San Francisco Couple Deemed 'Landlords from Hell'

Act 1: Kip Macy talks exclusively to ABC's "20/20" about terrorizing tenants with wife Nicole Macy.
9:25 | 11/15/13

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Transcript for San Francisco Couple Deemed 'Landlords from Hell'
Tonight in much of this country real estate is roaring back, home prices up 13% in a year, buyers in bidding wars families looking to flip a property for profit. It looks easy on tv, tonight see what happens when a couple so determined to flip their property, they will do anything to get their tenants out. Abc's chris conley tonight on why they are being called the landlords from hell. Reporter: Flipping homes for fun and profit. It's long been a popular investment strategy, and a cable tv staple. But before buying your own flip-worthy walk-up, consider a man, who went from this house to the big house. What is it that you regret doing? Well, all of it, but I mainly regret having bought the building. Reporter: Long before 34-year-old kip macy was cooling his heels in county, he and his wife nicole were famous in the real estate hotbed of by-the-bay san francisco, because what they did in this building -- -- won them the title. Landlords from hell. Reporter: It said this place once was a sex club. Under the macy's only the tenants got -- well, you know. Kip earned six figures in software says the initial plan to flip the building was nicole's. Step one buy apartment building. Step two -- evict the tenants, legally. Step three -- sell the apartments as condos. Step four -- pocket a quick $200,000 profit. I was hesitant. But I mean, she assured me it wouldn't be that risky. Reporter: Oh, but it was. Just ask real estate expert barbara cochran. The macys started off as very naive, thinking they could just flip this building and make a fortune. Reporter: But guess what? Then reality hit. It's called a tenant. A tenant like the guy in apartment 4. Camera shy scott morrow knew all about the city's tenant-friendly housing laws and played the system like a stradivarius. Tenants are almost impossible to move today if they don't want to move. We're the owners of the property, scott. You don't have a permit to do any work here at all. Basically, scott was sort of the, sort of the one breaking point. You wanna be -- kicked out on your the same way i kicked out -- Reporter: You got mad at some point. Uh, probably. That's when we started making bad decisions. Reporter: Instead of flipping the house, kip and nicole flipped their lids -- declaring war on their tenants. Hey, hey, hey excuse me! Get the out! Get the off my property. What are you doing? , I own this place, I own that line, I own this building! Reporter: Cutting phone lines and shutting off power? Slumlord 101. But here's kip burglarizing an apartment occupied by three tenants, while being photographed through a peephole. Cutting edge, right? I regret, having moved, uh, the mexicans' stuff into the hallway. Reporter: The macys drenched the rest of the three tenants' stuff in ammonia. He said, "you know what? This is my building. I can do whatever I want. This is my property." Reporter: Building manager ricardo cartagena treasured his artwork, and found it trashed when the macys ransacked his place. They don't care. Like a -- like a katrina was in my apartment. Everything destroyed. Reporter: Why did you take stuff out of ricardo's apartment? Because it was garbage. Reporter: Then there were the menacing phone messages. Ricardo, you, get out of the building or bad going to happen to you Reporter: Could it get uglier? Well, the macys did purchase a handgun. Kip call me -- "ricardo, if you come to the building, my wife bought a gun and we will shoot you. This is serious." Reporter: Did you threaten to shoot him if he came back on the property? No. I threatened to shoot him if he attacked -- attacked my wife. Reporter: Had he ever attacked your wife? He never attacked her, no. Reporter: The macy's did attack -- the building. Nicole asked an inspector what support beams they could cut to make the building unlivable. San francisco district attorney. This has to go in the books as criminal. They used a power saw, tried to cut support beams underneath the floor. Reporter: See all those cuts in the beams? Kip ancole were sabotaging their own million dollar property. I don't understand why you were doing it. Um, we didn't either, at this point. When there's enough potential profit in a building, the tactics escalate because the landlord wants to get his