Investor · Boston, MA · Member since 2016 · 73 posts · 18 votes
I own a sinkhole SFH in Florida. I bought it as a cash flow property and have been very happy with it as an investor.
At this point I would like to sell it, and my realtor is saying that it’s marketable only to investors since owners/occupiers will not be able to get a conventional mortgage (and the insurance will be prohibitive).
@Ellie T. if you are saying your property has an active sinkhole on it then I would say that's only going to cash buyers. I don't know of any loan types that would give the approval to lend on a property with an active sinkhole...and yes, that means conventional loans too.
Hi Ellie,
I was the Analyst for a property in Boston that had slight soil settlement and required an engineers report for further evaluation after the Appraisal was done (which was made "subject to" the engineer report). The report noted that the settlement was hazardous to the structure and they recommended a geographical engineer to test the soil for further settlement or potential sink hole down the road. The loan was denied because of this. I also had a loan denied for having contaminated soil underneath the property. Fannie/Freddie and HUD will not buy loans with Environmental Hazards because Environmental problems are a far greater source of loss to lenders than fire or title risks because when the property becomes hazardous, its value plummets and if the borrower defaults, the lender could be responsible for costly clean-up fees, third party damages, or legal fees from town violations. This will also impact the Appraisal the Buyer obtains as well as far as value goes and coming back "subject to" versus "as is".