Cracked Brick - Would this be a deal breaker for you?

Real Estate Deal Analysis & Advice
7yFollow

Cracked Brick - Would this be a deal breaker for you?

Thomas Moran
Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes

Hey BP folks -

New investor here looking to close on my first deal. I've sifted through a huge pipeline of deals and have narrowed it down to two. The most promising one is a brick ranch 3bed 1.5 bath...1300 sq ft through a wholesaler.

I viewed it in person and it looks good. There is a lot of competition on the deal, with other investors. The main thing that's holding me back is this cracked brick. I am 90% sure it's brick veneer. Because I have to put down a deposit before the inspection... is this something (from the little information you can see) that would scare you off? 

Thanks so much for any feedback.

Cheers,

Tom

0Reply
119 views

Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

That wouldnt stop me.....I also dont think thats a veneer though.  Id fill it up with mortar so water doesnt get inside, freeze and make the cracking worse.

[email protected]301-893-4635Podcast Guest on Show #192
District Invest Group546 Reviews
WebsiteView Page
8Reply
See this reply in the discussion

57 Replies

Jump to latestLatest
  • Brian Van Pelt
    Specialist · Owings Mills, MD · Member since 2017 · 485 posts · 415 votes
    7y

    @Thomas Moran

    Read this: https://jadeengineering.biz/the-real-truth-about-brick-veneer-cracks/

    6Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    That wouldnt stop me.....I also dont think thats a veneer though.  Id fill it up with mortar so water doesnt get inside, freeze and make the cracking worse.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    8Reply
  • Darren Lenick
    Flipper/Rehabber · Davie, FL · Member since 2016 · 101 posts · 136 votes
    7y

    That’s not a crack. It actually looks like a possible foundation issue as the brick has dropped away.  If there is a basement, see if the crack continues down. If it’s a slab, go to the room connected to this wall and see if a golf ball rolls on it’s own showing a slope in the slab.

    6Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    7y

    Definitely not veneer you can see bricks set in on end a few rows down (first pic). Needs to be 'pointed' to prevent any water entering causing further problems. I would do as @Darren Lenick suggests and press on.

    1Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    Thanks everyone so much for the support and advice. Just pinged the wholesaler and he said from the realist report that it's brick veneer. I am requesting a copy though, because even though I'm sure most wholesalers are trustworthy, I know they are not bound to the same legal obligations as realtors. 

    0Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    7y

    I don't count on Realist having those kind of details right around here. Frequently they are wrong.

    3Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y


    Looks like the general consensus is that it’s not veneer. The wholesaler couldn’t provide me with the document proving anything so I drove up there myself and found that the windows are set back a whole row (see pic below). 

    Based on the excerpt from this article it looks like that’s a good indication of brick walls, “...You can also check the depth of windowsills and doorjambs. These features on a house with solid brick walls are very deep because the walls are two bricks thick. Windows will be set back about one brick length from the outside in a true brick wall. Those in a brick veneer house sit closer to the outside of the wall.”

    0Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    image upload is not working. Here is a link

    0Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    Here is the link. Image uploaded not working. https://imgur.com/a/Z6BczTO?desktop=1

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    Most brick houses in the USA are veneer in that the brick isn't the structural part of the house. It's used in lieu of some other type of siding. ie, you could take ALL the brick off the house and it wouldn't fall down. These types of cracks are the results of settling but all structures move and settle to some extent. If this house was made of cement block, I'd walk away, but because it's brick it could be sealed up by either tuck pointing it or using a caulk made for that purpose. (you need to keep water infiltration from happening.) There is a type of brick veneer that is actually brick material and is about a half inch thick. I think that's what some are thinking.

    3Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    Thats super helpful, John. And everyone else. Please everyone else chime in if that’s what you were referring to as “not veneer”. I think I’ll get in the crawl space tomorrow and check if there’s internal cracking and if not, mortar/seal & press on. 

