Foundation Issues on First Property

[Logan Allec]

I am currently in escrow on a four-unit property "house hack", which will be my first real estate purchase.  The property consists of three buildings: a duplex, a one-bed one-bath, and a small studio.  The foundations on the duplex and the one-bed one-bath look decent enough, but the small studio has some cracks and has a funhouse feel due to drops in the floor.

I had a foundation guy come out and take a look.  He gave me a quote (see below) for $6,000 - $25,000 depending on how good a fix I want with a summary of the problem as follows: "The structure has settled...the measurements indicate a drop that ranges from -1.9" to -0.4", with the average drop at 1.23"...the structure has sustained two severe foundation cracks...there is wall cracking on the inside of the home: cracks in the front room and cracks in the kitchen."

My predicament is that I simply don't think this unit is worth sinking much money into.  The rent is only $675/month, and the tenant of 15 years is perfectly fine with her dilapidated living quarters.  I would much rather put money into the nicer three units than sink $6,000 - $25,000 into the foundation on the all-around crappiest unit, this studio.  Thoughts?  Am I asking for problems down the road by neglecting the foundation?

[Brandon Ingegneri]

@Logan Allec

First question. At what point in the transaction was this noticed?  Is this deal contingent on a home inspection, or did you notice the crack and immediately call this contractor?  If so, how did the negotiation after this was discovered in the inspection play out if at all?  I don't know how much differently deals are structured in Ca, but where I am located, a buyer can introduce terms to the seller after an inspection which can be negotiated.  If you have something similar, here is your out, or your opportunity to SLASH the price of the property, because depending on the damage, you potentially have an extremely costly repair down the road.  

These are questions that you may not know off the top of your head, but what is the land like in this area? Ledge, sandy, gravel, etc... What is the water table?  Do you have photographs?  

Now there is the possibility that the house had settling over time, so Im going to ask what year it was built.  Cracks can become established from settling which is normal for older houses.  There is maintenance that can be performed that can minimize the damage.  From the information that you are providing, I'd say that the sagging floors are most likely settling and not due to cracks in the foundation.  Check the center stick in the house and all of the structural supports.  

You may only need a few lolly columns and hydraulic cement to repair the cracking and sagging floors, or there may be a larger issue that I honestly can't tell you unless I somehow saw it for myself.  Either way, you can overcome the issue with price or walking away unless you are able to determine exactly what is causing what.  

Just looked a little closer at your report. Issue with the footing of the foundation and the foundation is only 29 years old.  Walk.  You're going to have issues. If this was a 70 year old house, different story.  A 30 year old foundation shouldn't have issues like this, and a 30 year old house shouldn't have extensive sagging.