I’ll be sharing a lot of stories and lessons learned as I navigate through various Real Estate transactions. And while I intend to spend a lot of time talking about “high level” stuff, I want to get right into the weeds right now, and talk about something I’m dealing with at this very moment.

OK. I’m in the process of buying a 24 unit apartment complex, and we’ve reached a point where it seems we’ve gotten past all the major obstacles.

• We’ve negotiated a price and terms with the seller.
• We’ve gotten a commitment from the lender.
• We’ve completed Due Diligence to our satisfaction.

At this point, it seems the worst is over. All we need to do is receive the appraisal at or above our buying price, and we can get right to closing. I am very certain that this property will appraise well above the sale price.

First lesson to learn: It’s NEVER over.

The appraiser visited the property on 5/25, so I am expecting a call from the bank confirming that the appraisal came in, and we are good to close.

Last Wednesday night, I got a call from the bank. Bam. Here we go.

My lender had a tone to her voice that I wasn’t expecting. And the conversation began very awkwardly.

“OK. I got an e-mail from the appraiser…”

Uh oh. Something’s wrong. I can tell.

“Yes? Where are we?” I asked.

“Well, they came out to the property on May 25th. And they weren’t able to finish the walkthrough.”

What? What did she mean “couldn’t finish”??? And why did it take so long for them to tell us this? We should be receiving the report by now.

My lender slowly tried to explain.

Apparently, during the inspection, the appraiser’s assistant detected a foul chemical odor and his lungs seized and had to leave the unit immediately.

“So, what are you saying to me?”

My lender tried to find a way to answer my question, but didn’t say anything.

After an awkward moment, I continued.

“Are you saying we might have a “Breaking Bad” situation on our hands?

“Yes. That’s what I am saying.”

OK. We’ve seen the show. We all know how bad this could be. If it turns out that I have indeed purchased a meth lab, I need to pull the plug on this immediately. Just kill this deal. You want nothing to do with this.

Now, that’s the most important lesson I can give to you right now. Whenever you are presented a crisis…

DON’T PANIC!!!!

Listen.

The biggest part of being a real estate owner is to navigate through situations. And after you’ve been through a few crises, you’ll realize that most of the time, the initial freakout is just that – a freakout.

So – before you make a rash decision with limited information, triage the situation. Find out what is actually happening.

For me, I took the following steps:

• Contacted my agent
• Had my agent get ahold of the property manager who was present at the time of the inspection, for his account of what happened
• Looked up police reports in the area for possible drug activity
• Had property manager contact appraiser to schedule another visit

So, here’s what I gathered.

1. The property manager reported that the breezeways had been cleaned with bleach recently, hence the smell.
2. He did not get any indication that the appraiser had any problem. In fact, they seemed to have gotten all the information they needed.
3. Police reports came back clean for the area. No drug activity detected.
4. I’m no expert when it comes to the manufacture of illegal substances, but common sense dictates that the goal for people running a meth lab is to NOT GET CAUGHT. So for them to do this in a populated area where other tenants would definitely smell something… no. Best place would be somewhere out in the woods, where their operation wouldn’t be disturbed.
5. Plus, the amount of equipment required for something like this is significant. It’s not something you can simply cook up in your bathtub,
6. Plus all tenants were given 24 hour notice that an inspection would be happening.

So, owing to all this, I can say with a degree of confidence that this is not a meth lab, and the most likely answer is exactly as the property manager had stated – that the place has been cleaned – with BLEACH.

Property manager contacted the appraiser and asked to schedule another visit.

The appraiser responded that they have everything they need and will be finishing up the report.

Huh?

Wait… so… what just happened?

I still have no idea, but if the appraiser is satisfied, are we to just pretend that this whole incident never happened???

I am to assume so. I will keep you posted on the outcome of the appraisal.

Stay vigilant, my friends.