How a Failed Real Estate Deal Led to Me Getting Married

I’ve talked before about my move to California in my About page. It was May 2013 and it snowed in Minnesota; that was the straw that broke the camel’s back. But truth be told, I was super close to sticking around. In fact, I would have been here permanently starting in 2013 had a real estate deal panned out how I’d originally wanted.

In March of 2013 I was on the hunt for a rental property. I’d never been a home-owner, but I wanted to “house hack“: buy a duplex, rent out half, and get a roommate or two to help with the other half. I found what I thought was the perfect place. It was in a decent location, it was affordable, and it had one long-term tenant.

Paper Dream

On paper this thing was a dream. With the rent coming in from one unit, I could more than pay for the mortgage. If I decided to rent out both units down the line, I’d have been banking a considerable amount of money. A roommate would help me save even more money each month, and as a three-bedroom unit, I could have two of them.

The property was in relatively decent shape, but it did need a little bit of work.

HOA from Hell

The work itself wasn’t a huge concern. It needed a new deck and some hail damage on the roof which needed to be patched. Where we ran into problems, however, was the HOA. The property was part of a Home Owners Association along with one other duplex, and a couple dozen townhomes.

Unfortunately, part of the HOA restrictions meant that the HOA itself had control over repairing the roof and the deck in the back. A batched roof installation a few years back on ALL of the homes in the HOA meant that all of the roofs in the HOA needed to be replaced.

This by itself wouldn’t have been a huge deal either, except that the roofing company that did the installs a few years previously had done a horrible job. They were actually were out of business after being sued for their shoddy work. To make matters worse, the HOA was very poorly managed and did not have the money to fix ANY of the roofs – not even one.

No Options

Left with a huge bill, the HOA decided that if it couldn’t sue the roofers, it would go to the city for financial support. Unfortunately, the city had denied the HOA’s request to subsidize the repair costs. This meant the HOA needed to cover all of the roof replacement costs by itself.

The town-homes were the first priority, and the two lonely duplexes were the last ones on the list. It’d take years at the then-current HOA dues amount to get all of the roofs taken care of. In the meantime, we’d be at risk of water causing some major damage to the property.

With my hands tied, the bank wouldn’t give me financing, deeming the property uninsurable.

Blessing in Disguise

I was super bummed out. It initially appeared to be such a great opportunity to house hack and start amassing some real estate. I would have been able to save nearly 90% of my income. But it was not meant to be. Ultimately it was a blessing in disguise.

Since I had no property ties to Minnesota, when that snow came about in May I decided it was time to make the move. I’d had my dream crushed, but it was totally out of my control. Another dream of mine – moving to CA – was totally my call. I wasn’t going to let that one be crushed, too.

And it turned out pretty dang good. I lived in CA for three great years. On the down-side, I didn’t get to save as much money as I wanted, but it was worth everything I gave up and paid to do it. I met my lovely wife and we ended up back in MN by the friends and family I’d missed.

Look for the Silver Lining

Sometimes you need to look for the silver lining in every situation. Sure, on paper that duplex was an awesome deal. But it would have been an absolute nightmare of a property even if I’d been able to close. The HOA situation alone raised some red flags. It being uninsurable turned out to give way to another dream of living by the ocean, and forever changing my life.

Not all bad situations are really that bad. The key is to find the good in it, even if you need to reflect on it down the road. It may seem like a crappy situation now, but if you power through it there is always a lesson and something good that can come out of it.

Question:

What has happened in your life that had some silver lining to an otherwise bad situation?

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2 Comments

  1. I don’t think I’ll ever own a condo or townhome with an HOA. At least in the Olympia/Tacoma/Seattle WA area, HOAs are very expensive. One reason is to prevent investors from buying all of them up and renting them out. I’ve heard of horror stories where condo owners couldn’t rent out their condos because the HOAs only allowed a certain percentage of overall condos to be rented out. These people were on wait-lists and lost thousands of dollars per year.

    I like your outlook. No point in dwelling on things in the past, right?

    1. Yeah, HOA’s vary quite a bit out here. That sounds like a horrible situation for those condo-owners 🙁

      And yeah – the past can be a useful learning experience, but no point in dwelling on it!

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