Are Foundation issues with the underfloor HVAC big red flag?

Question

Hello All,

I'm new to Real Estate Investing. My immediate goal is to buy a duplex for Househack.

I came across this duplex which has the major foundation issues with underfloor HVAC system in the property.

Foundation issues like

- Multiple creaks on two bedroom drywall on each units

- little Slop in a drawing room

- Big creaks on the driveway

Questions

Should I consider this property for my first investment or skip it?

Approximately how much it can cost me to fix those foundation issues?

- Jignesh Savaliya

Jim Goebel · Answer

@Jignesh Savaliya

Hi Jignesh, to be honest this would not be something I'd mess with on a first project.  I'd 'ease' your way into something like that over time.  I mean, I can keep asking questions and perhaps it'd be a good learning experience but at the end of the day we need to know what we don't know - meaning, make sure that what you take on is something that is a nice, safe, stretch learning experience.  Most places that have foundation issues are not that.  The issue for many is how to find that first project that still hits the numbers you need to keep rolling, but not too much risk.  It's tough as the market has tightened up in many places.

What you want to be looking for is perhaps, something that has a leaning front porch.  The kind of thing that doesn't make or break your project financials - ie perhaps the jurisdiction doesn't have a great chance of 'making' you do it, so you can take it on more from a 'bring upside value' to your rents, etc.... and you get some 'soft' experience working through jacking something, pouring 1x new footer for a corner post, etc.

The issue becomes many jurisdictions literally make a judgement call on whether YOU can pull the permit, some many require you to hire a 3rd party if you want to fix stuff like what you're describing.  If you want to roll the dice and work outside of the system, well you can do that.  Many jurisdictions will let you do it if you live there, but once you start getting into foundation work, many require a 3rd party engineer and contractor get involved.  And, many of those will absolutely run you through the ringer.

When I was in engineering I was taught to always take a first crack at something,  Have you got down in the crawlspace?  If not, why not?  If so, what did you see?  Can you come up with a hypothesis of what is causing the settling issues - is it rot?  Is it a wet area around the foundation?  Is it a couple joists have shifted or rot in the plate they are resting on?

That's the issue here honestly if you aren't crawling around looking for stuff like this, my opinion is that you're not ready to take it on cost effectively.

Jignesh Savaliya · Answer

Thank you so much for your answer

@Jim Goebel

This house has a pier and beam foundation build in 1984. So the entire house is approx 4 feet above the ground.

Yes, HVAC system located in a crawlspace. It has duck access from the bedroom closet

Hope this is the answer of your questions.

-Jignesh Savaliya

Jim Goebel · Answer

@Jignesh Savaliya

Does sound like quite a bit to stomach with regards to risk as a first project.  However, we need more info.

What do you mean when you say underfloor HVAC?  As in, duct work?  Radiator heat piping?  When you say underfloor, are you referring to your HVAC system located in a crawlspace?  Under a slab?  Is the HVAC system inaccessible?  What about the central unit?

Cracks on drywall can be indicative of larger issue, but not always.  All houses settle at least to some extent over time.

Big cracks on driveway - well - just depends on whether it's to a point where re-doing is needed, and if the project pencils out.