Joe: 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 if she’s nodding your head. All right. I’ve got to go. 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.

Joe: And this is something that’s so awesome with a 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. And this is these are the kinds of people you want to learn things from. Right? 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 skinned their knee, who has been bruised, beat up a little bit, but has come back and still fighting. And 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.

Joe: 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 the 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 Lisa, as we do this podcast, we type 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 ten or so or so lined up. I’m going to be putting all of this together into a resource.

Joe: Right now, it’s a mind map. Pretty soon it’s going to be in a PDF of 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 thirty-one, thirty-onethirty-one, or go to JoeMcCall.com/bad again. Text the word bad to thirty-onethirty-onethirty-one or go to JoeMcCall.com/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 OK?

Lisa: I can hear you great. Thanks for having me, Joe.

Joe: Glad you’re here. I’ll give you some comments. Your landlord coach. I think this is Mark, right? Great show, Joe. Fantastic series. Jan, try to follow most of the deals gone bad. Great content, but I’m glad you guys are liking it. I’m glad you’re commenting on the YouTube and Facebook. So, Lisa, you’re an investor in Phoenix. Tell us a little bit about yourself.

Lisa: 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 a city violations, weird clouds on title, someone having difficulty selling a property that they want to get rid of that type of thing.

Joe: OK, and how did you get started?

Lisa: 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 the intention of trying to find 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 them for a few years and then went solo.

Joe: All right. Nice. And so you learn, I love that, you learned from somebody who’s actually doing deals are already. And you just kind of like were their boots on the ground person that went out and found the deals for them? They taught you what to look for? How to make the offers.

Lisa:  Yes. Yeah. All of those things. It was great mentorship. Good.

Joe: And you’re in Phoenix, a real tough, competitive market, right?

Lisa: Yeah. Phoenix is a little saturated. You got a lot of people doing investing here. And this is challenging. We’ve got real low inventory, so that raises the stakes a bit good.

Joe: All right. So let’s talk about this deal. This is unique property. It sounds like it’s a pretty big deal. So how did you find it?

Lisa: So probates were are one of the business models that we utilize. And so here in Arizona, probates are actually public record. That’s not the case in every state. But, um, 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 go down and get our monthly list 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 safety violations. So having those two things stack on top of each other were made it a hot lead.

Joe: So you get these. By the way, the heart of the lead to get the better it is typically the less competition. And so you get the address, you get the name of. What do you do then?

Lisa: 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 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. 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.

Lisa: It was, they were friends of the family that originally owned property, and they initially rented the property to this woman’s mother. And then life things happened and 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’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, sure, this is all hearsay. So this was the story that we received. And so she said I actually filed the probate to sell the property at a title company told me that I couldn’t because there is an improper quitclaim. So the mother who had been living there in an effort to legitimize her stake in the property quit claimed it to herself, which is not a valid deed in process.

Joe: So did she forge the owner’s signature?

Lisa: No. She literally just quick claimed if from herself to herself. OK, yeah. So, I mean, you can go into an Office Depot or whatever and buy a quitclaim form and people use them the wrong way all the time, any different. So this is what happened. And so the title company said, no dice, you don’t quitclaim a property from yourself to yourself and the names don’t line up in terms of who might be an there. This woman said to me, I was 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 I said, by the way, no. So this property was vacant and in pretty bad condition. The roof was in it had had squatters for a number of years. It was 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.

Joe: 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 know. And I’m just taking notes.

Lisa: Appreciate that. That’s also so. Yeah. So basically, that was the first bit of information that we got when we reached out about this property. And I said, hey, do you know if there are any actual blood heirs that we can go to? Because look at here’s the situation. The city doesn’t care who pays off the liens. They just want them paid. And they don’t care who pays 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 the cycle issue and get this property out of your way. And so she said, as far as I know, these people, their adult children have already passed away and I don’t know if they had kids.

Lisa: So we had to go back to the drawing board and do some more research. And this is where it gets into the more complicated. Now, you’re not just searching, doing like a tidal surge and doing skip tracing, which a lot of investors are familiar with. Now, we’re into ancestry.com and the right people. We’re looking on Facebook to see if we can find some 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 is a high likelihood that she actually was a blood relative. And then we 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.