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Thomas Moran is this in Raleigh NC? How much is the wholesaler deposit? I imagine it’s non-refundable? Be careful with that stuff, especially if you’re new. I see so much wholesaler stuff and it’s all overpriced

    5Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    @Caleb Heimsoth

    Yes it is NC. In fact since you’re from Durham you might know the location of this one. It’s 5 or so minutes from RTP...right where S Miami and US 70 intersect.

    You’re correct. It’s a 2,500 deposit before I can inspect or anything that’s why I’m sweating bullets thinking about this. On paper it looks like a great opportunity but I don’t want to burn myself on my first deal either.

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y
    Originally posted by @Thomas Moran:

    @Caleb Heimsoth

    Yes it is NC. In fact since you’re from Durham you might know the location of this one. It’s 5 or so minutes from RTP...right where S Miami and US 70 intersect.

    You’re correct. It’s a 2,500 deposit before I can inspect or anything that’s why I’m sweating bullets thinking about this. On paper it looks like a great opportunity but I don’t want to burn myself on my first deal either.

    I’m not great with directions lol.  Just shoot me a message with the address, and I’m happy to look at it if you want.  I’ll need more numbers though. Are you looking to flip it or keep it as a rental?

    Personally I typically don’t deal with wholesalers because of the whole non-refundable deposit thing.  If you didn’t have to pay that, make an offer, get an engineer to look at the crack and see what’s going on.  Probably cost you 300-400 bucks.  But the deposit makes it generally not worth it. 

    3Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    @Caleb Heimsoth

    The metrics of the deal are 3 bed 2 bath brick ranch 1300 square ft. .5 acre lot.

    Ask is 133k comps have it at 191k rehab looks to be about 20k.

    My plan was to BRRR it, and just sell/flip as an alternative exit strategy if I can't refinance or find tenants or sh%# hits the fan.

    PMing you now Caleb

    0Reply
  • Wesley C.
    Investor · Houston, TX · Member since 2015 · 8 posts · 4 votes
    7y

    @Thomas Moran

    Looks like a strong indication of foundation problems. If your numbers are good, it wouldn’t scare me at all. Happy bidding.

    1Reply
  • Timothy McKinney
    Investor/GC · Apex, NC · Member since 2015 · 59 posts · 28 votes
    7y

    I do alot of work in East Durham and am familiar with the contruction of houses in the area. Given the location, my guess is the house was built in the 50's, 60's, or 70's. During that time they commonly used brick as a veneer (at least in Durham) with a block foundation behind it and wood framing. 

    You have some settling issues (but this is North Carolina and that is going to happen eventually). I don't see anything that would hold me back from the purchase. If you want extra comfort to be sure, you can go in the crawl space and look at the wall from the inside. My guess is there is also a crack there. But again, that is likely to happen anyway. If it is not crumbling, buy it and patch it. Shoot me a message. I am in Durham most days and can swing by and take a look.

    4Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    @Thomas Moran, one of my biggest regrets about not buying involved a house with similar-looking cracks near downtown Durham about 8 years ago.  The front of the house had a huge diagonal crack from window-sill height down to the ground.  Some of the bricks were literally leaning outward.  The interior was a basic reno, new kitchen and bath, and painting mostly.  Asking was about $20K.  I walked that house a half-dozen times trying to convince myself to buy it, but ultimately allowed my ignorance and fear to convince me to pass.  I wasn't the only one -- it sat on the market for months.  An investor finally bought it, pulled down half the wall and had it rebricked.  It was all veneer.  Probably cost him a couple of thousand tops.  I shake my head and smack myself every time I drive past it.

    Since then, I've seen several other houses in Durham with even worse cracking and separation.  Each was a veneer problem, not a structural problem.  Sometimes, the entire side of a house (the bricks only) have had to be removed and redone.  That's not necessarily as expensive as you might expect.  I've also seen structural problems, but those can be figured out by difficulty opening doors and windows in the rooms closest to the cracks, and of course, going under the house to check the foundation to see if the cinder block foundation is actually cracked on the inside, or if there is water penetration.

