Need Input: 1st OOS Deal & Foundation Issues

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Need Input: 1st OOS Deal & Foundation Issues

Todd Wheatley
Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes

Hey BP,

My wife and I are under agreement on our first out of state single family property. We’ve established a team on the ground to help us with due diligence. We are looking for advice from experienced investors that have dealt with structural or foundation issues. This property is located in Ohio and was built in the early 1950’s.

At this point I’m not overly concerned as I see this as just another “problem” that needs someone to come solve it. If the numbers ultimately work then I think the deal is still worth pursuing. Am I being overly optimistic or naive about the severity of this type of issue? I would love a devil’s advocate perspective, especially from those having worked through similar types of issues.

We have a foundation repair specialist visiting the house early this week to review and estimate repairs. Ultimately we may need to renegotiate our offer price based on these new estimates. Please chime in with your thoughts on that being the right approach or steering clear and finding another property. Thanks all!

Detached Garage

Basement Floor

Back Patio

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y

there are simply no shortage of cheap houses in Ohio.. why fool with this one that obviously has major issues.

to me its a pass look for one of the other thousands upon thousands of SFRs in ohio that can be bought for the price of a middle of the road luxury car. 

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  • Josue Vargas
    Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
    6y

    Let me ask you this... Do you have experience with foundation issues?  

    To me it looks like a nightmare.  Of course you can repair it.  Not familiar with your area.  Have you measure how off is the level in the area?  Do you know if they repaired the foundation previously?  Looks like a lot of patches, but hard to say if they try to repair the foundation issues.  

    To me "just another problem" is not a crack in the foundation that is more than 1.5" thick.

    Interested of what the structural/ or geotech engineer recommends to you.  House is 70+ years, so settlement is an issue obviously, just curios how much as given in the last 15 years

    1Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    Hi @Josue Vargas,

    I appreciate your response. No we don’t have experience with any foundational or structural issues of this magnitude. I’m certainly not trying to write of the significance of foundational cracks I just meant that if the cost of repairs can be fully negotiated into a revised offer than it wouldn’t be impact the economics of the deal.

    From disclosure documents the settling has been reported as pre 1990 and as you saw in the pictures it’s been patched but never addressed appropriately. I take this with a grain of salt since it’s being reported through a minimum of 2 people.

    Appreciate the alternative perspective. It’s certainly a serious issue.




    0Reply
  • Nicole Cowden
    Member since 2019 · 10 posts · 3 votes
    6y

    @Todd Wheatley I would strongly suggest doing your due diligence & getting a few bids from a professional prior to closing.

    0Reply
  • Joe Timko
    Real Estate Broker · Glendora, CA · Member since 2017 · 51 posts · 14 votes
    6y

    @Todd Wheatley yes the foundation issue can be repaired but need to consider the underlining cause of the damage to the foundation. Is the soil unstable, are the drainage issues, etc. check with the neighbors to see if they are also having settling, foundation issues. I have seen areas were the soil was not prepared properly, filled incorrectly and the entire neighborhood has issues. Also remember when you decide to sell this property you will need to disclose this issue to the new buyer.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y

    there are simply no shortage of cheap houses in Ohio.. why fool with this one that obviously has major issues.

    to me its a pass look for one of the other thousands upon thousands of SFRs in ohio that can be bought for the price of a middle of the road luxury car. 

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  • Javier D.
    Investor · FL · Member since 2017 · 266 posts · 220 votes
    6y

    @Todd Wheatley

    Nothing a little liquid nail cant fix.

    Like @Jay Hinrichs said unless you want to throw a hailmary discount request you cant walk away from. Id need to get a full rehab to deal with this.

    2Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    I was gonna say caulk...but obviously liquid nails is more appropriate @Javier D.

    How about the asbestos tiles in the kitchen? And you say the crack's been addressed previously...how do you know they didn't do it right? I mean, just because it's crappy now, doesn't mean it wasn't done right.

