Need Input: 1st OOS Deal & Foundation Issues

Buying & Selling Real Estate
6yFollow

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

1Reply
53 views

Most Popular Reply

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. 

Podcast Guest on Show #222
JLH Capital Partners51 Review
WebsiteView Page
15Reply
See this reply in the discussion

45 Replies

Jump to latestLatest
  • James Allen
    Lender · Los Angeles, CA · Member since 2015 · 184 posts · 92 votes
    6y

    @Todd Wheatley - I would run, especially if this is your first OOS Deal! Like others have said, there are much easier ways to make money on OOS deals. This is one of the worst and potentially most expensive issues to deal with on a property. For perspective, I've done multiple OOS rehabs and I still wouldn't touch a house with major foundation issues. 

    1Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y

    I wouldn't go near it because too much is involved with deep floor crack foundation issues. There are tons of deals in Ohio and the midwest, id run away.

    1Reply
  • Tony Mai
    Rental Property Investor · Los Angeles, CA · Member since 2016 · 137 posts · 80 votes
    6y

    @Todd Wheatley Run! Foundations are one of the most expensive items to fix. Unless the seller will pay for the repair I would skip this deal and move on to another deal! Good luck

    1Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Kill it. There's a reason this house looks like numbers work it's because all the locals passed on it. 

    In Chicago we would consider this a teardown and it would sell for land value.

    2Reply
  • Kaleena Felipe
    Real Estate Agent · San Antonio, TX · Member since 2019 · 10 posts · 2 votes
    6y

    @Todd Wheatley great advice I got today from the plumbing company that will be trenching to get to broken sewer pipes. Is to get a pre plumbing test before the foundation work and a post test. I have two properties that have had foundation work and both are requiring over 10k in plumbing repairs for broken/leaking pipes. Also have plumber do tests before the foundation company closes the holes in the foundation.

    2Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    @Kaleena Felipe thanks for that valuable advice!

    0Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y
    Originally posted by @Jay Hinrichs:

    asbestos tile cost me 37k 2 years ago.. 

    Jay, how did they track the contractor and you down? Security camera at the landfill, pick up the license plate? Curious how the dots got joined. Not that I'm planning on anything sinister like returning a naturally occurring product that was mined from the ground many years ago, back to the ground from whence it came...I'm sure a good lawyer would convince a court that it is just recycling.

    I do have my own asbestos tile. I like the retro look and am sure they'll come back in fashion.

    0Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y
    Originally posted by @Todd Wheatley:

    At this point I’m not overly concerned as I see this as just another “problem” that needs someone to come solve it.

    You have the enthusiasm of a super hero, I must say. Throw enough money at it, and it will be solved. Probably cheapest to bull doze it, says I who looks at a couple of photos and can safely make decisions and assumptions from the safety of my keyboard. Good luck, whatever you choose.

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

    asbestos tile cost me 37k 2 years ago.. 

    Jay, how did they track the contractor and you down? Security camera at the landfill, pick up the license plate? Curious how the dots got joined. Not that I'm planning on anything sinister like returning a naturally occurring product that was mined from the ground many years ago, back to the ground from whence it came...I'm sure a good lawyer would convince a court that it is just recycling.

    I do have my own asbestos tile. I like the retro look and am sure they'll come back in fashion.

    at the dump they look through what your bringing.. the hombres got caught then to add fuel.. someone must have walked on our site and called DEQ as they went out and saw some tiles still stuck on the floor.. this was a rural project 3 parcels  1.5 acre 2 acre and 4 acre and each had a meth house on it.. so I bulldozed all three homes.. just one had the tiles.. in this location these are 150 to 250k lots.. so houses were not worth saving. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    IF it's in a demand area the only buy option I would consider would be; get it for 40% of the lot price minus the tear down & removal cost. 

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    6y
    Originally posted by @Todd Wheatley:

    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

    For houses in Columbus like this what we do is a structural engineer consult to take a look. That letter that they provide trumps any building department or anyone else. It helps to have one on your team.  

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    0Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    @Robert Ellis thanks for the advice! We have 2 engineers visiting today. The next 24 hours will determine what we end up doing on this house.

    We very much appreciate the valuable and varying perspectives offered in this thread.

    0Reply
  • Andrew Alpsteg
    Real Estate Agent · Lincoln, NE · Member since 2018 · 18 posts · 13 votes
    6y

    @Todd Wheatley I live in Nebraska. Around here it seems every house has an issue with the foundation. That foundation looks pretty scary. I can tell you what I did during the inspection period and what I would do next time.

