Anyone flipped a house with foundation issues?

Real Estate Agent · Brandenburg, KY · Member since 2015 · 277 posts · 68 votes

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.

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Aaron McGinnis

Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes

11y

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.

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Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
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Like @J Scott I haven't read through all the replies, so apologies if I am repetitive. However, easily 50% of homes in the DFW have or will develop foundation issues serious enough to require remediation. It's just the nature of the "black dirt" (aka...clay) we live on here in the Metroplex. If you're looking at the property as an owner occupy, you will have a property that has a fully transferable, lifetime warranty, if you get a good foundation repair company. Add to that good foundation maintenance, while you're living in the home...soaker hoses around the foundation in the summer, and you shouldn't have any issues with the house or selling it later. I've been working on a deal with a property in a super desirable area with some serious foundation issues. It had previous foundation work done, but it wasn't done well. This property has fallen out of escrow multiple times, because people are scared off by the fact it has already had one round of repairs done. Just get it done right. Spend the extra money to have a licensed Structural Engineer write a report on it and then inspect it after the repairs, before you pay the final bill.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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@Jeremy Jackson
We see this over in Mississippi constantly.. and agree with other post a correctly done foundation repair by the premier company is an asset in your area were this is common.
As for those buying rental houses in these areas.. it may be smart to only look at houses that have had this major repair.. because most likely you will be faced with it somewhere down the line.. pretty hard to get your tenants to stay on top of watering the foundation and them having to pay the water bill... One foundation repair just took 2 to 3 years of your positive cash flow.. Also other than the plumbing that is mentioned.. depending on the situation you may have a ton of sheet rock repair and then of course paint etc etc. So these can easily be 5 to 10k issues.
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Manolo D.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
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The numbers doesn't work for me, 165 vs 185. I would say offer 135-140? I just hope there is no plumbing repair that needs to be done when you open it up.
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Jeremy Jackson
OP
Real Estate Agent · Brandenburg, KY · Member since 2015 · 277 posts · 68 votes
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@Manolo D.
Definintely not interested with the current price, but based on results from an inspection and repairt quote I'll come up with an offer.
I've scheduled an inspection and quote but they will need permission from the owner (va forclosure) before they can complete it.
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Bruce May
Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
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@Jeremy Jackson without repeating everything already stated above, I'd add that you should disclose the issue as early as possible, possibly even on the MLS so it doesn't come up as a problem during your buyer's due diligence phase. I did a house in an older section of San Diego last year and had to make foundation repairs as well. We hired a repair company with a great reputation that worked with our engineer and when we sold we didn't have any issue. Best of luck.
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James Stevens
Contractor · Temple, TX · Member since 2014 · 379 posts · 164 votes
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@Jeremy Jackson Rudy's does pretty good and reasonable foundation work in this area
www.rudysrepairandremodel.com
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Jeremy Jackson
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Real Estate Agent · Brandenburg, KY · Member since 2015 · 277 posts · 68 votes
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@James Stevens Thanks, I'll look them up.
I had lunch with a group of investors in the area today. They confirmed that foundation problems are common here. I've also always wondered why the houses have no gutters here. I learned today that's it's better for the foundation.
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Account Closed
Real Estate Investor · San Antonio, TX · Member since 2014 · 785 posts · 190 votes
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I flipped a house with a pier and beam foundation problem, fixed for about $3k, no problems with it. Wasn't difficult.
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Shawn Thom
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
11y
If you are doing rehabs in Texas you better get used to foundation issues. I'd say on a newer home, I'd be concerned. Anything over 10-15 years, less of an issue. I've only rehabbed 1 home that didn't have foundation issues. I'm rehabbing a 1996 build and it has foundations issues, 1965 house had issues, a few 1950s houses....issues. Pier and beam....slab foundation, in Texas they all have issues! In your budget, assume you have to foundation repairs, and will have to repair a few sewer lines due to foundation repair.
Here are the things that will help you. Get a lifetime warranty that is transferable. Look for a company that will include an egineering report, even if its at an extra cost. If it cost money to transfer the warranty, pay it when you sell. Get a licensed plumber to do checks after repairs are done to make sure there are no issues with plumbing. Get a written plumbing report with a license number shown on report to show buyer. On your disclosure, put the details and put that it has a lifetime warranty. Unless your buyer is looking for a brand new house, your rehabbed house won't be the first one they are considering with foundation issues. In Texas, its not if....its when you have foundation issues.........so depending on age, everything your buyer is looking at will have foundation issues.
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Joe Johnson
Investor · Dallas, TX · Member since 2014 · 17 posts · 1 vote
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On foreclosure's How do find out if foundation work was done in the past?
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Dmitri L.
Investor · DFW, TX · Member since 2013 · 319 posts · 101 votes
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Originally posted by @Joe Johnson:

On foreclosure's How do find out if foundation work was done in the past?
Try checking for past issued building permits. I've been able to find company name and repair budget 10+ years back
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Jimmy H.
Investor · Houston, TX · Member since 2015 · 51 posts · 11 votes
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This is a great thread. I was about to start a new thread asking about foundations but this thread just about answered all my questions. I am just going to assume that foundation issues are common here in Houston as well.
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David Holt
Houston, TX · Member since 2013 · 16 posts · 4 votes
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Just a couple of thoughts. Around Houston foundation issues are common. It's hard to tell a 4k vs 14k repair on a walkthrough though. I viewed a possible deal last week with a 4k discount for foundation repairs but after a getting a quote it was a 10k repair and because the water barrier was broken and the location they would not warranty the repair. In the Clearlake/Seabrook area few companies will do the work and fewer will warranty it due to the flood zone and sandy loam under the foundations. Remember also for flips, a foundation issue on the disclosure without a repair or warranty sends up red flags to your buyers lender and insurance company. It's a big ticket item that can bite you a few ways if you don't consider and budget for it correctly.
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Jimmy H.
Investor · Houston, TX · Member since 2015 · 51 posts · 11 votes
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Good to know @David Holt. Thanks, I'll keep that in mind.
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Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
11y
Originally posted by @Rocky V.:

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.
Rocky,
I found this post in my search. I posted mine here to get some information:
https://www.biggerpockets.com/forums/311/topics/23...
You mention a lifetime warranty, something that I didn't ask about when I was talking to the foundation company that performed the work. Is there anything in particular that I should ask them?
Wow, that pictures looks scary!
Thanks
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Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
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@Daria B.
There are a couple of companies, Straightline Foundation Repair being one of them, that offers a global life-time warranty. That means that there is no need to take any action to transfer the warranty. The warranty is on the property's foundation, not attached to the owner.
A good number of companies issue the warranty to the owner of record, when the work was done. Therefore, any time there is a change of ownership, the warranty has to be transferred. Many of those warranties also include a time limitation, during which the transfer has to be made, or the warranty is invalidated.
Probably doesn't matter to you, but it will matter to your buyers and could become a selling point.
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James Palin
Dallas, TX · Member since 2014 · 189 posts · 39 votes
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If you are using hard money be sure to check with them first. I had a hard money take off running when I told them I was looking at a house with foundation issues.
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James Palin
Dallas, TX · Member since 2014 · 189 posts · 39 votes
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*lender
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Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
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thanks @Hattie Dizmond and @James Palin for your answers.
Great info. I should ask them then if something exists by way of 'transfer'. I am looking at this property as a buy and hold and have put in a call into my insurance company not knowing if this would be a problem for them. It would be nice to get the final report but that has been difficult.
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Daria B.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
11y
Originally posted by @Hattie Dizmond:

Like @J Scott I haven't read through all the replies, so apologies if I am repetitive. However, easily 50% of homes in the DFW have or will develop foundation issues serious enough to require remediation. It's just the nature of the "black dirt" (aka...clay) we live on here in the Metroplex. If you're looking at the property as an owner occupy, you will have a property that has a fully transferable, lifetime warranty, if you get a good foundation repair company. Add to that good foundation maintenance, while you're living in the home...soaker hoses around the foundation in the summer, and you shouldn't have any issues with the house or selling it later. I've been working on a deal with a property in a super desirable area with some serious foundation issues. It had previous foundation work done, but it wasn't done well. This property has fallen out of escrow multiple times, because people are scared off by the fact it has already had one round of repairs done. Just get it done right. Spend the extra money to have a licensed Structural Engineer write a report on it and then inspect it after the repairs, before you pay the final bill.
Reading lots on foundation and I found your response similar to the home I found here in FL. We have 'red/brown clay'. I guess all these states near the water all suffer from sink-age.
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Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
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@Daria B.
In the DFW area the problem isn't exactly "sinkage", it's shrinkage. The black clay we have here shrinks dramatically, when it drys and hardens. It literally pulls away from the foundation of the house, if the foundation isn't irrigated. It will lead to huge cracks (3 - 4" wide) in your yard. The clay can expand and contract as much as 10". This process destabilizes the foundation and causes slabs to suffer serious cracks. That's the most common problem here in North Texas.
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Chris Soignier
Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
11y
I bought a rehab property w/ bad foundation issues a couple of weeks ago. The foundation work, which consisted of about 50 piers, was just completed Friday. It admittedly is a bit nerve-wracking, but the numbers on the project are good enough to support the investment and risk.
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Gene Livingston
Investor · Kyle, TX · Member since 2015 · 113 posts · 102 votes
10y
Agree with above. Foundations are scary(!) but this business is all about problem-solving. Many/most of the houses we get involved in have at least *some* foundation issue, soil movement, etc. The photo at the top of page 1 of this thread looks very similar to a house I flipped in Richardson, TX!. It was around 30 piers, include some inside piers. You may not want to be around to see them cutting into your slab for the inside piers LOL.
Don't forget to accurately fill out the Seller's Disclosure statement. Also, when you sell the property, you will want to call the foundation company to allow them to release the information on the work they did to the new buyer.
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