    2Reply
  • Charles Beyer
    Glenview, IL · Member since 2016 · 7 posts · 0 votes
    6y

    I'm by no means a real estate pro; however, unless the price for this house is ridiculously under market, why bother with it?  Foundation issues are nothing to mess around with.

    Also, as someone else mentioned, knowing the cause would be v ery useful.  For instance, Ohio has been increasingly using fracking which causes soil instability.  You could "fix" this foundation and if the ground shifts, it is all wasted effort/$.

    0Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    Thanks for the input everyone. It’s good to hear these opinions and we will factor them in as we near the end of our due diligence period.

    0Reply
  • Vasyl Magura
    Real Estate Agent · Cleveland, OH · Member since 2017 · 41 posts · 32 votes
    6y

    Unless you are experienced with doing out of state rehabbing, my professional advice to you is to shy away.

    Foundation repair costs are always in the thousands - in addition once you dig in... there can always be something else to repair. (e.g. broken clay sewer pipes)

    I live in Ohio myself, an agent, and own a construction company.

    Unless this house is in downtown Columbus, it's a "Pass"

    4Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    Thanks for the experienced opinion @Vasyl Magura!

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    @Todd Wheatley The only way I would deal with a house is if I bought it at a very good price and it was a top flight area that I otherwise could not afford. Both of those, not one or the other. 

    As @Jay Hinrichs pointed out if the housing stock is similar everywhere in the area just go find one where you aren't dealing with structural issues. 

    0Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y


    @Michael Noto, that makes total sense. Unless there is disproportional upside why assume the added risk. Thanks!

    2Reply
  • Davido Davido
    Rental Property Investor · Olympia, WA · Member since 2012 · 543 posts · 311 votes
    6y

    @Todd Wheatley,  The properties with problems that almost everyone else avoids, can also be the properties that a creative or dedicated RE investor makes the most money on.   Find a cheaper way to solve this problem than anyone else, and you've found another way to profit when no one else will.

    Redirecting water drainage is fairly simple (downspouts and grading). Add a company that injects expanding foam under the foundation. Pad the figures for the unexpected. If the sales price works, do the deal, get the knowledge and you'll never be intimidated by a similar issue.

    4Reply
  • Davido Davido
    Rental Property Investor · Olympia, WA · Member since 2012 · 543 posts · 311 votes
    6y
    1Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    Thanks for the insight @Davido Davido! This is how I was/am thinking about this particular opportunity. Not that I want to blindly go into a money pit of a situation but if the inspection results come back with a clear path forward it seems this might be an opportunity to solve a problem that other's may not want to which inherently creates opportunity.

    It's great to hear the varying perspective from folks in the thread. We are weighing all of the input folks have been kind enough to share.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Todd Wheatley:

    Thanks for the insight @Davido Davido! This is how I was/am thinking about this particular opportunity. Not that I want to blindly go into a money pit of a situation but if the inspection results come back with a clear path forward it seems this might be an opportunity to solve a problem that other's may not want to which inherently creates opportunity.

    It's great to hear the varying perspective from folks in the thread. We are weighing all of the input folks have been kind enough to share.

    Certain parts of the south from Dallas to Jackson MS specifically have VERY bad soil conditions and its not a matter of if its a matter of when many times that U will be dealing with soil issues.. they can be fixed most of the time its 8 to 25k.. but then the pipes are busted cabinets don't work.. in those areas you need to deal with it because its SOP for the area.. my point in in Ohio were I have done a ton of work there are so many cheap properties it seems unless your getting this for free or near free why bother.. just go buy something else.. you will not have to go through all that is involved with a messed up foundation.  plus those floors might have asbestos in them.. 

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  • John Collins
    Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y

    Pictures tell you one thing, but being there with a pro is another. I would fly out for a couple days and schedule 3, maybe 4 different inspectors/foundation specialists to give you their quotes and opinions. This is a big deal and you should be there to see and understand it and make sure these guys aren't just trying to get themselves extra work or "swinging and missing" as some can do. 

