HELP! Got the inspection back on our 1st property--stay or walk?
Member since 2018 · 8 posts · 2 votes
We are in the process of buying our first official real estate investment! (YAY!!) We got the inspection back today; the issues are as follows:
mold beyond the surface mold we originally noticed when checking the house out, wood rot in left side floor, damaged roof joist, poor ventilation in the attic and mold, many of the chimney bricks are loose, standing water in crawlspace--potential mold, leaking shower and toilet leading to damaged floor/ceiling underneath, plumbing material issues, electrical not all properly grounded.
Because we are new, we see all of these things as bad :(
I know we are supposed to be "problem solvers" as real estate investors per one of the podcast guests, but we also don't want to move forward if the problems are bigger than the budget.
As it stands, this will be a cash flowing property by about 400 a month after costs. Does that justify staying with the deal and handling the issues?
Thank you in advance for reading this far and for your help!
Lindsey
@Lindsey Thomspon I'm a numbers geek, and if the math makes sense, I'm buying it. Get a quote from a mold remediation expert, don't try to "estimate" this one. Factor it into your rehab costs, and make sure your all in is still at or less than 75% of ARV. In this market, you're not going to find a multi-family property for a good price that doesn't come with a headache or two. Good luck, and let us know if you buy it or not!
I have been working on a renovation that is much larger than yours, but has had similar problems (plus a whole lot more). I paid $1100 to a plumber to give me new plumbing lines in the kitchen and to create an attachment for the washer and dryer in the mud room adjacent to the kitchen. So there’s a ballpark price for that. Round down a bit, as we are in a beach location.
The photo below is our kitchen. We couldn’t tell from the first appearance that we had a rodent’s nest, which is the dark spot to the right of the plumber. And some water damage from the previous kitchen. When we were looking for the bit of damage we *could* see from the outside, there was much more beneath the surface. Expect this!~
Below, and similar to what you mentioned, we had termites eat a floor joist, and had to sister in a new board. This involved pulling off the siding, tar paper and the innards of the wall, which was already termite eaten, and running a new joist in from the outside of the house, and affixing it in place in the space beneath the floor. Then installing plywood back over the framing, new waterproof membrane, and new siding on the outside of the house. And on the inside, we needed new insulation, new Sheetrock, mud and paint. This took a couple of guys a couple of days’ labor, plus materials. The photo below shows the damage to the joist. The pile of nails is where the joist should be!
We also have had mold. Mold is a result of dampness, so that needs to be solved first. We used masks when breathing when we disturbed surfaces, as I am allergic. We used an ozone generator to eliminate smells. And we sprayed Zep and painted with and oil based primer to Water was running down the inside of the laundry room wall, so when we pulled off the old plaster to see the extent of the damage, the vertical column in the corner was powder. I laughingly suggested we put a gutter in that corner, inside the walls, as water had been running inside the wall long enough to reduce the vertical post to dust. Once the old boards were out, and new Sheetrock in place, the source of the mold was gone...ran ozone machine and it smelled fine. Once you solve the damp problem, the area no longer easily supports mold growth. We could see a small bit of plaster damage at the top of this wall, below. Once the plaster came down, it was clear that a lot of years of water running here left no wall in the wall. :D Yes, that is daylight you see in the wall.
The project you are considering is more difficult than any of my earlier renovation houses, in which we replaced flooring, painted, updated landscaping and possibly replaced kitchen cabinets. I want to show you that there can be much more damage behind the walls than what you see at first glance. The property has so many water issues as you describe it, that you also could open up walls to try and solve a small issue and find a large one behind the walls.