Wood rot on recently purchased SFH invesment - KCMO

39 Replies

Investors - I'm torn on making a decision here and am curious how some of you would handle this situation. 

For starters, here is my background.  I am a new investor in KCMO, but live in Denver. I bought three SFHs at 2.785% in KCMO area in March with 25% down, All are rented at double the mortgage payment. I'd like to hold these for 10 or more years. 

I'm learning one home has a larger amount of wood rot on the siding than I originally realized and it needs gutter work as well.  This is a classic raised ranch (bi-level), 3x2, at about 1500 sq feet, built-in 1995. 

The seller noted this in the disclosure but did not provide detailed comments and the inspector noted some wood rot but did not mark it as an urgent item. Sadly, the inspector has since passed away. Clearly, I knew about this but did not know the extent of the problem, and I did not push to get bids before the inspection resolution was complete. My fault. Lesson learned. I've received one bid for $15,000 to fix the gutters, power wash, replace wood rot and paint, and trying to collect more bids. I have the cash to fix it but would rather spend it on my next purchase.

My questions to you all are this. 

  • I've never owned a home with wood siding. When will I know the exterior wood rot is at a point when it HAS to be replaced because it's affecting the value of the home? 
  • What alternative options, if any, would you use to temporarily patch the problem to buy time and fix it later?
  • Does anyone have a trustworthy siding expert in the KCMO area they would recommend? 

I'm probably overthinking this but obviously concerned I've made a $15k mistake. And I want to show the banks these are profitable so I can continue to finance more deals next year. 

Curious how some of the more experienced investors would evaluate this situation. Any advice?  Thank you for your time!

Hi @Melissa Robbins .  I need to say up front that construction questions aren't my strongest skill set.  Is most of the rot along the bottom of the siding?  Sometimes you can cut along the bottom and put some trim board up and paint to get by.   Gutters will help prevent more water from splashing up on the siding I am guessing.   I live in Lawrence and have a siding company I use here, but not sure if they go to KC.  Have you joined the Bridge Real Estate Investing Meetup Facebook Group that Nathan Brooks runs?  If you post in there, you'll get some good recommendations to call.  Hope that helps.  There's usually a surprise or two when purchasing a property.  Don't sweat it too much!

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@Derek Felch - Thank you. Just by you saying don't sweat it too much, lessens my anxiety.  The wood rot is in sections all over, some small, and some more extensive, because the previous owner didn't use the correct size sheets and never sealed seams or nail holes. I think you are right that gutters should be addressed now regardless.  I do belong to the Bridge investment Group. This is where I got the name of the company with the $15K bid.  I used that company to rebuild a deck for me at my other rental and was happy with the quality for the price. I know they work with other investors. I will go back through that site and read through comments on other companies.  That's a good idea.

@Theresa Harris -  I received another bid for vinyl thinking it would be cheaper and that came in at $20K.  I've talked to one other company that was supposed to do a bid but I never heard back from them.  But you are right, I need more bids to truly make a best decision. 

@Bruce Woodruff - I'm not sure of the exterior SF but this is the house. Inside is 1342 sf is exact. Good to know I could potentially paint over wood rot for now and buy it some time. I might also get quotes for just touching up the paint over the repaired wood rot and then getting the whole thing painted at a later time. 

Originally posted by @Melissa Robbins :

@Derek Felch - Thank you. Just by you saying don't sweat it too much, lessens my anxiety.  The wood rot is in sections all over, some small, and some more extensive, because the previous owner didn't use the correct size sheets and never sealed seams or nail holes. I think you are right that gutters should be addressed now regardless.  I do belong to the Bridge investment Group. This is where I got the name of the company with the $15K bid.  I used that company to rebuild a deck for me at my other rental and was happy with the quality for the price. I know they work with other investors. I will go back through that site and read through comments on other companies.  That's a good idea.

@Theresa Harris -  I received another bid for vinyl thinking it would be cheaper and that came in at $20K.  I've talked to one other company that was supposed to do a bid but I never heard back from them.  But you are right, I need more bids to truly make a best decision. 

 $20K vs $15K is a big difference.  Make sure they include similar things.  You may find a few shady people who will try to take advantage of you because you are a woman.

@Theresa Harris thanks! Yes, woman and out of state makes it a little more strategic to get to the right answer.  I apparently need to learn more about wood exteriors so I can talk more intelligently from a distance. Being a newbie makes me more vulnerable. 

