Experienced investors, homeowners: Currently in the due diligence period for an investment property built in the 1970s. First time home buyer. Expensive at $1.5 million but priced pretty fairly for $/sq ft (~4900 ft^2) based on comps.
Estimated 11-15% cash on cash return, 50-70k cash flow. Large tax savings. First time buyer. Will enjoy on occasion as a vacation home.
What are your thoughts on these findings? Obviously I’m pretty concerned about these and want a property but not at the expense of 50 years of deferred maintenance with landmine expenses.
What is a must fix, and what could balloon into big expenses?
What would you negotiate? Would you walk on this deal?
Already got $25k seller credits and they said they weren’t planning on negotiating much later (eg. After inspection), they’re eager to sell but also are still allowing showings under contract so hedging their bets. I’ll lose about 10K in appraisal, title, searching due diligence fees which would suck. The seller is also selling the house for $1 million profit (owned for five years clearly didn’t do that much maintenance but bought for 450k. Roof and I think hvac)
Some recs from AI:
-Mold remediation contractor to inspect Mold in the attic/roof framing to assess whether it’s active. “If active and widespread, this can be a very large ticket item.”
-roofer to inspect the attic staining and flashing and roof bumps, etc. which combined with mold in roof could be a large issue. But I believe the roof was replaced in 2020 which should still be under warranty I would think.
-structural engineer for the foundation cracks. I don’t feel as strongly about this but then again new at this.
-Water intrusion in the basement/crawlspace is a recurring theme. “Combined with foundation issues (cracks, mortar gaps, small opening in foundation wall) this suggests a systemic drainage problem.”
-corroded gas lines, how big of a fix is this? Major safety issue, could be flagged by insurance/lender
-plumbing corrosion, can this lead to major pipe issues in the next few years?
-best way to address contaminated water (well water). Bleach the well, Whole house filter, UV
-I’m omitting a bunch of other issues: loose railing, windows that don’t open, creaking floors, rodent issue, nonfunctional gas fireplace, etc etc.) trying to mitigate major expenses/risks.
Overall, seems like the property could do well from an investment perspective, but I don’t want to walk into a maintenance minefield. First investment property, baby on the way, want to make a well-informed decision for my family. Thank you.
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source https://www.reddit.com/r/RealEstate/comments/1seug47/investment_property_inspection_issues/
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