Full Transcript for #351: Buying a 12-Unit After a Jury Trial and a Supreme Court Appeal with Jeff Duchesne

so we bought it for 108 a unit, so 1.3 million. 00:01:59.040 --> 00:02:00.799 But that was tied up for five years. 00:02:01.280 --> 00:02:10.080 So we so the whole story is we walked this property, and also I will say too, the sellers of this were two very, very successful business guys. 00:02:10.319 --> 00:02:12.960 Yeah, and so not just like a 98-year-old woman. 00:02:13.120 --> 00:02:17.280 So we we they sold us a three unit a week prior. 00:02:17.680 --> 00:02:18.240 Perfectly smooth. 00:02:18.479 --> 00:02:19.199 Back in 2021. 00:02:19.360 --> 00:02:21.280 Yep, perfectly smooth transaction. 00:02:21.840 --> 00:02:25.759 And then we're supposed to close on the next one, the 12 unit, the next week. 00:02:26.000 --> 00:02:34.560 And we got an email, I got an email Friday morning before closing or before the week prior, and said, Hey, we uh we're we're actually not gonna be selling to you anymore. 00:02:35.120 --> 00:02:37.599 And uh we have a contract, sir, you can't you can't do that. 00:02:37.759 --> 00:02:57.280 Yeah, and just totally ghosted us, so we had to put a Lispendent lean on the property, and they drag they put us through the ringer for five years, and they were just trying to, I think, gas us out and and have us give up on the deal, and we knew and and as time went on, like what happened since 2021, too. 00:02:57.439 --> 00:03:00.159 So we got like the the market helped us too, of course. 00:03:00.319 --> 00:03:04.159 Yeah, it went from a good solid deal to oh my god, we need to buy this, we need to win. 00:03:04.400 --> 00:03:04.879 Yeah, yeah. 00:03:05.120 --> 00:03:09.919 So they brought us to a three it ended up being a three-day jury trial. 00:03:10.159 --> 00:03:11.199 I was on the stand. 00:03:11.280 --> 00:03:12.560 I thought it was like on a murder trial. 00:03:12.719 --> 00:03:17.520 I was on the crazy I was on the stand for an hour and a half getting drilled by their attorney. 00:03:17.759 --> 00:03:18.159 Wow. 00:03:18.400 --> 00:03:24.240 The jury decided in our the verdict in our favor, and then they appealed it to the New Hampshire Supreme Court. 00:03:24.400 --> 00:03:28.560 So then we had to go through the New Hampshire Supreme Court, so over a hundred grand in attorney fees later. 00:03:28.719 --> 00:03:29.199 Yeah. 00:03:29.439 --> 00:03:35.039 And then we finally won that won that as well, and then closed, yeah, two months ago. 00:03:35.280 --> 00:03:35.599 Wow. 00:03:35.680 --> 00:03:36.879 That's I mean, it's a crazy story. 00:03:36.960 --> 00:03:42.879 We're gonna get into a couple things here, and we're gonna like deviate from the normal process here, because I think that's obviously the meat of the story here. 00:03:43.039 --> 00:03:46.879 Why do you think they like what was the reasoning that they wanted to just backhaul? 00:03:47.039 --> 00:03:56.719 Clearly they sold you a three unit, and they were probably, I don't know, you would assume that they were happy with the price they sold it to you at because

they were happy with how the transaction went, but then a week later something changed in this other one. 00:03:56.879 --> 00:03:59.840 What do you think drove that like cold feet type dynamic? 00:04:00.159 --> 00:04:03.520 Well, per exhibit B of the our court documents, no. 00:04:03.680 --> 00:04:06.319 Yeah, they they they're two partners. 00:04:06.560 --> 00:04:06.719 Yeah. 00:04:07.280 --> 00:04:11.280 They were very busy, very busy guys doing projects all across the US. 00:04:11.439 --> 00:04:14.479 So they I don't think they really paid attention to signing the contract. 00:04:14.800 --> 00:04:16.959 And or they didn't communicate with each other. 00:04:17.199 --> 00:04:17.759 I see. 00:04:18.000 --> 00:04:20.639 So one didn't want to sell, one wanted to sell. 00:04:20.800 --> 00:04:23.759 So then they tried to back they and then they spoke to a broker. 00:04:24.000 --> 00:04:26.399 Then that was uh and the broker's like you can get more. 00:04:26.560 --> 00:04:28.000 Yeah, what are you doing selling for this? 00:04:28.160 --> 00:04:28.319 Yeah. 00:04:28.560 --> 00:04:34.560 But it was already too late, they committed, and yeah, they they they didn't hold up their their end of the bargain. 00:04:34.800 --> 00:04:35.839 Yeah, no, clearly. 