$25K in Repairs on Michigan Rental – Looking for Advice

Real Estate Agent · Costa Mesa, CA · Member since 2019 · 75 posts · 20 votes

My business partner and I own a rental property in the Detroit area through an LLC. We purchased it three years ago, and after our tenant recently moved out, we discovered significant wall damage, likely caused by a water leak.

Repairs could cost around $25,000, and unfortunately, we don't currently have the cash available to cover them.

Property details:

Estimated value: $130K
Mortgage balance: $95K
Estimated repairs: $25K

We're exploring insurance claims, financing options, and whether the original home inspection could be relevant.

Has anyone dealt with a similar situation? Any advice on insurance coverage, financing major repairs with limited equity, or alternative solutions would be greatly appreciated.

Thanks in advance!

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes

Not enough info to help you:(

DM me to get on my schedule and I'll do my best to brainstorm solutions:)

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Nyisha Walton
Lender · Houston, TX · Member since 2026 · 113 posts · 34 votes
6d
Luca, finding that kind of damage between tenants is a gut punch. Helping investors fund repairs like this is what I do, and I work with a network of lenders, so if I'm not the right fit I can point you to someone who is. Get the insurance claim filed before anything is torn out, since adjusters want to see the damage, and a rehab or second lien lender will want the contractor bid too. Message me the bid and the rent it gets when it's fixed and I'll help you sort out the options.
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Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
6d
Sorry about the water damage, Luca. That's a stressful one with a mortgage still on it. A few things worth checking before you commit to financing. First, pull your landlord policy and read the water section closely: many policies cover sudden and accidental leaks but exclude damage from long-term seepage or deferred maintenance, so how the adjuster classifies the cause matters a lot. Photograph everything before demo and file promptly. Second, the original inspection report is worth reading for any note on that wall or plumbing, but it rarely gets you much unless something was clearly missed, and the clock may have run out on a claim after three years. Third, get two or three contractor bids with a line-item scope, since a lender or insurer will want that and a partial repair may get it rent-ready sooner. If you do finance it, compare that cost against how quickly the unit can rent again. Happy to connect and compare notes.
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
6d
Not enough info to help you:(
DM me to get on my schedule and I'll do my best to brainstorm solutions:)
[email protected]248-209-6824
Logical Property Management4.9462 Reviews
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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 1k+ posts · 663 votes
6d
I'd start with finding out exactly where the water came from before deciding how to pay for the repairs. If you haven't already, I'd have someone document the damage and determine whether it was a plumbing issue, roof issue, long-term leak, or something else. I'd definitely contact the insurance company before starting major repairs and see what they will cover. I'd also pull the old inspection report and compare it with what you're finding now, although after three years it may not tell you much about the current damage. With only about $35K in estimated equity before selling costs, I'd be careful about taking on expensive financing for the repairs. I'd get a couple of repair estimates and look at all your options before putting more money into the property.

