← The David Greene Show
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- [00:01]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green and I've been doing this for over 10 years. I've seen the ups, the downs, and everything in between. This is the show where we pull back the curtain and show it to you too. So if you want to build wealth through real estate or you just love learning about it, you found your home. I'm David Green. This is the David Green show and today's podcast. We're going to be talking about a specific property of mine in the Fort Lauderdale area. Now, some of you have talked to me personally, some of you that follow the show religiously have heard me mention it. But if you haven't, let me start the show by giving you a little bit of context. Several years ago, two and a half close to three years ago, I bought three properties in South Florida. Now I did this as part of a 1031 exchange because somebody had stolen title to a whole bunch of my properties. When I got the title back, I had to sell them. And then I was forced into a 10:31 exchange that I really didn't want to do, but I wanted to make the most of it. Miami was a red hot market and so I bought some real estate just north of Miami in the areas where I thought the population would be moving too. I got a pretty good deal on the homes. They appraised for much more than I paid for them and the market was continuing to go up. So these were pretty good deals at the time. I bought them with the information that I had. I was a nice guy and I played by the rules and I applied with the cities that these houses were in, three different cities to get short term rental permits. That ended up being the beginning of a very long and painful process with these three properties. As I learned the hard way that many cities don't want short term rentals, even though there are states like Florida that have laws on the book that allow you as a citizen run them as short term rentals. I found out that there are neighbors that will make hell on city council, which will make its way up to the mayor's office, which makes its way into the coding and the zoning enforcement. And long story short, these cities figure out ways to stop you from running a short term rental even though you were doing so legally. So on every one of these homes, I had inspectors come walk the house to make sure that it was good to get the short term rental permit and they play dirty. What happened was they would find things in the houses that had been modified without permits, but I didn't do the work. This was done long before I bought them. Some of it was stuff like a kitchen remodel that was recently done before the person sold me the house. Other stuff was things that were done in the 60s, the 70s, the 80s or the 90s. We ended up with entire ADUs in backyards that the city said you can't have and they needed me to tear down because it was a foot too close to the fence. Or one property that was a 5,000 square foot property that also had a duplex on the lot two blocks from the beach in Hollywood, Florida, that they said I had to tear down the entire duplex on my own dime to make my property worth less money because when it was originally constructed in the 40s, they didn't complete the permitting process. Now, every single house on the street, that one in particular, had the same thing. They all had garages that were added to the properties later because they were built in the early 1900s. And those garages were often converted into ADUs because this was an area with a lot of demand. And the city told us when we called, that's because you guys applied for a short term rental permit. We don't bother the people that don't. They made it very clear this was their plan. That's what was going on. And they didn't care if that was unfair. They kind of have the political power to do so. So there's not much you can do now. Here's where it gets ugly, because I was eventually forced to resign and say, okay, fine, I'll make the changes. But they kick you around from the zoning department to the planning department to the building department to the fire department with new rounds of plans that are drawn by architects and engineers over and over and over, never letting you out of this hell. Now if you try to sell the properties, you can't because there's red tags that they can't be occupied and the new buyer isn't able to do anything with it. You may be wondering, what is their plan here? I don't think there is one. I think you're talking about city officials with W2 workers that really don't give a crap how things go down. They just want to get it off their desk. And because you get branded as a short term rental operator or real estate investor, you're a greedy person and it's not their problem. And I think they actually take some joy from being able to inflict financial pain on you. And I had to make these mortgage payments for years without any ability to get a certificate of occupancy to get them occupied or fix them up to sell them to someone else. Several of the properties, they shut the power off. They said, you can't have power going to your house. So mold termites. And even in one property, massive bees accumulated in the property that I had to continually spend money to fix. All the while, they would not allow us to get the permits to make the changes that we had applied for because there was one person having a problem with it. When another department said okay, another one said, no. For instance, one of These properties had two bathrooms that were added to it sometime in the 50s to the bedrooms. They work fine. But the city said there were no permits that were pulled. Now, they never had a problem with anybody else holding this house before me. I needed a larger water heater because of the new bathrooms. In order to put a larger water heater in, I needed another spot on an electrical panel, but the electrical panel needed to be replaced. In order to replace the electrical panel, I needed to have a larger wattage line installed from the city to the house. But it was already the largest that the city would allow you to have. So after nine months of them just saying, it's not our problem, and us saying, well, then what do you want us to do? They finally said, you have to dig a hole under the ground to run the power to the house if you ever want the power to be turned on again. Well, the only way to get it there was to go through the neighbor's yard. The neighbors hate this house because of the people that owned it before me and were too stupid to realize that taking this out on the new owner wouldn't be in their best interest. So they declined to allow me to dig the trench under their yard. We would go back to the city, and we said, what do you want us to do? They said, no, and they have a right to say no. Do you have