00:04:36.240 --> 00:04:57.759 I mean, just out of my own curiosity, was there was there ever like a and if you can't talk about any of this, like just because you again, but we'll find was there ever like an offer to like settle to get out of the PSA on either of your sides or so us trying to be the smart level-headed individuals here, yeah, we made countless offers to settle. 00:04:58.079 --> 00:05:09.920 And I think I can say this now, but at the the the night before this was a three-day jury trial, so prisoners made offers to settle, and they they would call they would counteroff it something like laughable. 00:05:10.079 --> 00:05:11.519 Yeah, so we just couldn't do it. 00:05:12.160 --> 00:05:20.160 So the night before the verdict, of course, they deliberated the jury and then they said, Okay, time's out, we they have to go home, come back tomorrow morning. 00:05:20.800 --> 00:05:22.079 So that was a stressful night. 00:05:22.399 --> 00:05:23.839 So but it was fun. 00:05:24.079 --> 00:05:26.560 So it gets the blood flowing, yeah. 00:05:26.639 --> 00:05:29.120 So me and my buddy, my business partner, we're talking that night. 00:05:29.199 --> 00:05:34.959 We're like, all right, what we're here for like we're uh 3132, we're gonna be in this business forever. 00:05:35.040 --> 00:05:40.879 Let's just head our hedge our bets and offer 1.7$400,000 more before the verdict came out. 00:05:41.040 --> 00:05:41.279 Yeah. 00:05:41.600 --> 00:05:47.439 Worst case, they accept it, and then we we buy the property for 1.7, fine. 00:05:47.600 --> 00:05:49.439 You don't even hear the verdict, they won't, they won't read it. 00:05:49.600 --> 00:05:50.319 The case is done. 00:05:50.480 --> 00:05:52.079 So you will you'll never know what they decided. 00:05:52.160 --> 00:05:52.480 Yeah. 00:05:52.639 --> 00:05:54.000 So you never kick yourself. 00:05:54.240 --> 00:06:00.720 Or they deny it and we win, and then they're they're gonna be kicking themselves that they should have accepted it. 00:06:00.879 --> 00:06:04.319 Yeah, or they deny it, we lose, and nothing matters, anyways. 00:06:04.560 --> 00:06:05.680 So that was our thought process. 00:06:05.759 --> 00:06:10.879 So we made that counter the night before, and they denied it, and then the verdict came in, and that made it even better. 00:06:11.120 --> 00:06:11.680 Yeah, exactly. 00:06:11.839 --> 00:06:13.199 Didn't it didn't work out in their favor? 00:06:13.439 --> 00:06:15.839 Yeah, so I mean that's a that's a that's a wild story. 00:06:15.920 --> 00:06:35.279 Like I've I've you know, somehow I've never been in a situation where we've had we've had a couple sellers like try to bag out of a PSA, but we remind them sternly like this is the situation, and then they come to their senses, and usually it's something stupid, it's they're you know, a little emotional because oh, I think my kid actually wants to inherit it or whatever, and we're like, does he? 00:06:35.439 --> 00:06:36.160 Did you talk to him? 00:06:36.240 --> 00:06:38.079 And also, by the way, like you can't do it anyways. 00:06:38.160 --> 00:06:38.560 Yeah, yeah, yeah. 00:06:38.720 --> 00:06:46.560 It's usually like we'll have a you know a level-headed conversation with a stern reminder of like whatever, and that's only happened a couple times, but like we've never been in a drawn-out situation like that. 00:06:46.720 --> 00:06:48.480 But it's you know, I guess it is what it is. 00:06:48.560 --> 00:06:50.000 You litigate and then you arrive at a finishing. 00:06:50.079 --> 00:06:51.920 And I mean, like anything else, that's a legal dispute. 00:06:52.079 --> 00:06:59.360 But from a deal standpoint, like you know, back to the deal itself, like I gotta imagine you had a lender lined up who was ready to fund it back in 2021. 00:06:59.680 --> 00:07:00.399 They did fund it. 00:07:00.480 --> 00:07:03.360 They did and that same lender sat at the attorney's office. 00:07:03.600 --> 00:07:05.360 Yeah, yeah, that's that's crazy. 00:07:05.439 --> 00:07:05.759 Yeah. 00:07:05.839 --> 00:07:09.600 So like, how did like was it the same lender all the way five years later? 00:07:09.680 --> 00:07:11.199 Did you find a new lender while you were working through the state? 00:07:11.519 --> 00:07:13.120 Same lender and helped me testify. 00:07:13.360 --> 00:07:15.439 The the attorney came to testify on my behalf. 00:07:15.600 --> 00:07:15.759 Yeah. 00:07:16.000 --> 00:07:16.720 The closing attorney. 00:07:16.959 --> 00:07:18.800 Yeah, so yeah, same process, same, same. 00:07:19.759 --> 00:07:23.680 So they wrote the they rode the way for five years and did the debt check. 00:07:24.079 --> 00:07:26.160 I don't think they really cared, but yeah, they were like, whatever.