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G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 898 votes
6d
I’d start with the insurance claim and figuring out exactly what caused the damage before deciding how to finance it. With only about $35K in equity on paper, I’d be cautious about putting another expensive loan on the property. I’d also go back to the inspection and see whether there was any indication of the leak or moisture issue at the time of purchase. If the insurance doesn’t cover it, I’d price out the repair, then compare a small rehab loan or contractor financing against selling as-is rather than throwing $25K into a property without knowing the after-repair value.
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Rosey FlahertyPro Member
Accountant · Boston, MA · Member since 2026 · 29 posts · 11 votes
6d
Luca, alongside the insurance and financing questions, I’d keep one project file with the damage photos, cause of loss findings, itemized contractor estimates, and any insurance payments.
Ask contractors to distinguish the work needed to address the damage from optional upgrades. That gives your tax preparer the detail needed to evaluate each part of the project rather than working from one invoice labeled “repairs.”
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Owen RosenBusiness Member
Professional · Clinton Township, MI · Member since 2015 · 705 posts · 266 votes
6d
Do you have an insurance agent that you can talk to? Have you used AI/LLM at all for this problem?
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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
6d
So there were no signs of the issue at your annual inspections? $25K is substantial, there had to be signs of potential problems.
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Randy Schell
Member since 2026 · 274 posts · 40 votes
5d
A surprise like that after three years of owning it is a real gut punch, especially with no cash cushion, and I'm sorry you're dealing with it. I'm no insurance expert, but friends have told me the answer on a claim can hinge on whether the leak was sudden or slow, so it might be worth having a plumber write down exactly where the water came from and calling your agent before any walls get opened up.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
5d
$25,000 seems like a very big repair. Have you got multiple prices?
Also yes, you can file an insurance claim and depending on the insurance it possibly could be covered. Where it gets dicey is if you get a policy as if you're a homeowner living in it and didn't get one that's acting as if you are the landlord. But since you said you bought it through an LLC, I'm guessing you have the right type of policy
Call your insurance agent, send them some photos, and file a claim
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- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  4d
  Not for nothing but if you are in the rental business and a 25k repair comes up and you do not have the cash or at least credit on a CC your woefully undercaptialized and should not be putting yourself in this situation.. the average turnover these days is 7 to 15k without a water leak how are you going to handle those.. ? hopefully your insurance will pick this up or most of it and if so sell the house get out of debt and dont put yourself in a position were 25k could cost you a mortgage default and ruin your credit.. Just Sayin.
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Divin KanyamaBusiness Member
Accountant · Seattle, WA · Member since 2025 · 671 posts · 279 votes
5d
@Luca Giani I can relate through a similar situation with a rental in MS that had serious property damage, mainly from weather. The cause may be different, but the challenge feels familiar: a major repair bill doesn’t wait until you have the cash available. It’s a tough spot, especially when you’re still figuring out the full extent of the damage.
I’d start by documenting the damage, getting a written assessment of the source, and contacting the insurer promptly. A leak alone doesn’t tell you whether there’s coverage; the cause, timing, and policy terms matter. I’d also take reasonable steps to stop further damage and keep photos, receipts, and contractor findings. The original inspection could help establish what was visible at purchase, but I wouldn’t assume it proves responsibility for something discovered three years later.
On the funding side, I’d get itemized quotes separating urgent work from anything that can safely wait, then talk with the existing lender about repair financing before committing to expensive short-term debt. The value and mortgage figures suggest some equity, but that isn’t the same as available cash or guaranteed borrowing capacity. You and your partner would also want a clear agreement on any additional contributions or borrowing. For me, the priority would be getting a reliable repair scope and understanding the insurance position before deciding whether to repair and hold or consider an as-is sale. It’s worth comparing those paths without assuming either one will be an easy exit.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
5d
What did you do with the rent collected? You should have built reserves for maintenance/cap ex items and have some savings for items such as this. Note maintenance/cap ex is not an if item, it is a when item.
Depending on your insurance, this may not be covered. Damage the result of a long term leak is often excluded.
When was the last inspection? If it was recent and there was no sign of a leak it may help with your claim. Conversely, if there have been no inspections since the tenant was placed 3 years ago that may work against your claim.
If you are covered, there is a modest chance that the claim will result in a rate increase.
Good luck
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Kyle Jones
Chicago, Cook County · Member since 2026 · 35 posts · 13 votes
4d
Sorry you walked into that, Luca. The thing I'd worry about most is that the $25K number was probably priced before anyone opened the wall, so it could be high or low, and either way it is hard to plan financing around it.
- Before you finance anything, have a few small test openings cut and moisture readings taken around the stained areas. That tells you whether this is drywall and paint, or wet framing, subfloor, and mold, which is what really drives the price.
- Ask whoever bids it to split the work into stages: stop the leak, dry out and remediate, then rebuild. The first two are urgent and are often the smaller part of the bill. The rebuild can wait a few weeks while you sort out insurance and money.
- Ask for unit prices for extra drywall, framing, or subfloor in the bid. Once walls are open there are usually surprises, and unit prices keep those from turning into open-ended change orders.
- If the house was built before 1978, any contractor disturbing painted walls in a rental should be lead-safe (RRP) certified. Worth asking up front so it does not show up as a stop or an extra later.
- If you do borrow for it, don't pay big money up front. Tie each payment to a finished stage with photos and get a lien waiver with each payment, especially since you are managing this from California.
Hope the claim goes your way.
Kyle
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Jamiel Strickland
Rental Property Investor · Detroit, MI · Member since 2018 · 382 posts · 244 votes
14h
I do many rehabs in the Detroit area, I may have a guy to recommend to get at least a different quote. I do not know the extent of the work but he may be able to help out.
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