Looking for advice on undisclosed repairs after closing
Here's the story. We closed on a 4 unit and 12 unit building in January under a single deal. Since then, we have discovered a few minor things that were not disclosed prior to closing (broken stoves, a minor plumbing issue) and so we were inclined to just let those go. Just this last week we discovered that one of the apartments has water leaking from the ceiling and several mold spots on the drywall. After ripping out the drywall and having a 2nd roof inspection (we had one before we closed too) we find out the roof is shot. The decking is rotting and it needs to be replaced. We don't have a bid yet but I'm guessing around $20,000 for this.
We were pretty disappointed that the inspection we had done prior to closing did NOT catch this. We were told that there was pooling (flat roof) and that isn't good, but the membrane looked OK and should last a few more years probably. The inspector that did the final inspection also did not catch the mold in the bedrooms. It's possible this was covered up by a bookshelf or bed though. Obviously, we should have done a more through inspection ourselves... but we're still new at this and leaning.
The property manager has told us verbally that the previous owner knew about the leaking roof. He said he knew about it a year ago and didn't do anything. There was mold showing on the walls previously and he bleached it and painted over it.
Now, what do we do about this? We talked to an attorney and he basically said the legal fees for litigation would probably make it not worth our time to pursue. We talked to the roofer who inspected it previous to the sale and he will not budge or give us compensation. Our next step is to call the previous owner, but any tips you all could provide as to what we should present in that conversation would be very helpful.
Or are there other avenues we should be pursuing? We have enough cash flow on the property (assuming no more 20k surprises) to cover this, but it will make our returns for the year almost zilch. Thanks for any feedback.