    If you've been looking in Durham for a long time for your first buy and this one fits your other criteria, don't just blindly abandon this opportunity.  If you don't trust your own ability to figure it out, pay a professional a couple of hundred bucks to take a look at it.

    3Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    @Randy E.

    Hey Randy, thanks for the response. I am worried about regret of a missed opportunity, but also more so of buyers remorse. I basically told the wholesaler that if I can’t verify via a professional that it’s not a foundation issue then he should entertain other offers. Might kick myself for this later. Maybe he’s bluffing though and will let me get an inspection. I don’t know. Either way I’ll chalk it up to experience.

    Thanks!

    0Reply
  • Randy E.
    Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Thomas Moran:

    @Randy E.

    Hey Randy, thanks for the response. I am worried about regret of a missed opportunity, but also more so of buyers remorse. I basically told the wholesaler that if I can’t verify via a professional that it’s not a foundation issue then he should entertain other offers. Might kick myself for this later. Maybe he’s bluffing though and will let me get an inspection. I don’t know. Either way I’ll chalk it up to experience.

    Thanks!

    I fully understand being overly cautious with this.  A tight budget, a rookie investor, and cracked bricks is a combination that has convinced many a deal to go undone.  Myself included.

    However, as hot as the Durham market is, I don't think the deal will sit too long.  Another investor who is more seasoned will probably snatch it up.

    Good luck.

    2Reply
  • Jim Manson
    Investor · Durham, NC · Member since 2012 · 22 posts · 14 votes
    7y

    If the wholesaler is going back-and-forth so much with you on this deal, the "lot of competition" for this deal may be BS. In my experience, there is a slight softening in some price ranges and some areas of the Durham market. Also, the Hwy 70 area is not as desirable as other areas where you might still be able to shake out a good deal with a lot of digging. I'd lowball the hell out of the deal and move on if the wholesaler doesn't bite. 

    1Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    @Jim Manson He claims there is a guy who does hundreds of flips in Raleigh-Durham (Chris Papadopoulos?) who is sitting right below my bid at 131,000. I work in sales so i'm very familiar with the principle of scarcity - or perceived scarcity. The main thing for my first deal is I realize it's not going to be a home run, but I don't want it to be so much of a nightmare that I extinguish my confidence and never get back in the game.


    Thanks to all who have commented on this. It's really been such a massive help. I'll update with the outcome soon.

    0Reply
  • Andrew S.
    Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
    7y

    If you are planning on financing this deal, be aware that those cracks, even if it is only veneer, could cause your lender to nix it.  I has this happen with one of my properties in Raleigh.  The lender insisted on me hiring an engineer (~ $700, if I remember correctly) to verify that “the cracks were due to just minor settling rather than a major foundation issue”.

    2Reply
  • Thomas Moran
    OP
    Rental Property Investor · Raleigh, NC · Member since 2019 · 85 posts · 32 votes
    7y

    @Andrew S.

    Thanks for the feedback. I am using a hard money lender and they seem pretty lax about the property itself, and care more about the numbers. I guess money is easy to come by in this market. I would love to hire an engineer - but I know the wholesaler will want the deposit before I can get anyone on site which puts me over 3k in the hole. 

    Do you invest in Raleigh, Andrew?

    0Reply
  • Andrew S.
    Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
    7y
    Originally posted by @Thomas Moran:

    @Andrew S.

    Thanks for the feedback. I am using a hard money lender and they seem pretty lax about the property itself, and care more about the numbers. I guess money is easy to come by in this market. I would love to hire an engineer - but I know the wholesaler will want the deposit before I can get anyone on site which puts me over 3k in the hole. 

    Do you invest in Raleigh, Andrew?

     Don’t get me wrong, I think there is a very good chance that these cracks are mostly cosmetic.  I just wanted to point out that lenders may look at it differently.  Sounds like you have that covered.

    No way in heck would I put down a nonrefundable deposit of that size before being able to look at it.

    I quit buying a couple of years ago - the local market is too rich for me at this point.  Can’t make the numbers work anymore for the types of properties that I’m interested in.  If/when things change, I’ll likely re-enter.

    3Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free