If your like me you have noticed some very inexpensive investment properties sold at auction on ebay. Particularly in the areas of Ohio, Pennsylvania, Virgina and Michigan. Having invested in several properties before I decided to buy one of these properties even though I lived on the west coast. I have had quit an experience and would like to share it with others before they embark on an adventure like mine.

I ended up purchasing a duplex in Ohio built in the late 1800's. The property had a nice exterior appearance though the inside had been striped of all its plumbing and wiring. Most of the windows where broken and boarded. However the layout, square footage and quality of structure seemed to warrant repairs. Besides the amount of rent a unit like that would bring was so much more than its monthly mortgage payment I knew I had to try it.

I won the bid on ebay without looking at the property other than pictures. I had flown out to Pennsylvania once before to look at this type of property and thought I had a good feel for what situation these properties where in. The price less than $20,00 seemed good and enough to leave room for repairs since the city assessed the property at $46,000. I made appointments with two contractors to meet me out there and look at the properties.

The first contractor that lived in the same town advised me to board up the house and not continue with improvements. This was a shock since that would mean no return on my investment. The second contractor that was from a town an hour away advised me to make the repairs and that he would even manage the property. Though there where a lot of homes boarded up in my neighborhood there was a few decent and occupied ones and I thought it would be possible to rent if I had the repairs done. I decided to get the bid and move forward with my investment.

Back home I got an estimate from the contractor that agreed to do the work. It seemed in line though it would more than double my investment in the house it would still be at the cities assessed value. The shock to me was that the contractor required 60% deposit. In my state that amount is illegal. A maximum of 30% deposit before work is done is the maximum a contractor can charge in my state. After disputing this point with my contractor he said that for many reasons he need that amount that a lower deposit would significantly increase the time it took to get the job done. I paid the amount and overnighted a check to be sure to get on schedule for work to begin in a week.

Upon my contractor recieving my check he said they would be starting work shortly. He said he would be sending me pictures and updates. Upon inquiring on the progress two weeks later I was told that work was starting but he did not have any pictures he could send. From there on this process continued untill 3+ months later and many phone calls and emails with no satisfactory responses I realized this was not going to work. I called the second contractor to look at the property and he informed me in fact no work had been done.

At this point a requested to cancel my contract and have my deposit returned. After many phone calls the contractor agreed to cancel it and return my money. At this point I heard nothing more from him and threatened to get a lawyer. I offered to accept partial repayment if he would do it within 45 days. After not returning my money and wasting another 2+ months I hired an attorney which had to be in the state that the work was done. Currently I have not had a cent returned to me and have attorneys fees to boot. It is yet to be seen what the final result of this will be. Though I complained to ebay about the seller who is in business with this contractor he is still selling homes on ebay.

In retrospect there are many mistakes that are obvious to me now and probably to those reading this. Somehow when you are in the middle of the process these are not as obvious. I would like to point out what I have learned so that others don't have to repeat them.

1. Long distance workers are very hard to trust and monitor. Unless your willing to fly out bimonthly I think it is nearly impossible to accomplish.

2.The seller of this duplex had several bad feedback, I thought the deal was so good I was willing to overlook it. Don't trust multiple bad feedbacks on a big investment. (he is currently still selling on ebay and the contractor I used is associated with his business)

3.When things start to feel fishy like a big deposit required stop and reassess. You only have the power while you have the money.

4. If the state you do work in does not require the contractor to be bonded there is few ways to insure that you will get your money back if things go bad. Ohio does not require their contractors to be bonded.

5. Depressed areas are hard to guage unless you spend a long time at that location and understand the complexities of why prices are as low as they are and what situations can affect or improve your investment.

6. Lastly even if you do everything right things can go wrong. When your not close by they go wrong while you are oblivious which wastes more time and money.