Warren Buffett, arguably the greatest investor of all time, once said, "Seize an opportunity while you can." This sentence is often quoted in beginner investor courses and is so well remembered that people forget another equally great quote: "Be skeptical. If something looks too good to be true..."
Investors in the market are always advised to be fast, like gunfighters in the Wild West, so as not to get ahead of competitors. Unfortunately, sometimes this leads to the fact that people, in pursuit of speed deals, do not look at what they are buying at all. As a result, it is almost impossible to return at least the initial amount of investment.
A good example is this story in the MaliciousCompliance community on Reddit. The post describing it got about 18.4K upvotes and over 1K comments. It is unlikely that all the commenters were investors, but it's so nice when inconsiderate incompetence is punished!
More info: Reddit
The OP's parents' neighbor lived in a big house in Florida with almost no repairs for the last 20 years
Image source: Images Money (not the actual photo)
So, we're talking about the neighbor of the Original Poster's parents, who, together with them, bought a 1/2 acre lot with a large house in an up-and-coming part of Florida twenty years ago for $130K. The house was large, but without a pool - however, over the years, only the roof has been repaired. Everything else remains the same as it was two decades ago.
Image source: dodohead9743
The house owner was widowed and decided to put the house up for sale for $400K
Some time ago, the house owner was widowed. She realized that she was not comfortable living in a big house alone, and decided to put it up for sale for $400K. A few days later, she was contacted by an investor from California, who offered another $30K on top - the main thing was that she quickly removed the house from the auction.
Image source: dodohead9743
The investor from California offered $430K for her to remove the house from the auction ASAP, without even looking at it
The neighbor, well aware of the condition of her house, cautiously asked if the potential buyer would like to see the house. The investor, in turn, said that she wanted to rent it anyway so just needed to get the rights to the house as soon as possible, so she was ready to deposit funds with the management company and the owner could receive them in exchange for the keys.
Image source: dodohead9743
The owner certainly agreed, but the buyer soon found out that the house needed at least to be painted
The woman thought... and, of course, agreed. According to the OP, the total cost to the investor was about $450K. A few days later, the former owner received a call from the same investor saying that the house urgently needed painting - and that she would like her to take care of this issue.
Image source: dodohead9743
The former owner refused to take care of the issue so the investor definitely lost a lot of money
The answer was quite predictable - the former owner reasonably objected that the house no longer belongs to her, and the problems are not hers either. According to the OP's parents, after some time, they saw an ad for $430K on the house, but there weren’t a lot of people who wanted to even look at it.
Image source: daveynin (not the actual photo)
People in the comments recalled a lot of similar stories of incompetent investors
Commenters noted that the house owner acted quite logically - if you are offered money above the market value, you definitely need to take the money. People add that those who have a lot of money don't always know how to invest wisely. As it turns out, there are a lot of examples when large investments have turned into a complete failure.
However, some folks note that in Europe, a twenty-year-old house is considered brand new, so the situation in the United States is quite different. On the other hand, the investor frenzy is the same in any country. And perhaps the most amusing comment contains advice for the OP's neighbor to buy this house for $390K.
We, for our part, will be happy to read your opinion on this situation, or get acquainted with a similar story. After all, to paraphrase another Warren Buffett quote, "a comment is what you pay, respect is what you get."