00:07:26.240 --> 00:07:30.560 I mean, it wasn't the the biggest, you know, the stakes weren't as high for them, obviously, as they were for you guys. 00:07:30.720 --> 00:07:34.480 But like now, I'm just curious, like similar terms. 00:07:34.639 --> 00:07:41.040 I mean, obviously rates shot up by then, so I'm sure they adjusted the term sheet and you know came back to the deal and funded and whatever. 00:07:41.120 --> 00:07:42.319 But it was actually a different bank. 00:07:42.399 --> 00:07:43.759 So different lender, same lender, different bank. 00:07:44.000 --> 00:07:45.279 Same lender moved to a different bank. 00:07:45.439 --> 00:07:45.759 I see. 00:07:45.920 --> 00:07:46.720 That's interesting. 00:07:47.040 --> 00:07:48.720 But yeah, interest rate doubled. 00:07:49.040 --> 00:07:49.199 Yeah. 00:07:49.360 --> 00:07:50.240 The value did too. 00:07:50.319 --> 00:07:52.319 So yeah, I was gonna say that's you don't care. 00:07:53.040 --> 00:07:56.720 When you spend that much money on a 1980-12 unit building, yeah. 00:07:56.959 --> 00:08:00.639 So what's the plan with the deal itself now that now that it's closed and all that drama's behind you? 00:08:00.879 --> 00:08:04.480 Yeah, so our plan as always is to obviously get it stabilized as quick as possible. 00:08:04.639 --> 00:08:08.240 So in these people were they had very low, below market rents. 00:08:09.279 --> 00:08:20.879 And so what I do in all cases is call up or I'll text first and then I'll have a conversation with every single resident and explain our situation. 00:08:21.040 --> 00:08:30.399 Hey, the previous owners never had a mortgage, they had this market rent is I don't know, whatever, 2,000, and we need to bring it up to 1750 or whatever. 00:08:30.480 --> 00:08:36.080 So we show them the market with like with comp sometimes and and just hash it out, just have a conversation. 00:08:36.399 --> 00:08:41.039 And everyone at the end of the conversation said thank you, and only one person vacated. 00:08:41.200 --> 00:08:46.720 Yeah, and we have a deal with everyone, fully occupied, fully stabilized building, and and yeah. 00:08:47.200 --> 00:08:48.480 Yeah, and that's pretty much it. 00:08:48.559 --> 00:08:50.720 I mean, it's not a building, it seems like that needs a ton of work, right? 00:08:50.799 --> 00:08:54.320 It's like you just you know no, they they did take good care of the building, which is good. 00:08:54.559 --> 00:08:55.519 Yeah, for sure. 00:08:55.759 --> 00:09:00.960 You know, we could talk about what the end result is, but you guys just bought it, so that's still kind of TBD. 00:09:01.200 --> 00:09:03.600 So let's talk about like biggest lesson or takeaway. 00:09:03.840 --> 00:09:10.240 I mean, you know, it's not like the them backing out of the deal you know a few days before closing is something that was under your control. 00:09:10.399 --> 00:09:11.039 That's really not. 00:09:11.120 --> 00:09:19.759 But like, you know, whether it's maybe that particular, you know, something that you learned during that process or you know, during any other components of the deal, like what was one of the big takeaways that you have from this one? 00:09:20.000 --> 00:09:20.159 Yeah. 00:09:20.320 --> 00:09:22.240 No, never back down, never give up. 00:09:22.480 --> 00:09:23.279 Yeah, exactly. 00:09:23.360 --> 00:09:23.600 Yeah. 00:09:23.840 --> 00:09:25.120 It could be as simple as that, yeah. 00:09:25.600 --> 00:09:29.679 Obviously, if the numbers, if the property went down in value, I wouldn't have fought. 00:09:29.759 --> 00:09:31.600 Obviously, for five years, I would have just walked away, right? 00:09:31.759 --> 00:09:32.320 Yeah, exactly. 00:09:32.720 --> 00:09:34.080 I had incentive to fight for it. 00:09:34.240 --> 00:09:35.519 But it was a great learning experience. 00:09:35.679 --> 00:09:38.480 I was don't really like public speaking. 00:09:38.720 --> 00:09:44.639 So to go in front of a whole jury and a judge, and it was a um pretty good learning experience and and good practice. 