Is it worth repairing a property that may collapse(Images Attached)
TLDR. I have a 2 story structure that needs significant foundation work. It will cost roughly 6k to do it but the building has a strong possibility of getting worse if repairs are done. Is it worth attempting to fix it to potentially rent the space to make the Property produce significantly more cashflow or just convert the unit into storage to break even.
I have just gone under contract on my first house hack. Purchase Price 125k, Conventional Mortgage with a $1130 payment, 1949 Built 1700sqft 2b1b single family home with a detached 1957 built 2 story 1b1b garage apartment on the same lot. Both properties are separately metered. I was planning to live in the rear apartment, add a bedroom to the main house, and rent it out for $1200-$1400 a month. Then in 12 months move out and rent out the rear unit for 800-1000 utilities included.
But after getting my inspections done it may not be worth saving the apartment. As of now I've paid one structural engineer to evaluate the unit and had 4 foundation companies come out to give a quote on repairing the issue, 2 of them refused to even quote a price on the project.
According to the engineer the property is just laying on a 3"-4" slab and is not attached at any point. The property is also just studs laying on the concrete without a seal plate. Typically the fix is just to jack the building up and install a new seal plate to attach it to the concrete but there is also significant wood rot on the north-east wall. With the slab moving overtime it has caused the building to move out significantly out of plumb. So I will need to completely reframe the north and east walls of the bottom half the unit and then Jack up the rear and install 7 piers. I'll be looking at around $4000-$6000 in work but they can not guarantee that the slab will not break and cause more issues during the lift due to it being so thin. I've attached images below.
The left side is around 3 1/2" higher than the right side
The north-east corner has significant wood rot and the whole property is tilting heavily in that direction.
Closer look at the wood rot on the north-east corner
Rot and missing seal plate
Rot and missing seal plate
So here are my options.
1. I can attempt to fix the issue and risk causing more damage to the property with the potential to bring in $500-$700 in cashflow from renting both units in 12 months. (after putting away 20%)
2. I can ignore the problem for now, Occupy the apartment to fulfill my loan terms, and convert the lower half of the unit into storage. I can realistically ask for around $125-$150 per month to rent the bottom half of the unit and then store my personal belongings in the top of the building. It allows the property to slightly cashflow around $100 a month and I get to sleep better at night knowing that nobody else is living in it.
3. I can walk away from the deal. It may just not be worth attempting to fix. Ill be out around $700 but that's just the cost of business