Let me descibe the situation...
The house was built on a steep incline and appears to be falling down the fill. So much so that cracks are all throughout the house, it feels slanted when you walk through it, and the roof has come detached in one area that is allowing water to leak in. It has some serious foundation problems. As far as cosmetics go, it would need some drywall repair, roof repair, stucco repair, paint, carpet, closing off a loft to turn into a bedroom. For the most part it actually looks quite nice had it not been for the foundation falling down the hill.
It's definitely the nicest house on the block so determining a good ARV is really tough as nothing compares to it. Just from its unique location it feels like a cabin the woods where as the rest of the properties are standard typical neighborhood. It's listed as a raised ranch but is more of a 4 level with the garage as the lowest level and more sq ft than most surrounding properties. Selling through HUD. It was last sold in 2009 for $280,000 and it is currently listed at $158,000.
What are your thoughts and would you do it?
I buy the cheapest house on the nicest block. I would not want to buy something pushing value that needs tons of work.
If the numbers worked I would do it. First thing I would do is get 3 foundation repair companies out there and figure out what you have to do and what it will cost. Then get your other bids together plus how much profit you need to make (add cushion because of the "uniqueness" of the situation) so you can figure out what you are able to pay for the property. Put the offer in and if the bank takes it do it. If not move on.
It all depends on the numbers. Get some quotes to repair the foundation damage. If including those repairs still make the numbers work for the deal, then it's still worth considering.
this sounds very risky. I have been a general contractor for many years and foundation problems don't usually scare me, but a leaning house on the side of a steep hill does scare me. if you can buy it for the value of the land and teardown,,,,then price the foundation solutions and all other repairs (by the sound of your description there will be lots).
I suspect lots of headaches here so make it worthwhile.
Colin, What was the result of your situation?
The reapr estimate for the foundation alone was 75k-100k and the structure had to be proven safe by a structural engineer before any work could be done. To say the least the numbers don't work out and the property still sits on the market today.
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