Anyone flipped a house with foundation issues?

48 Replies

Found a nice property in a nice area with foundation issues.  Anyone flipped a property with foundation issues?  I feel like it will be harder to unload and scare potential buyers away with this type of issue, even after repaired.

Yup, the majority of homes I rehab and retail have foundation issues.  Common thing in DFW.  Just make sure the foundation company offers a lifetime warranty among other things. 

all houses have foundations. some are major. most are minor.

Depending on how severe & whether or not you have the warranty from the foundation co. a lot of home buyers will over look the issue. If feel the type of buyers attracted to whatever neighborhood the home is in will a factor into how accepting they'll be as well.

First time home buyers in a C+ neighborhood may be more lenient as opposed to a growing family that is trying to size up in a A or B neighborhood. 

@Jeremy Jackson  

Hire a structural engineer. They will be able to tell you what needs to be repaired and how much it will cost. My partner and I found a property with foundational issues but instead of flipping it, we ended up assigning the contract. We shared the same concerns you have...potential buyers being scared about the foundation repair.

To those who have flipped a property with a repaired foundation, how do you disclose the repair to the buyer and what feedback have you recieved? Has it been an issue?

I'm going to look at the property this afternoon.  I'll have more info shortly.  I was running in the other direction at first. 

Step 1: Hire a legitimate engineer to assess
Step 2: Hire a reputable foundation company with a great warranty
Step 3: Disclose to the buyer that there was an issue, it was diagnosed, and summarily dealt with in a way that cannot be questioned.
Step 4: Profit from a deal that would scare other investors off!

Note: I recommend step 1 prior to buying the property, and getting a bid for step 2 prior to buying as well. Expect to spend some bucks to make this happen - it's no different from doing a survey on a lot you plan to build on as part of your due diligence.

We found one that was such a deal because of the poor foundation we couldn't resist it. In fact the kitchen floor sloped so badly it gave my wife vertigo as she walked through it.

Built during the 1890's it was a foundation of stone & river rock held together by a disintegrating binding of some sort. We sold it on a LTO & they stayed 6 years, patched the foundation when they added a 20x20 family room, got divorced & gave it back to us. Sold it twice since & held the note(s). The current owner has completely redone the basement walls.

I've sold a few houses with bowing walls in the basements.  In some, beams have already been added, in another one I paid a company to install the beams.  I purchase the beams and all materials myself and hire out the labor.  I disclosed what was done(if I had it done) and I've never had a problem selling.  The buyers I've had seem satisfied that the issue has been addressed properly.

I used to walk away from a property with structural issues.  Now that I know how to handle the issue and I'm comfortable that I'll be able to resell I'm actually looking for them.

Originally posted by @Matt Stewart :

I used to walk away from a property with structural issues.  Now that I know how to handle the issue and I'm comfortable that I'll be able to resell I'm actually looking for them.

I'm with you..we have bought several that scared others away. The only one we ever walked away from one was a gorgeous $350,000 home with a very severe hydrostatically cracked foundation (common in an area up here). The engineering report estimated repairs to meet code would be close to $100,000. But it was a great home, in a great location & I believe it was eventually bulldozed.

I do all the time in San Antonio. Should be looking at $175-200/ pier on slabs. $5,000 should pretty much lift an entire 1,500 sqft house. If it's more than a 4-5 inch drop it's likely to split the PVC plumbing under the house requiring your foundation guys and plumber to tunnel under the structure to fix the plumbing. If it was built before like 1965 it's likely got cast iron plumbing which will crack after even an inch of lifting. Remember it's got to be off more than 2.4 inches in a 20' span to be outside of FHA tolerance. Get a lifetime transferable warranty and make sure your guy pulls the correct permits.

A house with a lifetime transferable warranty is an asset not something that's going to hurt your sale.  Your buyer doesn't know if any of the neighbors have any settling but are insured that your house is structurally sound.

Get a structural engineer's assessment, ensure the foundation work is completed per the engineers report. Get a transferable warranty from the foundation company. Do your due diligence, check with the BBB. Good luck. 

Every home I have bought and/or flipped in San Antonio has had foundation issues.  My personal preference is to stick with homes on "pier & beam" or "pier & post" foundations.  I prefer this for a few reasons: It allows me to reconfigure interior layout and install all new plumbing and electrical with out jack-hammering a slab. If done correctly performs the same (if not better) than slab foundations, and typically it's less expensive.  Relative to cost, I am lucky to get piers done at $150 - $175 per pier, add in engineer's report ($400+/-), and city permit if applicable ($400 - 500).  Don't forget to figure in any beams that need to be replaced or any additional carpentry from your foundation guys.    As @Ryan Harthan  mentioned, a transferable warranty is a plus, not a deterrent, unless you're in an area where it's rare for there to be foundation issues. 