another plan? Do you have an option we can do? Does anyone there have an idea? We are trying to do what you want. And their answer every time was to ignore the emails, ignore the phone calls, dodge us, and eventually push us to another department in perpetuity. Now, in today's podcast, we're going to be talking about one of the properties that I finally got released from red tag hell and tried to put on the market to sell at the same time that the South Florida market is getting hammered right now. So it's going to be made into a short term rental. And because you came and listened to my sob story about how difficult this was, you're going to get the insight of seeing what the property looked like originally, what it looked like after they made us tear everything apart and then how we are currently putting it back together. It's not completely finished, but it is coming along really nice. You kind of get to see the full timeline of taking a house and making it into a short term rental. Now I also would like this to function as a warning to other people who are thinking about buying real estate, particularly short term rentals. I don't want to discourage you from doing it. I want you to be aware that it's the stuff you don't see coming that will hurt you. The stuff you know about that other people talk about can be avoided. But I don't think anybody knew that the city could come in and play dirty and shut you down and then not let you get started again, even if you made the changes they wanted you to make. And play dirty they do. This house you're about to see is looks like every other house in the entire neighborhood. It's very close to Imperial Point in Fort Lauderdale in a city right next to it called Pompano Beach. And the property has a garage. Well, at one point it had been a carport and they built it into a one car garage like every other house in that area sometime in the 80s. Well, they didn't get a permit when they did. That city didn't care about it until I had the house and applied for a short term rental permit. And then it was a problem. It had a pergola in the backyard, a beautiful one near the pool. A big reason why I bought the house. The pergola was gorgeous and well built. They still made me tear down the entire thing because it was too close to the fence. It had an ADU in the backyard that was also too close to the fence and had to be taken apart. We put some movie theater chairs in that garage had been converted. They said that made this now living space and you couldn't have movie theater chairs. We said, we'll take the movie theater chairs out 104, no problem. They said it's too late. Now that you've done that, we're going to force you to turn this into living space. We said we won't use it as living space. It'll be a garage. They said your garage never got the right permits, so we're going to make you turn it into permitted living space and that's going to cost $25,000 at every turn. When the city gets involved, they can destroy you. And you don't hear people talk about this on real estate podcasts. Nobody's going on Bigger Pockets to talk about what can go wrong, how unfair it can be, how as a real estate investor, you often have a target on your back and no one feels bad for you. Those of you that own real estate, that have created wealth through it, you understand how great it can be. But what you might not understand is there's a lot of jealousy and anger in the world. People that don't like you for owning land, people that don't like rents going up, and they blame the real estate investors for that problem. Even some people that think owning a home should be illegal unless you live in it. All these people put political pressure on the people that sit in office and you can often find that they will turn against you if you're not living in the house. The neighbors do this, the people that attend city council does this. I have properties in Maui that I bought several years ago in an area specifically zoned for real estate investing. This was a place where they had what they're called condotels. It was a big condo development where you got to pay expensive AOA fees, this like the HOAs in Hawaii, as well as expensive maintenance. You pay property taxes to rent out the property. This is not areas that are zoned for primary residences. And there is still, even though this is the area zone for it, right next to all the hotels, a massive battle going on in Maui right now where they are trying to outlaw short term rentals because they think it's going to make the real estate cheaper for the locals to live in. And if you happen to have bought it before that, that's not their problem. This is all occurring while we are going likely into a economic recession or possibly depression where a lot of people are not going to be able to buy houses anyways and the market is probably going to be flooded with foreclosures in certain areas that typically real estate investors would have swooped in to buy. This is a really nasty storm that's brewing and I just want everyone to know before we get into today's show, if you're going through this stuff, you're not alone. If you're losing money in real estate, it's not just you, you are not crazy. And there is a form of gaslighting that goes on in our industry where only the wins get shared and people hide the losses. And also as you're thinking about getting into it, put extra attention into if the area that you're looking to buy into wants real estate investors in their area. Because even if there are laws to protect you like there were in Florida, there are still situations like the specific city council, mayor and zoning departments that can turn against you where you will lose. So that being said, quick reminder, before we get into some of the pictures and the story of this property, if you guys would like to reach out to me to talk about getting a loan to buy real estate to have my short term rental company manage one of your properties coast to coast getaways, you could do so@davidgreen24.com and go to the chat button. Get a hold of me. If you would like to have one of your questions answered on a future episode of the David Green show, you could go to davidgreen24.com Ask A S K and if you'd like to sign up for our free text letter, you could do so@realtalkrealestate.com text letter without any further ado, let's get into looking at some of the pictures of the property now. If you're listening to this on Apple Podcasts, you jump onto Spotify. You can often see the videos on there. Or you can look this specific episode up on YouTube where you can watch the videos and see the pictures. All right, let's take a look of what the house looked like when it was under construction after the city initially came in and shut it down and made me fix all the stuff that I never changed in the first place.