Lisa: And she even remembered the friends of the family as well and said, oh, yeah, that lady lived there for. Twenty years or something, and she said, I don’t live in Phoenix, but yeah, I’m happy to help with whatever I can do to stop whatever is happening with this property. And of course, we offer her a little bit of money because 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 error, which is what the first person said. I would love it if you would find appropriate er so that this can be off on my plate.

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

Joe: OK, let me rewind a little bit. The first person you talk to refresh your memory, who was that again?

Lisa:  So she was the daughter of the woman who lived in the property for the 20 years that tried to quitclaim it to herself. I know there’s a lot of characters involved. Is it making sense? OK.

Joe: She started seeing dollar signs. She didn’t care about the property before and all of a sudden when an investor is involved, she’s saying, oh, well, I can actually make some money with this thing.

Lisa: You got it right. Yeah. So when we started moving forward and found out what was happening and she went, wait a minute, why would somebody be going after this property? Is there money here? And so 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 twenty-five years. And as far as I’m concerned, that should be part of my inheritance.

Joe: She does have a right to it.

Lisa: 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 can have the property, she started paying property taxes. And so in the state of Arizona, that is enough to have legal interest in the property. So that tied us up because now we have a blood relative who does have legal interest because the ownership team 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 if you’ve done any number of deals, you know how people get when money is involved.

Joe: How much time and resources have you been into this so far at this point?

Lisa: So at this point, I must say we’re probably three months in. And any time we get contacted by an attorney, we like to get our attorney involved as well just to make sure that everything is going the way that it should. You don’t want to talk to legal counsel and say something you’re not supposed to say, so you want to have that representation.

Joe: 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?

Lisa: It was definitely worth pursuing. So the ARV at that time was about 180 and we had offered sixty for the property. So 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 Phenix. So you got four walls that are you can’t without a bulldozer, they’re not coming down. So we had room there for either a flip or for a nice assignment, see if we ended up wholesaling it. So we were still deciding.

Joe: So then what happened?

Lisa:  Once this woman got involved with her attorney we had to, of course, check with our attorney to see what was going on. And he looked things over and said, OK, you’ve got two people here who have legal interests in the property. So there’s a couple of things you can do. 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. 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? There’s nothing that I can do.

Lisa: So we ended up hiring our attorney to represent us, to keep our contracts 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 not feasible. So that that was lucky for us that the property was in that condition because that that gave us some leverage. And 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. Everybody’s happy and you’ve given it to someone who knows what to do with property to get it fixed appropriately. And it’s a win winwin. So let’s do that. And it would have been really nice if they would agree to that immediately.

Lisa: But instead they went back and forth and argued with each other about who should get more money, why one of the how are we going to split 70, 30, 60, 40? And so this went on and on for a number of months. And we ended up finally being able to follow through on our contract and close on the property nine months after the initial contact. So it took them six months of a back and forth and six months of the I don’t even know what to call her. The friend of the family paying an attorney to argue back and forth of what percentage they weregoing to get. It was sixty 60 that we were purchasing it for.

Joe: OK, so then what did they finally agreed to?

Lisa: 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 sixty five is the highest we can go. The same needs eighty to one hundred K 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 forty-five minutes way, 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.

Joe: Wow. That took nine months. Nine months. Yeah. So then did you buy it?

Lisa:  We bought it.

Joe: Is that the end of the story?

Lisa: Well we, 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 done wanted to be done with the deal.

Joe: So how much did you wholesaler for?

Lisa: So we made about thirty five K for you guys. So no complaints there.

Joe: Well this is a bad deal gone good.

Lisa: Ultimately, yes.

Joe: Yes, not bad. And so most people would have quit and give up though wouldn’t they.

Lisa: Yes, absolutely.

Joe: I know I would have, I wouldn’t have had the patience to stick with that. Just too much of a hassle. Forget it.

Lisa: It was a big hassle. And had the spread not been there, you have to you have to sort of wear 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 put in your time and resources into it. You’re always there. But 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.

