Hi fellow BP'ers. I thought I could get some thoughts and experiences.
I am looking at a foreclosure, unoccupied for at least a year or so, that was previously owned by an investor. Their initial rehab was obviously shoddy, and many corners were cut.
There are also a few flags waving such as: only a few small spots in the basement painted (were they hiding water stains or cracks in wall and foundation?), electrical mishmash (Knob and Tube wiring with a new 100 amp box placed in upside down!?) one or two newer support beams placed under a joist showing some signs of sagging...
I did the following:
1- had a 10 day inspection addendum in the contract with the right to terminate based on inspection.
2-Had a home inspector and contractor go through the place.
3-Built a "surprise repair" cushion into the purchase price.
With a house like this, however, I have a concern that even a good inspector and contractor could be missing bigger hidden things, only to be discovered while we are rehabbing.
What have your experiences been in this situation?
Do you take the leap, or say "other deals out there, don't want to deal with the headache?"
How have you mitigated the risks?
Thanks for any thoughts-
Interesting - I think I would build up your surprise cushion more and more and assume you'll discover the worst. If I find questionable plumbing or electrical in many areas throughout I'll automatically put in a number for entire redo on it. For me, I'd rather not deal with the headaches as much so it may be something I'd pass on.
Since the seller is the bank I'd just throw in lower numbers and see where they come back if at all.
We love these because we can do the work ourselves & most potential buyers have to add in their 'contractor pricing' to get to a buy point, so we low ball, go in cash & wait.
The best rehab 'skeleton' we found was when a 2-car garage had been enclosed & made into a large family room. When we broke through the ceiling we found the garage doors & garage door opener still there!!! So you can imagine the rest of the skeletons we found.
@Steven J. sounds like a good idea to just assume, at least for plumbing and electric, it would need to be a complete redo and adjust offer accordingly.
@Pat L. I guess I am just one of those that has to factor in the contractor pricing :)
- with the plumbing and electrical I would want a real pro to sort out the mess!
Thanks for the responses!
Free eBook from BiggerPockets!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!