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Co-host or Guest
It.
- [13:34]
David Green
So this is the master bedroom, first of two bathrooms, updated years ago. So you see a tile shower, but nothing super modern. All the furniture, these are the chairs that we took out of the garage. One of the things I'll do often is I'll convert a garage into a movie theater room and a short term rental because people don't really ever park their cars there. This is one of the guest rooms where we have bunk beds. It's been a little updated since then. And then this is the third bedroom. There's also another bathroom, the second one in the hallway. Now this furniture had to be moved from one of the other properties that the city shut me down in. So we we moved it from that one to this one. A lot of the furniture is still there, but we took what we could and moved it over to this property. I had that accent wall painted, but the flooring was already here in the house. We had to move. You can see like they. They renovated the kitchen before they sold it to me. That was part of the problem. They didn't get permits when they renovated it, which no one ever cares about until it's a short term rental. And this is the game room. You could make this into another bedroom. I just don't think we'll really need it for the area. You won't have so many people going. And now here's the backyard. That white stuff is fencing that we had to take down because we didn't get a permit before. White plastic fence was put into the backyard, and it kind of separated these two areas. And that's the adu. So you got kind of like an overview of what this house looks like. All right, now here's what it looks like in the backyard. And with the adu, which was a big reason why I bought the property. So I bought it intending to rent the house out and the ADU out separately, where you could choose to rent them together when you bought the property, or I could rent them out separate. So I had this white fence that you can see in here put in the backyard just to separate the two areas. And. And they both. They both had access to the backyard from separate places. So it looked like it was going to work out pretty good. That's a laundry room so that the ADU in the back could have its own laundry. City was very mad about that. And here's the entrance to the adu, which was repainted by me and retrofitted to be hurricane safe. It's a pretty cool little setup here. You got your kitchenette. You got your seating area in the kitchen. You got a full bathroom with a shower and a toilet and a sink. Got your AC unit in the wall there. Everything you need for a pretty fun little Florida vacation. And then a closet and a little sitting area like a workspace station. The hairy arm and grunting actually are something you have to pay extra for. They don't come with the house. Here's your full bathroom. They really got the most out of this little space. It was a cool, cool deal. I was excited about it. Again, all of this was here when I bought this property. There was nothing wrong with the construction. There was nothing unsafe about it. The city's argument was it is one foot too close to the fence of the neighbor's house. The neighbors didn't complain about it at all, but that was enough to shut it down and shut the power off. And you can see this is where like the rest of the backyard of the house was, which we'll get to in a minute here. All right, now this is going to show you what the house looked like after it been sitting vacant for a pretty good period of time. Overgrown lawn.
- [18:06]
Co-host or Guest
Instead of just hopping the back, I.
- [18:08]
David Green
Searched for another way in.
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Co-host or Guest
I found there was a driveway here, at least this gate.
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David Green
So this was a gate that goes into the other side of the backyard.
- [18:23]
Co-host or Guest
So this is the side and this.