hands on that money. I was in the hallway. And I hear screaming. Stop. Stop! Stop!" "I call the police, stop!" Reporter: It was a handsaw, coming up thru the floorboards of apartment four. They are sawing -- they are sawing my floor. They cut a new hole in it. This looks, like, right out of a cartoon. Uh, literally, you can see the blade going -- going through the uh, wooden floor. Reporter: I'm guessing that's not legal. No. To say the least. If anybody was gonna make a movie, uh, about a problem between landlords and tenants, this would be a perfect script. Reporter: The da's office rolled the credits on the macys' reign of terror, charging them with a fistful of felonies, the case aided by shocking boasts that kip had made on the internet. I will be demolishing his unit while he is living in it. I slammed him against the wall. Reporter: "We harassed him a bit because no longer had anything to lose. He had parts of his floor cut out from underneath, also illegal, but whatever." Whatever? Breaking the law, whatever? Uh. Well, we felt like the law had abandoned us. Reporter: Kip and nicole were held on big-time bail -- $500,000. To spring them, kip's parents dug deep, his mother marie, a va nurse, sold her jewelry, but they fretted that their freedom would be short lived. Just seemed like the various -- vice grip of the system was just closing. Reporter: So in june, 2010, kip and nicole skipped bail and vanished. Did you say to yourself, did you say to your wife, we can't leave, because my parents will be out half a million dollars? I mean, I didn't. Totally oblivious to the enormous, um, difficulties that would put us in. Reporter: Kip had messed with the wrong mother. Marie reached out to geriito campana and ron lee, bail agents and bounty hunters for 30 years. I found out that the passports were used to exit the united states. Reporter: Gumshoe work by geri and ron would produce the break they desperately needed -- someone with inside info on the couple's whereabouts. And he gave us a street. Reporter: A street where? Florence. Reporter: Florence, italy. A romantic city, swarming with american tourists. The perfect hideaway for kip and nicole, but ron vowed to track them down. I had mug shots of them. I stared at them. When I was shaving, I took them in the bathroom and kept staring at them. Reporter: After three fruitless days on stakeout in florence, ron's attention wandered to the unlikeliest of italian sights -- a chinese restaurant. I look down the street, and i see this sign that says chinatown. I said, hey, I gotta have a picture of this, and then as i got there, I looked up and there they were. And I said, oh, my god. Reporter: Kip and nicole might have been on the lam, but they had made no attempt to transform their appearance. They had no clue that we were coming after them. They thought they were home free. Reporter: The next day, marie pushed open this door, and stood face-to-face at last with her fugitive son. A big hug was not he menu. Reporter: What did you see on his face when you looked at him? He was kind of horrified. He said, "well, I'm impressed." You look mad. Yeah, I mean, probably. Reporter: It's your mother, kip. Yeah. Reporter: Whose money you had used to get out of jail. I mean, I just saw her as sort of representing the state, which was trying to take me down. Reporter: Kip and nicole were eventually taken into custody and returned to the u.S., But marie's whole aim was to get her money back, and to her shock, the da and courts stiffed her, she says. We were robbed by the court. They fled the jurisdiction, they fled the nation. And that's really what the bottom line is. Reporter: Nicole and kip were each sentenced to four years and four months. Still married, during sentencing, they barely looked at each other. Their real estate dream, lost to foreclosure. As he sits in stir, kip thinks. Not about the tenant terrorizing he pled guilty to, but that lost $500,000 and his hopes to pay his parents back. 100,000 over five years. Reporter: You're going to give him $100,000 a year. If I can. People ask me if I'm angry mad at kip, but really? I just feel sad. Obviously we are both ashamed to be here. It's a difficult juncture. Reporter: You're the landlords from hell. That's what they say, yeah. We want to know what you think tonight, do those landlords deserve their new address. Let us know on twitter. #Abc 20/20.

This transcript has been automatically generated and may not be 100% accurate.

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