I recently came across a deal that have a crack foundation. Rehab cost of 50k. The asking price is around $230,000 o.b.o in an area where most home go for $400,000 - $500,000.
The seller seem to be motivate to sale. I am working on get this home under contract the only problem is that I am new. I have not done all my home yet and I am seeking some advice before I start digging into this project. I know I need comps and so on. What would before way to obtain all the information I need. Is it smart to chase after a house with a crack foundation?
Any advice would be helpful.
Thank you for reading.
Is the crack vertical or horizontal? are you talking a single crack or how bad? id say that is a question worth answering to better assist. The direction of the crack can make a difference though, as one is an easier fix.
You should probably get a local referral or two to someone who specializes in foundation repair, then get them to inspect the property and give you a quote (and you'll get some education as well!) You could do this before you make an offer or you could try to get it it under contract with an inspection contingency and then negotiate (or bail) if needed once you know the full costs of fixing the foundation.
Many investors are (rightly) afraid of dealing with foundation issues so it can actually be a profitable niche once you learn what you're doing -- and if you have a super competent foundation repair company that you can work with.
Some end buyers will be leery of a place that has had foundation issues, even if they've been properly repaired. Make sure you're taking that into consideration when you determine your final ARV -- you might want to estimate a bit on the low side so you don't get caught out.
Jean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com
What is your plan with this one? I own a similar one right now. Mine is a cut and fill on a hillside with insufficient compaction on the fill side. The worst corner on mine has dropped almost 2 inches. I would have been afraid to try and wholesale this house as most investors, as @ Jean Bolger pointed out, seem to be afraid of them.
If you want to rehab it, it can work but there is a lot of time involved in the fix. Getting multiple estimates can take 3 to 4 weeks. Once you commit, they will need to get a permit. They have to get some engineering done and a soil test before they apply for the permit. ( Est. 2 weeks) Fresno wanted 4 weeks for mine permit and we decided to pay extra which is supposed to bring it down to 2 weeks. (Some places can go much faster - maybe even over the counter according to my guy and I imagine some could be slower as well). Once you have your permit you have to schedule the job, which undoubtedly will be at least a couple of weeks out. After it is finished an inspection has to be done. It seems that Fresno county doesn't have anyone on staff qualified so my guy is going to try to get the geo-technical engineer who did the soil test to do the inspection. All said, the process takes a long time and mine is coming in around $20,000. I got multiple bids and had as high as $35,000 quoted. I think you could spend a lot more depending on the severity of the problem. My affected area is a relatively small corner of the house, about 12 feet by 14 feet on one corner with the crack and settling going between those points forming a triangle.
I think this could be overwhelming if it is your first flip and holding costs could be high if you are using hard money. The good news is the companies I dealt with are out of So. Cal and would service your area. I'm getting a 20 year warranty that is transferable. Good luck my friend.
P.S. Most of these companies want $350 to come out and do an estimate if you aren't the owner on record. If you own it, they don't charge for that.
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