    I have had foundation issues causing settling where I had to remove a concrete patio that was sloping into the house, instead of away from it. Now I put in things sloping away from the house. I put up gutters, which were not very expensive. I put river rock around the sides of the house and any water that came down landed on a hard surface, not the soil. I also graded and put some drainage in the yard where water would pool and had it roll away. I put up a couple of support beams that weren't really needed but I did it myself with a friend, so wasn't too expensive.  The next storm I stood outside myself watching the water move away from the house like a beautifully orchestrated symphony. 

    That being said, my situation and yours likely have 0 to do with each other, so get the pro's out there to take a look. 

    3Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Todd Wheatley None of those areas seem like extremely important spots but I would definitely try to get the seller to cut a check to remedy them at closing.

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    6y

    @Todd Wheatley congrats on doing OOS investing. When I help OOS investors I coach them to avoid them if you can. Ultimately any issue can be fixed but it will cost. In the Midwest the common reason foundations settle is people let water sit by their foundation. Small maintenance issues like gutters needing cleaned out, dirt around home, extended down spouts leave water sitting by your foundation. You’d want to have multiple bids to fix the foundation. If you trust the team in place I’d go with their guidance but don’t get too excited and jump on a lemon. Best of luck!

    3Reply
  • Alma Mills
    Real Estate Investor · Los Angeles, CA · Member since 2013 · 98 posts · 48 votes
    6y

    @Todd Wheatley it's hard to give solid advice without the numbers involved and your goals. Is this a flip or a buy and hold? Nice area or run down? The basic principle is you should be making a greater profit than your having spend to fix this. I.e. if it costs you 30k to fix you want to be making an additional 50k profit. You don't know for sure that will be the cost as things always come up. The seller doesn't want to deal with it for fear the cost will be too high.

    I have done out of state rehabs in Ohio and they were not easy. I would agree with @Jay Hinrichs and suggest as your 1st OOS investment this might not be the best. Of course, if your a flipper and experienced in remodels this still might be a great deal. Make sure you get 2 quotes from well reviewed contractors.

    2Reply
  • Account Closed
    Contractor · San Diego, CA · Member since 2018 · 432 posts · 221 votes
    6y

    @Todd Wheatley doesn’t look like its moving too far in the last 70 years. Maybe squeeze some epoxy in the crack, pressure wash or sand blast exterior and stucco all. That crack doesn’t seem to represent a whole ton of movement. I would make sure I’m getting a good deal. If you have to do anything beyond surface work (who would on a house that old) it’s going to be too expensive and the house sits trashy. The real bad crack looks exterior, so break up and replace. Inside you’ll have to decide if it’s too high and must be broken out and replaced or leveled with concrete.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Michael King:

    I was gonna say caulk...but obviously liquid nails is more appropriate @Javier D.

    How about the asbestos tiles in the kitchen? And you say the crack's been addressed previously...how do you know they didn't do it right? I mean, just because it's crappy now, doesn't mean it wasn't done right.

    asbestos tile cost me 37k 2 years ago.. bill bob hombre contractor tried to hid them taking them to the dump.. state came down on us like a ton of bricks.. luckily its a 3 parcel deal with tons of meat so while don't like it we can live to fight another day and still make a nice lick.

    this stuff is serious this asbestos and lead and cracked foundations..  just easier ways to make money in my mind. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Javier D.:

    @Todd Wheatley

    Nothing a little liquid nail cant fix.

    Like @Jay Hinrichs said unless you want to throw a hailmary discount request you cant walk away from. Id need to get a full rehab to deal with this.

    when we see a wrecked plane pilots always say well that will buff out or nothing a little duct tape cant fix LOL.. 

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  • Javier D.
    Investor · FL · Member since 2017 · 266 posts · 220 votes
    6y

    @Jay Hinrichs

    Lol same down here in south Florida but with the boat captains.

    1Reply
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