    I had a few local block and beam companies come look at the property. A couple of them said it didn’t look like a big deal and beams could remedy the issue. Eager to jump in this was a relief. After buying the property I got a few more bids. One guy told me if I didn’t act fast the whole place was going to collapse, while the a few others said it could be fixed easily.

    I found that these bids had several different ideas about how to shore up the foundation and each one had there own tactic about why it needed to be done soon. These guys were just trying to get my business and didn’t seem to be experts with anything but trying to get my business.

    I decided to go with the most reputable company in our area and they provided a 30 year warranty on their work. I figured if I needed to sell the property at some point I could point to the warranty when the buyers ask questions.

    Now with some experience on the topic here is what I would do.. hire a structural engineer. The engineer will come in and inspect the property. The engineer will make a recommendation on what needs to be done to fix the issue. Then find a contractor to make the repairs recommended by the engineer. After the repairs are made the bring the engineer back to sign off on the work done. Here’s why, the engineer has inspected and signed off he is liable if the work doesn’t fix the job. He has insurance to back him up. That gives you a lifetime warranty, don’t worry about the warranty from the company, get one from an engineer. Also be sure it’s a reputable engineer who isn’t going to run out of business. All these things will probably be the most expensive route but it will give you protection and peace of mind.

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

    @Andrew Alpsteg what a killer response, thank you! That makes total sense. Hire an objective 3rd party to determine root cause and recommended solution and then hire contractor to perform said recommendation. Really appreciate the recommendation!

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

    @Andrew Alpsteg what a killer response, thank you! That makes total sense. Hire an objective 3rd party to determine root cause and recommended solution and then hire contractor to perform said recommendation. Really appreciate the recommendation!

    Just a word of caution on relying on long term vendor warranties these guys retire they die they go out of business.. 

    nice to have but to think you have it made in the shade with their warranties can be wishful thinking. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Andrew Alpsteg
    Real Estate Agent · Lincoln, NE · Member since 2018 · 18 posts · 13 votes
    6y

    @Jay Hinrichs your absolutely right. If he can get a reputable engineer and foundation contractor that both offer warranties then that would be my aim. There’s no guarantees but when your ready to sell and those guys are still in the business then you can use it for the sale.

    1Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Todd Wheatley:

    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!

    Haven't had to deal with a foundation problem in a while but 100% of the properties we purchase in DFW needed foundation repairs. We were investing from out of town, flipping, not holding. We stayed in the deals once we were able to confirm that we could make our numbers given the cost to repair the foundation along with the rest of the rehab. Even if we could make our numbers we also wanted some type of guarantee from the contractor. Something that we could transfer to the new buyer. For cracks like what I see in your garage pictures, we would assume a teardown and rebuild. The key thing for us was we had a local partner with as much skin in the game as us who knew the market, construction,....  

    The bottom line it's all about the numbers & the quality of the people you're partnered with the risk analysis.

    312-681-7487
    2Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    Thanks @Crystal Smith

    At this time we’ve confirmed the garage is a tear down. The basement slab crack is likely heaving with no evidence of foundation integrity issues.

    Amazing what many of you experienced folks have been able to pick up by just a few pictures I posted.

    Lastly, as some noted we need to address the asbestos tiles in the basement.

    Great stuff BP.

    -Todd

    1Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Todd Wheatley:

    Thanks @Crystal Smith

    At this time we’ve confirmed the garage is a tear down. The basement slab crack is likely heaving with no evidence of foundation integrity issues.

    Amazing what many of you experienced folks have been able to pick up by just a few pictures I posted.

    Lastly, as some noted we need to address the asbestos tiles in the basement.

    Great stuff BP.

    -Todd

    Regarding the asbestos tiles, I’m not saying it’s not asbestos but technically unless it says asbestos there’s only one way to determine if it’s asbestos, test it. In any event whether or not it’s asbestos and your planning on replacing it either get it tested or make sure your renovation contract includes provisions that protect you.  

    312-681-7487
    0Reply
  • Todd Wheatley
    OP
    Real Estate Agent · Waltham, MA · Member since 2019 · 92 posts · 93 votes
    6y

    We elected to pass on this property. There was simply too much variability in the costs and risks associated with the foundation and garage. Thanks to everyone whom chimed in with their experience and opinions. We sincerely appreciate it.

    -Todd

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free