00:09:44.720 --> 00:09:47.360 So now it makes me more confident for anything else I do. 00:09:47.679 --> 00:09:53.360 I was gonna say, yeah, well, if you get into this situation again in the future, you can just send them the nice, you know, hey, we've gone through this before and we won. 00:09:53.600 --> 00:09:54.480 Little little news story. 00:09:54.799 --> 00:09:55.519 Exactly, exactly. 00:09:55.600 --> 00:09:57.440 I think they were shocked that we fought it too. 00:09:57.600 --> 00:09:57.759 Yeah. 00:09:57.919 --> 00:10:01.600 But they had they had unlimited pockets, they didn't care, and they they were cash flowing, they had no more like they're not. 00:10:01.919 --> 00:10:04.000 They were just taking the money from the deal and probably spending it on the legal. 00:10:04.720 --> 00:10:10.799 Honestly, if I'm in like their shoes, like obviously not a good person thing to do, but it financially made sense for them to fight it too at that point. 00:10:10.960 --> 00:10:11.120 Yeah. 00:10:11.679 --> 00:10:13.039 Exactly, which is which is wild. 00:10:13.200 --> 00:10:16.080 I mean, that's a that's a crazy story, but you know, glad you guys got it done. 00:10:16.159 --> 00:10:20.320 I mean, it's a hell of an outcome in terms of like you bought a hell of a deal at a hell of a price, right? 00:10:20.399 --> 00:10:24.080 So obviously the pain and suffering for five years was probably worth it or definitely worth it. 00:10:24.399 --> 00:10:28.480 And the bank refunded us for our attorney fees too, basically, because the value went up so much. 00:10:28.559 --> 00:10:29.600 So yeah, exactly. 00:10:29.679 --> 00:10:29.919 Yeah. 00:10:30.000 --> 00:10:37.120 So I mean, by the time you're closing, like the economics justify that more than you know, more than fivefold, ten, whatever the number is. 00:10:37.279 --> 00:10:39.279 So yeah, I mean, hell of a learning lesson. 00:10:39.360 --> 00:10:54.720 I guess it's one of those things where if you're in that situation and you're a listener, it's like, you know, probably consult with an attorney, get some representation, understand that it is something that you can fight, like, because it's I gotta imagine it's a more common solution or excuse me, more common problem than like what I've dealt with. 00:10:54.799 --> 00:10:58.480 Like, I'm surprised I haven't been in a situation like that yet in our business. 00:10:58.799 --> 00:11:12.799 Because I I would especially too, like when you're pursuing a deal with like just a regular seller, I think oftentimes like they sign a contract, but they're like, what you know, there's not the correct mental attitude around the signing of a purchase and sale agreement. 00:11:12.879 --> 00:11:25.919 I think for some folks that are kind of just shooting from the hip, which is not to say it's it's really even these guys, because these guys seem like competent businessmen, but like I think that that is a situation that people will find themselves in at some point if you invest for 10, 15, 20 years. 00:11:26.080 --> 00:11:26.240 Yeah. 00:11:26.559 --> 00:11:30.879 Yeah, one of my one of my mentors uh told me if you're not getting sued, you're not doing enough business. 00:11:31.279 --> 00:11:33.679 Yeah, no, it is there is certainly truth to that. 00:11:33.919 --> 00:11:34.559 Awesome, man. 00:11:34.639 --> 00:11:35.279 That was a great story. 00:11:35.440 --> 00:11:36.080 Appreciate you sharing. 00:11:36.320 --> 00:11:38.960 And uh again, plug like where folks can reach out to you. 00:11:39.039 --> 00:11:41.600 I know you mentioned on the last, you know, the last episode we shared here as well. 00:11:41.759 --> 00:11:48.799 Yeah, I don't have a website or anything, but my Instagram, Jeff Hunter15, or my cell phone, six oh three eight one nine three one eight three. 00:11:49.039 --> 00:11:49.360 Awesome. 00:11:49.440 --> 00:11:50.000 Thanks again, man. 00:11:50.320 --> 00:11:51.279 Thank you, appreciate it.