Foundation Leaks/Cracks : Deal Maker or Deal Breaker?

5 Replies

So recently I have viewed several homes with foundation problems and I raise this question: are foundation leaks/cracks deal makers or deal breakers for your portfolio. If the property is a possible buy and hold, rents make sense and the purchase can be made at a significant discount? Here are 2 examples of a slab foundation leak and a Cinder block foundation crack.

Most of the time I will skip houses with foundation problems. 

Exceptions to that is if the house is priced right and I know the fix is not a big deal. I wouldn't be too scared of a corner that needed a new footer and reblock, or a house that needed new jack studs, but I would probably skip a badly settled slab as that could be real trouble depending on the area. Around here a fallen slab could be a house on a sinkhole. 

@Serena Bales , it depends.  In Houston, for example, the ground is like gumbo.  More than 75% of the SFRs over about 20 yrs old have foundation cracks.  In other parts of the country, a foundation crack = run.

What is the standard in your area?  If you don't know, ask a real estate agent.

Hope that helps.

@Alan Grobmeier is spot on.  This is just a number, these things can be fixed and so if you know the cost to do that, then it can be priced into the offer.

I've only completed one flip myself on my own, but that one did have mild foundation issues at the back end of the house.  It was a $3K repair - and the wholesaler already had a bid lined up for me.  After closing, I just made a phone and stroked a check.  Done. 

Now here is the other aspect of this - that house will need some time to settle after you repair the foundation, and you will find a lot of other items that need fixing as a result.  Doors that don't close, windows that leak... things you maybe didn't notice before.  So there is a small cost multiplier effect with these foundation houses (in my single-project limited experience).

We're not experienced enough yet, so we avoid foundation issues. I hope to reach a level where that's no longer a deal-breaker. 

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