- [18:25]
David Green
Is the side yard. So things had already been disheveled pretty much. But there was a shed here which we could have used for storage of, like pool equipment and toys and stuff like that. And I was going to take this little backyard space and make it like a seating area with a fire pit. But that didn't happen. We had to clear all the stuff out of that shed. And then this is what the backyard looked like at the time that I bought it. So you got this really cool pool, a slide, a security fence, and look at that gorgeous pergola that we've got. So, like, that's what you would have been able to stay in. There was a TV back here. There was electrical run. They have these shades that come down. There were chairs back there. And we had games set up that the guests could play in the backyard. Beautiful South Florida sky. And as you can tell, it's pretty much isolated from that adu that's in the back. We had like that retro fridge in the back here. You can see in the pergola. The house has been vacant for quite some time when we're taking this, but we have these cafe lights that were put up to make it a nicer space. That's the entrance into the game room. And then you have this backyard with this Astroturf. Really nice looking space. Again, this is the pergola that they claimed was unsafe. Got a privacy wall back here. I mean, that's awesome. We had these chairs set up and tables. This is what it looked like at the time that I bought it. Obviously that all had to be ripped apart to satisfy what the city wanted with the property. But you can still see like this what the vision for this property was. And it was pretty much turnkey right out the door. I didn't have to do hardly anything to the property. I even got a complete brand new roof as part of the negotiation. When I bought it, they replaced the entire roof, which is a big deal in areas where it rains a lot. Here's another look of what that pergola would look like from the side. To me, it looks like great construction. Much nicer than most of the ones you See out there that are kind of put up hastily and cheaply. Solid, solid foundation. Really nice privacy wall that's made of that Pyrex material that won't rot. The. The shade screens, you can see that they've got them throughout here. There's electrical that was already run to it. So you have your fans for cooling. You have lights in here, you have lights strung around it. And then you had a big screen outdoor TV so you could watch it while the kids are swimming in the pool. Everybody having a good time? All right, so with the pergola removed, this is what the backyard looks like now. No fence, no pergola. I mean, isn't that a huge difference with just like the appeal of what that looks like and how the pictures would show up and what the guests would actually have access to? Again, you can't use the adu. The kitchen had to be removed. The bathroom had to be removed. It's basically just a structure at this point that sits there and is used for storage. Destroyed so much of the value in the property for no reason. Now, I was recently in South Florida trying to get this thing into as good of a shape as I possibly could while cooperating with the city, getting the furniture squared away, working on the movie room, working on the game room, working on the backyard. So now I've got some pictures to show you of where we're at now, even though we're not completely finished. So here's one of the shots of the backyard. We've got some lawn furniture back there. You can see that the new roof has been put on. It's been cleaned up a little bit. Here's another one. It had recently been raining. You can see the rain splashing in the pool, but without the pergola, it doesn't look nearly as good. But we've got some lawn chairs. I found these on Facebook marketplace for $50 each. And several of them there, you can get some pretty good deals for short term rentals. Looking on Facebook now, if you've never seen night in South Florida, the sky, it's incredible. I mean, that. That picture you see right there with that blue sky and white clouds is like every night. It is gorgeous out there. And we hooked some cafe lights that you can see on the fence, and we cleaned up the pool some, and so that's a pretty gorgeous view. And we've got some more of these night pictures that came out pretty nice. If you've never visited there, I highly recommend it. One of my favorite places to go. All right, here's another Shot of the backyard from a different angle still, I think looked better with that white fence that used to be up. But you can see the cafe lights stretched all the way across. You can see the rest of the deck chairs and the table that we have here that was moved over from a different property. And that night sky, gorgeous. All right, here's a good shot of what the entire backyard looked like in the daytime. Still need to pressure wash those bricks in the backyard, clean up some of the debris and the Astroturf. But you can see there's a fire pit here that I found, some Adirondack chairs that we bought with color. This is going to be a cornhole throwing area. And I'm working with the city to see if they'll let me rebuild a pergola that won't be as nice as the one I had. It will probably be a lot smaller. So I had to spend money to tear it down and then spend more money to build it, plus spend money for all the permitting fees rather than just letting having them just let me keep the one that was there and maybe pay for permitting fees when it was there. But they, you know, the golden rule, they have the gold, they make the rules. All right, this is a picture of what it looked like when they forced me to convert the garage into living space. We had to bring the entire floor up to the same level as the house. So normally when you step out of a