 I would repair it all and make sure all the rotten wood is removed before it get's worse. Attempting a temporary repair on rotten wood could just lead to a more expensive repair later on as the rot spreads into the rest of the house, potentially compromising the framing causing structural issues. Paint doesn't adhere to rotten wood. You can cut out small areas and use a product like wood filler, plastic wood, durham's water putty etc. or bondo basically to repair small areas, but it sounds like your problem goes beyond that at this point. Once you start seeing large rotten areas that an inspector notes and a seller discloses, there's usually more rot underneath the visible rot that needs to be addressed. Unfortunately it's often a can of worms situation where you can't really know the scope of the problem until you pull off some rotten boards. I usually plan for the scope of work to broaden in these scenarios. I'd hire a competent carpentry crew and stay in close communication with them, have them video call you daily if possible, maybe even travel to KCMO to supervise. Sometimes it's necessary to get eyes on an issue to make these kinds of judgement calls. Good luck!  

Originally posted by @Melissa Robbins :

@Bruce Woodruff - I'm not sure of the exterior SF but this is the house. Inside is 1342 sf is exact. Good to know I could potentially paint over wood rot for now and buy it some time. I might also get quotes for just touching up the paint over the repaired wood rot and then getting the whole thing painted at a later time. 

 Nice house! You can buy a little time  but I would attend to it within the year. That kind of siding is not that hard to repair/patch. How much of the exterior (in %) needs repair? From the price tag, it must be a majority of it?

It's unclear from the post but is this actually "wood" siding, as in boards? Or is it more likely a wood composition siding product? If it's the latter, in the mid 90's there were a gazillion homes that used wood product siding that was problematic to the point that there were class action lawsuits concerning it and many homes were resided under conditions of the settlement. However, this siding is still prevalent on many homes. Just today I was painting a house that has this type of siding. Wood rots due to moisture. If it's kept dry, it's fine. Thus, depending on how much it's deteriorated, caulk and paint may buy more time. Otherwise, removing it and installing a Hardie plank type product is a common solution. Also, in my area, these houses are often covered with vinyl siding while leaving the wood product siding in place. Most of the time, this siding goes bad on chimney chases, the bottom row or two around the house and anywhere it's been damaged allowing water egress.

@Steve K. Thanks Steve. That's good advice. I didn't think about not being able to paint over it. I got it rented May 1 and the cash flow is about $500 per month so right now I don't have much profit saved up to cover it but if it can wait a year, I should be able to cover the cost as long as nothing else goes wrong. I really don't want to take money out of my personal savings. 

Since I've received many good tips from everyone, I've done more research and have three other vendors to call on Monday. And flights are affordable from Denver to KC so I can make a day trip or stay with family while I am there. 

@Bruce Woodruff - There are areas all over where the wrong size trim was used, seams and screw holes were never sealed. I would say 30-40% of the home needs work. Here's a few other pics. 

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@John Teachout - Yes, its a composition material. I say wood but I am not using the correct label. The house was built in 1995 so I am sure this is one of those gazillion! I hope the product they use now is better. KC is a humid area with a decent amount of rain.  I think I will find someone who can fix the gutters now, save up my profits to fix the rest later. 

@David Song YES, you are correct. I remember the person I received the bid from said the old homeowner used the wrong sized sheet and should be 4x9.  If this material is that bad, maybe I do need to look at replacing all of it. Ugh. Thanks for offering that info David. Its helpful to know what the material is called.

Originally posted by @David Song :

T1-11siding, 4’x8’ sheets. Made with mostly paper material, not even plywood. 

T-111 is actually a wood plywood. This product is one of the composites, probably this: https://www.homedepot.com/p/LP...

It can be a decent product if installed absolutely correctly. but that work looks horrible. You need to address the water penetration issues immediately.

@Melissa Robbins I had this same issue on my house. Those horizontal stops of wood are probably holding moisture and it is rotting the wood. I used "z flashing" and painted it the same color as the siding, no horizontal trim. I would hope the contractors would have some idea on how to let that water shed in that situation.

When you rip off rotten wood, you don't really know what is behind it and how much has rotted away.. That's more than likely why the bids are a little higher.

@Stephen Girard - I am scared to find out what is behind it. Hopefully, it's not terrible. Whomever I select, I will for sure be coming to KC since the risk of more work is high.  Maybe I should just sell it. The other homes in the neighborhood are already selling for $30K more since I bought this in March. And the inside is nice with no major repairs needed.




Originally posted by @Melissa Robbins :

@David Song YES, you are correct. I remember the person I received the bid from said the old homeowner used the wrong sized sheet and should be 4x9.  If this material is that bad, maybe I do need to look at replacing all of it. Ugh. Thanks for offering that info David. Its helpful to know what the material is called.

This kind of siding is easy to repair. Most of the rot will happen in the lower section of the wall. Just cut those rotted sections out, install new water proofing paper, new z flashing, and new siding. Must paint. Paint protect those siding from water damage. This should not cost $15k, unless you are replacing whole house siding.