Gustavo's mansion becomes flooded, so he decides to live with the boys at the Palmwoods until it's unflooded. However, the boys want him to leave as soon as possible and will do whatever it takes to make him leave. Meanwhile, Carlos and Mr. Bitters are trying to prove that there is a ghost in the Palmwoods, while Logan is there to prove him wrong. Logan is eventually convinced that there is a ghost, and he, Carlos and Bitters are all terrified, while Kendall and James are failing miserably to get rid of Gustavo, who has moved in with them with his bed, as well as some of his personal belongings. They eventually team up to catch the ghost, which ends up being the new girl, Stephanie, using the Palm Woods residents as her actors for a no budget horror movie she's shooting. She desperately asks the boys not to snitch on her since she broke a lot of Bitters' stuff, and they agree as long as she helps them get rid of Gustavo. After they get rid of Gustavo, the boys proceed to sing Shot in the Dark. In the end, Stephanie teaches Katie how to move things using fishing line, which makes them think there is actually a ghost this time