, there was plenty of room. At that point, we were still deciding, actually, if we were going to purchase the property outright and fix it up, even though it was in pretty bad condition. But it was something called block construction, which we have a lot of here in Phoenix.

So you got four walls that are you can't, you know, without a bulldozer, they're not coming down. So, you know, we had room there for either a flip or for a nice assignment fee if we ended up wholesaling it. Um, so we were still deciding.

All right. So then what happened? So, um, once this woman got involved with her attorney, we had to, of course, check with our attorney and see what was going on. And he looked things over and said, okay, you've got two people here who have legal interest in the property. So there's a couple of things you can do.

You know, we had it under contract. So luckily we were attached to it, but the two of them still had to agree to keep that contract and agree to sell it to us. You know, they could have gone to court and said, we want to do something completely different. And that would have been up to a judge at that point.

The blood heir, the blood relative did not have funds to hire her own attorney. So she was really frustrated because she said, how am I going to fight this? You know, there's nothing that I can do. So we ended up hiring our attorney to represent us to keep our. contract in play here.

And our attorney negotiated with their attorney and said, look, here's the thing. If we take this all the way to trial, number one, it's going to take a really long time. Do we want to do this? Number two, have you seen the condition of this property?

Because if you take the property and you turn around and try to sell it, you're just going to be selling it to another investor. You might as well go ahead and sell it to these people you've already. talked with, you know, because nobody else is going to buy it. You're not going to put it on MLS. The roof is caved in.

It's, you know, not feasible. So that, that was lucky for us that the property was in that condition because, you know, that, that gave us some leverage. And, you know, then, then the third point that the attorney argued was, look, if you're willing to split the money, then you both walk away with something, all of the issues that you said you wanted off.

your plate are gone and you know, everybody's happy and you've given it to someone who knows what to do with property to get it fixed appropriately, you know, and, and it's a win, win, win. So let's do that. And, um, it would have been really nice if they would agree to that immediately, but instead they went back and forth and argued with each other about who should get more money, you know, why one of the, you know, how are we going to split it 70, 30, 60, 40. And so this went on and on, um, for a number of months.

And we ended up finally being able to follow through on our contract and close on the property, uh, nine months after the initial contact. So it took them, it took them six months of a back and forth, um, and six months of the, the, um, I don't even know what to call her, the friend of the family, um, paying an attorney, you know, to, to argue back and forth of what percentage they were going to get of, of the. 60K. Of the how much again?

It was 60, 60 that we were purchasing it for. Okay. So then what did they finally agree to?

So they finally agreed to a 50, 50 split if we slightly raised our price. And so we went and took a lot of photos of the property and presented them and said, 65 is the highest we can go. This thing needs 80 to 100K in...

repair. And at that point, neither one of them had actually seen the property. So even though the one person was here in Phoenix, she lived about 45 minutes away, never bothered to go look at the property to see what they were even dealing with.

So once they saw the pictures and saw how bad it was, they decided that they wanted to cooperate. Wow. And it took nine months. Nine months.

Nine months. Yeah. So then did you buy it?

We bought it. Is that the end of the story? Well, we decided to wholesale it, actually. Once we messed around with it for nine months, and then finally we're able to take possession at that point.

Now we've got our crew working on other projects, and we're going to have to wait on this one. And to be honest, it was in kind of a rough neighborhood. So we didn't want to risk squatters getting back in after we just... finally took possession. It had been kind of enough.

We just wanted to be done with the deal. And so do you mind if we, how much did you wholesale it for? So we made about 35K.

Good for you. Nice. So no complaints there.

Well, this is a bad deal gone good. Ultimately, yes. Yes.

Not bad. And so most people would have quit and give up though, wouldn't they? Yes, absolutely.

I know I would have. I wouldn't have had the patience to stick with that, you know, just too much of a hassle. Forget it. It was a big hassle. And, you know, had the spread not been there, you know, you have to you have to sort of weigh your options.

Right. If you've got a property that isn't worth a whole lot in the first place, then you shouldn't be putting your time and resources into it because your ROI isn't there. But, you know, we had a nice spread on this property and we had a lot of options of what to do with it. So we decided we were going to stick it out. Would you have done anything differently on this deal?