house, you step down like one step into a garage. They made me bring the entire thing up to be the exact same level, and I had to pay a bunch of money to do that. So this is a shot of our contractor showing us the work that's being done. If you've read my book Long Distance Real Estate Investing, you know that I am a very big proponent of having pictures, videos, and evidence from the contractor sent to you before you pay them for the work that was done. So that's what this was. This is us replacing the garage door that had previously been there. We actually kept it to where you could see the garage door from the outside, but there was a wall on the inside that separated it, and they said you couldn't do that. So we had to take down the full wall, take down the garage door, and then build this wall, which just makes the house look really silly and makes it pretty much impossible that it could ever garage again, even though all the other houses on the street have the garage. So that's why the property is going to look a little silly when you see it with the after Pictures where we're at now, it's been plastered and painted and you'll see that. But I need to put some kind of design in this area right here. And then we've got a flower area, like a bunch of potted flowers that go in the space before here to add to the aesthetics. The garage floor before it was turned into the movie room. Now this is fun too, because the city wanted to make sure that we never ever, ever were able to get plumbing to that adu. So they forced us to come in and reroute the plumbing from the house that was included in the adu because there was a kitchen, there was a shower, there was a toilet and a sink away from the ADU so that it wouldn't have water to it anymore. And I had to pay for all of that. Rather than just capping it off, telling us we couldn't use it. This is what they forced us to do to be able to just get power to the house turned back on again. This was the garage before the floor was floated up. This is what it was looking like. We had this AC unit that we did put in there. It was one of the few things that was adjusted to the property before they made us come in and raise the floor. All right, here's the kitchen that we had to rip apart so the city could inspect everything that was done by the owner that sold it to me before I ever owned it. So this is the contractor ripping it apart so the inspector can come in and look at everything that was already there. How many of you ever bought a house that had a remodeled kitchen? Did you have to go through this? Did you have people that showed up and said, hey, you just bought this house, but we're going to make you tear everything apart in it so that we can inspect it on your dimension. Then you're going to have to pay to put it all back together yourself, or you're just going to have a house without a kitchen. Here's an example of all the stuff that had to be sent to the house so that it could be used as a short term rental that sat there for two years before we could ever actually use the dang thing. Just imagine that they would rather have a property sitting in this condition than able to be used to bring in tourism, to bring in business to the local restaurants and rental shops. Nobody wins in this scenario. Now this is the game room, which is kind of the door you will take to go out into the backyard. Needed to be swept up and cleaned, but it's not in Terrible shape. And we've done some improvements to it. So this isn't the best angle, but you can tell it's already coming along. So these doors over here are where the laundry is. Because we couldn't put it in the garage. I was able to find these arcade games, which are normally around 400. Depending the area that you're in, you could get them used for 400. If you're lucky, you can get one for 300. Usually they're in the 400 to 500 range. These are actually newer models that work a lot nicer and have better graphics. I got all three for $400, which is a lot of driving, a lot of looking online, and a lot of time spent talking to people. And I was able to move this foosball out of one of the other properties where it was. So we're going to have a rug put down over this floor. We're going to have wallpaper put up in the room to make it look a lot n. And then we've got maybe a TV that we'll put in here as well. And this will be a fun little game room that should help with the bookings. Now, unfortunately, I don't have very good pictures of the movie room because it's still in the process of being completed. But it's going to be pretty cool when it's done. You can't really tell from these pictures. I don't know why TVs always look smaller in pictures than in person. But this is a monster TV. This thing's 85 inches was not light to put up at all. It was very heavy. You can kind of see these LEDs that don't show up very good in the picture. But we put them all around the top of the movie theater. These are surround sound speakers that I bought when we originally bought the house with the receiver. And a subwoofer here that are going to be going in the corner. So you'll get a surround sound experience. And then there are eight chairs in this movie theater to sit in. I'll also be getting some movie theater posters to be putting around the outside. This one here shows a little bit more. You can see some more of the chairs. And this is me making a video to highlight the property in my new favorite T shirt there. Grunt style, baby. This is says, be immortal. And I love that shirt. You're also going to love this movie theater if you guys visit this property. And I've got a cheesy little short video that I can share with you that shows the Rest of the movie theater currently being. This is currently being edited for social media. You guys get a sneak peek here.
