A Week From Closing and I am Having Roof Issues

8 Replies

I am currently a week from closing on a fourplex. Last week we had the inspection and some issues were brought up concerning the roof. This is a flat membrane rubber roof. I just had a contractor out to bid on the roof and he made it out to be a story from hell. He said the roof could is multiple layers of old school TPO and we are not sure how many layers. The flash on the roof only goes up six inches and is very loose around the edges of a second story section. It has begun to crack and bubble in certain parts. He said someone can come in and put on a base and cap for around 15K but to do things the right way, putting on new TPO all around would cost around 36k and once we rip up those layers and see what's underneath it could escalate in costs significantly. Any advice from the community on what to do? I currently have two more contractors coming out to bid on the roof.

@Grant Doyle I would go back to the seller with the information you found out. See if there is any wiggle room within negotiations or if he will provide a credit or even a repair allowance.

@Grant Doyle better to discover stuff before closing than after. I have a 5000 sq' rubber roof on a building; quotes were 32k to tear off and start over; the second quote was to caulk some flashing which we did and fingers crossed. Has not leaked since and this is one of the wettest areas in the PNW! 

Make sure your contractors do 'torch down' roofing and are licensed; otherwise they will have no clue; and check references beforehand.

Roofers want to replace roofs, so they recommend replacing roofs. Ive had many a roof last long long past their official lifespans and beyond when a roofer says to replace it.

@Grant Doyle what's the surface area of the roof? Or how big is the building and how many stories?

Those can be expensive depending on the extent of the damage underneath. I recently did a big, 3200sqft two story duplex (so about 1600sqft of roof)... full tearoff, water damage underneath, etc... for $10k in the greater chicago area. It was a torch down flat roof, as you and Bjorn are describing. I got a quote on a 3000sqft flat roof (10 unit, 3 story building) back in january for 16k. That was a pretty good price. 

Try and bust that seller back, let them know you've gotten multiple estimates and what the results were, and that any buyer would find that this roof needed replacement in the immediate future. I would try and get them to absorb most of the cost. Not necessarily all of the cost, since you weren't expecting a brand new flat roof with a full lifetime remaining. 

Originally posted by @Grant Doyle :

I am currently a week from closing on a fourplex. Last week we had the inspection and some issues were brought up concerning the roof. This is a flat membrane rubber roof. I just had a contractor out to bid on the roof and he made it out to be a story from hell. He said the roof could is multiple layers of old school TPO and we are not sure how many layers. The flash on the roof only goes up six inches and is very loose around the edges of a second story section. It has begun to crack and bubble in certain parts. He said someone can come in and put on a base and cap for around 15K but to do things the right way, putting on new TPO all around would cost around 36k and once we rip up those layers and see what's underneath it could escalate in costs significantly. Any advice from the community on what to do? I currently have two more contractors coming out to bid on the roof.

I'm assuming you didn't sign an "AS-IS" contract.  With this assumption, I'd have your attorney alert the seller about what was discovered during the inspection.  The attorney should provide the seller with the inspection report along with the contractor bid to repair and what concessions you need to close the deal in light of the finding.  You can wait for the other contractor bids, but I wouldn't wait to get those bids.  I'd alert the seller now. 

 

@Crystal Smith I am not currently working with an attorney. My contract allows me to leave the deal with anything that comes up in the inspection. I alerted the seller and he was not willing to budge on the price. I also do not want to supply him with an inspection report that he could give to a potential new buyer if I were to not purchase the property. 

@Elliott Elkhoury Hey Elliot, this is a 4800 square foot roof, about a "70 square roof" as all of the contractors stated. I told the seller I am willing to accept all of the other repairs in the house (approx. 15k) if he would meet me on the roof. I lowered my offer by 20k and he refused. 

There are also some other things with the property that were concerns. It is in a flood zone (hasn't ever flooded) inspector made sure of that. And I am willing to accept the risk of a flood. Once of the units has a tiny kitchen that would be quite the headache to renovate (no counter top space, no dishwasher space, and fridge against a flat wall on the opposite side of the kitchen.) The property has been on the market for two years in a town where there are many people with the money and interest to buy a rental. The signs and my gut are saying to stay out of the deal. 

Originally posted by @Grant Doyle :

@Crystal Smith I am not currently working with an attorney. My contract allows me to leave the deal with anything that comes up in the inspection. I alerted the seller and he was not willing to budge on the price. I also do not want to supply him with an inspection report that he could give to a potential new buyer if I were to not purchase the property. 

If he won't budge on the price & you're numbers no longer work if you have to invest additional capital then kill the deal.  If the property is still on the market in 6 months go back w/ another offer.

 

@Grant Doyle If I were in your situation, I would base my decision on how good of a deal this is. If you're buying this thing at a significantly above market cap rate (or a discounted price, however you'd like to look at it), then I would absorb those costs. 35k isn't a ton to invest in what seems to be a pretty large multiunit property.

The 2 years on the MLS detail is actually the biggest red flag here. I would probably instantly disqualify a property over this detail alone. Real estate investing has become virtualized, and a property that offers attractive cash flow and value can be offered on by non-local investors who are very eager to jump at an opportunity better than those available nearby.