Yes, I would have done a couple of things differently. So the first thing in our research, you know, seeing, so we saw clearly that the person who opened probate didn't appear to be a family member. And we probably should have looked further into that to see if there was someone else that we should contact first. I really don't know from a legal standpoint if it would have made a difference or not. if this person still may have come forward and initiated the suit.

You can't know. You don't have a crystal ball. But it may have been easier to sort of start with someone who legitimately had that legal interest in the property, see what they wanted to do with it, and move from there. Because we may have had some other options given the title company's opinion at that point.

point we may have been able to do like a quiet title action as they didn't see really very much legal interest from a title standpoint that they were willing to get involved. Explain what a quiet title action is. So quiet title is when someone has like either a lien or some kind of attachment to the property. So in this case, this person had opened a probate against it.

But they're either there is no real legitimate claim to the property or the claim that they're trying to make to the property gets, basically they don't respond when the title company tries to come to them to clear whatever it is they need to clear for title. If they can't remedy the situation, then the title company will do a quiet title action, which means clearing everything up without involving this party since they're not responding or they don't. have the correct interest. Yeah. Okay.

What else would you have done different? Um, so I think the other thing I would have done differently is, um, from the point where the attorneys got involved, um, I think that I would have been a little bit more aggressive in terms of, I want you guys to see this property condition. I want you to understand what you're dealing with. And I, I need you guys to understand that we're professionals that handle properties like this all the time.

And, you know, you guys are lay people who wouldn't have the resources. to repair this properly property appropriately. And explain more about that side of it. Because, you know, everybody gets these kind of big ideas.

And like, well, I watch HGTV, like I can, I can fix up the house. And this was well beyond, you know, this wasn't just like a carpet and paint situation. So that was good leverage for us.

But I had business partners, you know, and they wanted to be a little bit more relaxed with it. And I had a different opinion. So had that just been my deal alone, I think I would have been a little bit more aggressive with the attorneys to try to get it closed up earlier. That's interesting.

So maybe sending them more pictures or making the pictures more obvious. Yeah. Yeah. I think, yeah.

And you can really pile on a lot of information. We had all the records from the city. We had the back pack.

tax records we had um you know we we could have gotten better photos of the property and you know when you're juggling different things and you know because this isn't you're not just working one deal at a time you know so sometimes you're not thinking of all the things you can do to keep it moving along and um i think that we took for granted that once they kind of saw all these things that you know the two people that were heirs might say, wow, this is a lot of work. I don't really know if I want to take this on. You know, but they weren't realistic about certain things. They didn't really understand what it would take to fix it. You know, they're thinking they can make a whole lot more money on the back end if they can figure out how to get the property.

But oftentimes, this is just outside of, you know, the resources really available for a layperson who doesn't really know how to manage a project like that. Do you think you could have met them at the house? Would that have helped?

I think that would have been a great idea. Yes. If they would have agreed to it. You know, so one person was out of state, obviously, and she was much more agreeable to the whole thing.

If we could have gotten the other person, you know, yeah, to cooperate a little bit more, you know, and she changed her tune a little bit because she was very cooperative in the beginning. And then maybe, you know, maybe she felt some sense of frustration or sort of betrayal that you know, after the fact that someone was going to take the property. So she wasn't really wanting to work with us, um, you know, in, in the same capacity as before.

I wonder if it would have been worth the investment to pay for this other person that was out of town to pay for their ticket and hotel to fly to Phoenix. It may be. Yeah. Yeah. Yeah.

I mean, um, it was certainly worth it to bring our attorney in, you know, and, and pay those fees. So. Because I just know, unless you're a seasoned investor, right? When you go in and you see an ugly, bad house like that, that stains, that has all of a sudden, you're just like, oh my gosh, this is a disaster.

Changes everything. It does. It does.

And this was a total disaster. It was when the roof caved in, all of the insulation came out. And so it was all over the house.

And then at some point it had rained in there. So it was just like this black mold insulation, disgusting all over. It was terrible. You know, and the city had come and boarded up with plexiglass, all the windows.