- [29:53]
Co-host or Guest
Now you may think, David, you converted a garage into a movie theater. What's the big deal about that? Well, my friend, that's because you're assuming that things. Well, my friend, that's because you're assuming that this was done with common sense. But the city didn't just allow us to do this. I had to spend $25,000 because this garage had been converted from a carport into a garage in the 80s without a permit. Now you may also be thinking, but David, every other house on the street did the same thing. And you'd be right. The difference is not every other house was meant to be a short term rental. So if you want to watch a movie in all of its glory, you want to enjoy Hallmark, or maybe you're one of the fellows who just want to kick back and watch a football game after a day of deep sea fishing while somebody prepares your catch and you have homemade sushi. Please come take advantage of this because it's driving me nuts that I spent this much money to have a movie theater that nobody can use.
- [30:49]
David Green
It's not pretty, folks, but it never is when you see how the sausage is made. However, sausage isn't so bad once it's been fixed. And we will wrap this puppy up by including some pictures of just how gorgeous the property will be when it's finished. This is the Florida sky in the daytime when it's not raining and the lawn has been mowed. These shots were taken while I was on a run actually around the neighborhood. One of my favorite things to do when I'm traveling at different short term rentals or different investment properties or going to different meetups is to kind of get to know the area and make sure I get some exercise in. And this is probably one of our better pictures. We. These are the, the cornhole boards I told you about. They're going to go in this area. Behind it we've got spike ball. We got these Adirondack chairs. This is giant Jenga. So this backyard will be nice when it's finished. We'll have a new pergola in this space back here. We'll probably have an awning that comes off of this space. There will be people that will be able to enjoy this property that is just minutes from the beach. If you guys have never been to Pompano Beach, I love it. It has these huge big piers that go out like boardwalks over the water. You can watch pelicans diving into the water and coming up with fish. There's people that are fishing right off of the piers. I really should get some pictures of that for the next video because it's incredible over there. You're also super close to Lauderdale by the sea. Just like a six, seven minute drive probably. It's just a fun area. If you like South Florida, but you don't want to deal with the debauchery or the insanity of Miami, this is where you need to be. It's actually incredibly close to where valuetainment records their podcast. I've. I visited them while out there working on these properties and had a really good time. So you guys can search YouTube for David Green Valuetainment. See some of the interviews that I've done with those folks. Patrick met David's crew, but it's right over there. If this is somewhere that you guys ever want to go, we can put you in touch with the best restaurants, the best things to do, fun stuff. You can watch a movie in that movie theater room that will be decorated. Enjoy the backyard, see if you can beat my score on the arcades. Lots of fun stuff in this three bedroom house. I'll be doing another episode when it's finished that has the finished product. The after stuff. It will be night and day different, but I hope you guys enjoy that. If you've ever wondered what it looks like to bring a short term rental to life, usually you just see the before and the afters, but not the middle. And that's what I wanted to do is just share with you guys what goes on in the middle as well as why I haven't been making as many videos that show the properties I've been buying. Because I haven't been able to buy anything, frankly. Because for two and a half years I've been stuck in this position where they won't let me fix the problems and they won't let me sell the house and they won't let me rent the house out and you're just stuck in a vice grip with nothing that you can possibly do. So it's very frustrating. But I know many of you are dealing with frustration yourself. So this isn't a feel bad for David video, but it is a you're not alone video. Hopefully some of my misery can bring some joy to some of your lives as you know that you're not alone. And this nightmare fuel is going around. A lot of people have a case of it. Let me know if you've got some questions that I can help you with by going to davidgreen24.com ask and submitting your question. If you if you're frustrated about the market, if you've got a similar situation where you're stuck and you didn't want to say anything about it, if you're curious how to avoid something like this happen to you, any questions you're thinking about after watching this video, go there and submit a video and we will put it in a future episode of the David Green Show. Make sure you subscribe to my YouTube channel, the David Green show, and that you're subscribed on Apple Podcasts and Spotify so you don't miss future episodes. I'll see you guys next week.