Roof. Heating/ventilation/air conditioning (HVAC). Plumbing. Foundation. These are the four big ticket items when you’re evaluating a the structural integrity of a potential purchase.
Most of us investors are part timers. And lots of us are somewhat handy and know something about houses (we live in houses ourselves, don’t we?) So those first three items are things we can generally get our collective heads around. We see roof jobs every day. We change the filters on our own AC system. Most of us have replaced a faucet or two in your time. So problems, both big and small, might not phase us when it comes to the roof, the AC system, or pipes.
But foundation problems? Woah Nellie. A sloping floor or suspicious cracks in the plaster will send most investors scurrying on to the next prospect. But this might be an opportunity. Less competition = fewer bids. Fewer bids = a lower price. And we like low prices when we’re buying, don’t we?
But not all foundation problems are created equal. Here in Texas (and perhaps where you live, as well) you’ll tend to find two types of foundation: slab, and pier & beam. If you tried to dig a basement in Houston you’d be playing table tennis underwater; Houston is essentially a paved over swamp with the water table a few feet below ground. In other parts of the country you’ll have other options – a crawl space foundation or a full basement. I don’t have any first hand experience with the structures I’ll I won’t say any more about them.
What I will say, however, is that pier and beam foundation problems scare me a lot less than slab foundation problems. Slab foundations mean buried pipes and no repair access. Fixing them is expensive. Last year I had a problem with some tree roots which grew about fifteen horizontal feet under a slab foundation and busted up the plumbing under a commode (lots of nutrients down there, I guess). Visualize jackhammers and annoyed tenants.
So I probably wouldn’t consider a property with major foundation issues if it had a slab foundation. A pier & beam foundation, however, is another matter. This is the preferred method for older homes, in which the home is constructed on beams which sit on piers which are driven into the ground for stability. I own a fourplex that was built in 1935: a hurricane-proof all-brick tank of a building. I wish I had ten more just like it. But it had some foundation problems a few years ago, but with a pier & beam foundation this was cheap to fix. So if you run into a prospect like this then you might want to give it a second thought before you put it in the “too hard” box and cross it off your list; you might be passing up a property you could snag at a bargain because it scares off all the newbies.
But make sure you get a structural engineer to take a look (not a foundation repair specialist, who will be trying to sell you something). The bottom line: a prospect w/ foundation problems might be worth another look if it’s a pier & beam structure. Go ahead and wave your arms and declare the house a disaster to the seller and to your Realtor, but know in the back of your head that this is a problem that most serious part-time investors can tackle.
Note: Graphic illustration includes diagrams taken from the Foundation Repair Network.