And so it was, you know, it was a scary looking property. All right. So what were some of your biggest lessons learned then with this?

I know we talked a little bit about what you would have done differently. Yeah. What would some lessons learn that?

maybe would help other people listening to this to know what to do when they're in a situation like this? Well, I got to tell you, I sure did learn a lot about the legal process. And I think that that's really important because I see a lot of newer investors, like in the Facebook groups and such, talking about, you know, well, I've got two or three people on the deed and they're all arguing with each other and I don't know what to do. And so knowing the legal ins and outs of a situation like this can be really helpful, because if you know that someone really does or doesn't have legal interest in the property, that's saving you, you know, time and energy in terms of who you're dealing with and who you're trying to, you know, discuss and negotiate this property with.

Because if you're arguing with someone who doesn't even belong there. letting them know and being able to give them the evidence that this is not your deal. I'm sorry, I need to talk to this person over here.

That can save you a lot of time and headache, first of all. And, you know, it I mean, also just in terms of deciding whether or not you want to continue on with this deal, you know, the levels of complexity, as you said, you know, some people would have walked away. And so you're constantly assessing, do I know enough?

about this to make it work in the end or am I going to put a bunch of time into it and it's going to turn out to not be a deal and I could have been working on other things um you know so to me every time I learn something about how the legal system works within you know a situation like this um I'm really happy to walk away with that knowledge regardless of what happens with the deal because that just gives me another layer of understanding for whatever else might come up you know in in my day-to-day business. Yeah. Yeah. And don't be afraid to hire the experts like you did with the attorney, right?

Absolutely. Yeah. You know, and that's another thing. I do see a lot of new investors feel kind of a sense of scarcity about, I don't know if I want to put money into such and such, because what if it doesn't work out?

Deal with the experts, you know, you are not an attorney and sometimes there's no way around it. but to deal with an attorney or some other field expert that has information and knowledge that you don't have. It's always worth it, in my opinion, to spend the money on those things. Yeah, that's very good. Cool.

Well, the deal turned out good, right? You made 35 grand on this thing. When most people would have quit and given up, you stuck with it for nine months and saw this through to completion.

You invested a lot of time and energy and money into it. But you saw it across the finish line. Yeah.

Love it. Well, Lisa, thank you so much for sharing your story. Appreciate it. How can people get in touch with you? If they're in Phoenix and they got a deal maybe or they want to talk to you and just, you know, chat, how can people reach you?

So, yeah, absolutely. You guys can hit me up at lisaeven.phonesites. That's P-H-O-N-E. S-I-T-E-S dot com.

Okay. So I'm writing this down here. Lisa Even at phone sites.

Dot phone sites dot com. Oh, so that's a website. Yeah.

All right. Let me fix this here. Yeah. And it'll just ask you for your email. And that way, you know, we can get in touch and figure out what we want to chat about.

Cool. Lisa Even. L-I-S-A-E-V-E-N dot phone sites.

P-H-O-N-E, like a phone, sites, S-I-T-E-S, S-I-T-E-S.com. Yes. Cool. All right, Lisa, are you active on social media, Facebook, Instagram, all that? I am.

Yeah, I'm on Facebook as well. I'm Lisa with the pink hair. I got that from my clients. When I used to door knock, they would always say, oh, you're the girl with the pink hair. So Lisa with the pink hair is how you can find me on Facebook.

Right. Hey, thanks again, Lisa. Appreciate it. All right, guys. Don't forget if you want the notes from this interview and the notes from all the other ones that we've done, go to joemccall.com slash bad or text the word bad to 313131. And we'll get that to you.

And hopefully maybe put this into a book. We'll see. I'm getting some comments on YouTube and Facebook. Like Daryl here says, great info.

Thank you for sharing. Tom Kroll in the house. Easy peasy, lemon squeezy.

So glad you guys are here watching this. And we will see you all later. Take care, everybody. Thanks again, Lisa.

Bye-bye. Bye-bye. Thanks.

Transcript for:Learning from Real Estate Deal Challenges

Transcript for:
Learning from Real Estate Deal Challenges