Transcript
David Green (0:00)
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.