Joe: Would you have done anything differently on this deal?

Lisa: Yes, I would have done a couple of things differently. So the first thing in our research seeing we 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 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 suits, you can’t know. You don’t have a crystal ball. But it may 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, we may have been able to do a quiet title action because they didn’t see really very much legal interest from a title standpoint that they were willing to get involved.

Joe: Explain what a quiet title action is.

Lisa: So quiet title is when someone has either a lien or some kind of attachment to the property. So in this case, this person had opened a probate against it. But there 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 interests.

Joe: OK, what else would you have done differently?

Lisa: So I think the other thing I would have done differently is from the point where the attorneys got involved, 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 need you guys to understand that we’re professionals that handle properties like this all the time. And you guys are laypeople who wouldn’t have the resources to repair this property appropriately and explain more about that side of it, because, you know, everybody gets these kinds of big ideas and like, well, I watch TV like I can fix up the house. And this was well beyond this wasn’t just like a carpet and paint situation. So that was good leverage for us. But I had business partners 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.

Joe: That’s interesting. So maybe sending them more pictures or making the pictures more obvious?

Lisa: 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 tax records. We could have gotten better photos of the property. And, you know, when you’re juggling different things and because this isn’t you’re not just working one deal at a time. So sometimes you’re not thinking of all the things you can do to keep it moving along. And I think that we took for granted that once they kind of saw all these things that the two people that were errors might say, wow, this is a lot of work. I don’t really know if I want to take this on, but they weren’t realistic about certain things. They didn’t really understand what it would take to fix it. 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.

Lisa: But oftentimes this is just outside of 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. So one person was out of state, obviously, and he was much more agreeable to the whole thing. If we could have gotten the other person to cooperate a little bit more. And she changed your tune a little bit because she was very cooperative in the beginning. And then maybe, maybe she felt some sense of frustration or sort of betrayal that the fact that someone was going to take the property. So she wasn’t really wanting to work with us in the same capacity as before.

Joe: 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?

Lisa: Yeah, yeah, yeah. I mean, it was certainly worth it to bring our attorney in and pay those fees.

Joe: So I just know, unless you’re a seasoned investor, right? When you go in and you see an ugly, bad house like that that’s state that has all of a sudden you’re just like, oh, my gosh, this is a disaster. Changes everything.

Lisa: 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 of it was terrible in the city had come and boarded up with plexiglass, all the windows. And so it was it was a scary looking property.

Joe: All right. So what were some of your biggest lessons learned then with this? Why don’t we talk a little bit about what you would have done differently? What would some lessons learned that maybe would help other people listening to this to know what to do when they’re in a situation like this?

Lisa: 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, 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 time and energy in terms of who you’re dealing with and who you’re trying to 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.

Lisa: And also just in terms of deciding whether or not you want to continue on with this deal, the levels of complexity, as you said, 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. So to me, every time I learn something about how the legal system works within a situation like this, 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 in my day to day business.

Joe: And don’t be afraid to hire the experts like you did with the attorney, right?

Lisa: Absolutely. Yeah. 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 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.

Joe: Yeah, that’s very good. Cool. The deal turned out good, right? Made thirty-five grand on this thing. What most people would have quit giving 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. 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 adeal maybe or want to talk to you and just chat? How can people reach you?

Lisa: So, yeah, absolutely. You guys can hit me up at least even dot phone sites. That’s p h o n e s i t e s dot com.

Joe: OK, so I’m writing this down here, LisaEven at phone sites?

Lisa: Dot phonesites dot com.

Joe: That’s a website. Yeah. All right. Let me fix this here.

Lisa: Yeah. And it’ll just ask you for your email. And that way we can get in touch and figure out what we want to chat about.

Joe: LisaEven.phonesites.com. Yes. Cool. Are you active on social media, Facebook, Instagram, all that?

Lisa: I am, yeah. I’m on Facebook as well. Hi, 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 pink hair is how you can find me on Facebook.

Joe: 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/bad or text the word bad to thirty-one, thirty-onethirty-one, 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 Derald here. This is great info. Thank you for sharing. Tom Croll in the house. Easy peasy, easy. 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.