Here's one where I took out a garage slab and put in pier & beam so I could run plumbing and make it into a master suite.  

On-suite bath& walk-in closet

Seth Teel, Real Estate Agent in TX (#620984)

I looked at the house and possibly interested in it for a owner occupy.  It was built in 2004, slab foundation.  I couldn't find anything unlevel inside by feel or eyesight.  Floors seemed level, windows went up and down fine.  Doors seemed square.  There is crack in the ceiling running across the hallway.  Asking price is 165k.  It was under contract but fell through due to the foundation issue.  Comps in the neighborhood are selling for 185-190k.  I'm working on having someone look at it in the next few days. 

@Ryan Harthan  

Ryan, is that conventional FHA you're talking about or 203k?

What would be the best option for financing this as an owner occupy with little down?

My plan would be to fix, occupy for a yr or two and resell. 

@Seth Teel  nice work.  It's great to see others pursuing properties with foundation issues.  Maybe I'm on to a niche here. Lol I've  noticed a handful of you from Texas also.  Maybe a trend in texas?

Still seeking some financing options here.

the numbers are too close. the asking is too close to ARV.

btw, what's the new code in TX for these foundation issues? what do they do differently thhese days to avoid the sagging?

J Scott has done some flips with foundation work.

@Jeremy Jackson

Very common issue here in Texas.  Working on one right now but pier and beam so it's a pretty easy fix. Like most buyers, I use the issue to buy at a steeper discount because I know my only competition will be investors, not institutionally financed buyers. 

Don't get the cheapest repair company you can find...they may not be around to warrant any of their work a year from now. Read carefully the contract...most have more holes in them than Swiss cheese.

Originally posted by @Dawn Anastasi :

J Scott has done some flips with foundation work.

Haven't read the other responses, so my apologies if I repeat anything...

In my experience, a lot will depend on the expectations of your buyers based on the area.  For example, I've done rehabs in three areas...

In Atlanta, where most houses are relatively new and don't have full basements, there aren't too many foundation issues.  So, when buyers see a foundation fix, they get spooked -- they don't know what to think and will often just walk away without trying to understand that the repairs may have made the house better than new.

But, in both Milwaukee and Baltimore, there is much older housing stock and lots of basements (not to mention lots of snow).  In these areas, many (most?) houses have some foundation issues and it's unlikely that buyers aren't looking at lots of houses that either have or will have an issue.  So, when they see a foundation repair, they're thrilled!  It means that's one less thing they'll need to worry about in the coming years.

Based on that, foundation repairs in Atlanta will often lower the value of a property, while foundation repairs in Milwaukee and Baltimore will often increase the value of a property.  So, get to know your market and what buyers typically see and expect.

On top of that, I'd recommend always having a report from a structural engineer about the problem, the recommended fix and then a follow-up after the work was done to verify that the fix was appropriate.  If you have that -- plus a warranty from the foundation contractor -- you'll do a long way towards convincing your buyer that that foundation work was a good thing, not a bad thing.

@George P. I'm trying to get a few people lined up to look at the property and get some advice and estimates. Depending on the quote to repair, I'll use that to negotiate. Bottom line, if I can get it for a deep discount, I'm interested. If not, VA can keep it.

@J Scott thanks for the info.  Never thought of fixing a foundation issue as "new and improved property" with a lifetime warranty.  I'm learning that foundation issues are popular  in this central Texas region.  

I like foundation issues now that I have found a reputable foundation company that will provide a lifetime warranty on their work.  We have done seven or eight houses in the last three years, most are in the 125,000-200,000 range. We have not had any problems selling them. 

One we bought last year, major foundation issues, two sidewalls in the garage had to be totally replaced, front and rear walls were strapped with Fortress Stabilization System, cost me 14,000. Lifetime Warranty, transferable to buyer. 

Put it on the market Friday two weeks ago 299,000, 14 showings had offer within 10days.  Nobody complained about the foundation fixes. Here are a couple pictures

When you're flipping houses it is inevitable that you will encounter structural and foundation issues and your competence is the key to dealing with this. If in doubt, consult an engineer or even a couple of them, as long as the matter is dealt with properly, why should it be an issue unless you want to create one?

If you look hard enough at a house of any age you will find mold in it somewhere and that too has to be dealt with - it's the business we're in/the life we chose!

Good luck with it!