Here is an example of why the properties I buy are the ones nobody else wants

[Dominus]

In the spirit of Halloween, let me show some very scary pictures. But first, the background.

I must admit I'm one of those assholes who regularly offer homeowners cash for their houses. Why would any homeowner want to take the cowbell offer of their property? They wouldn't unless it's better than nothing.

Now, imagine a house that's 1 block away from the high school, the skateboard park, the regular park, and literally 5 minutes away from the economic part of the city. All the restaurants, movie theater, etc. It's a 4 bedroom house. 2 full baths. 2 stories. The master bathroom has a walk in closet that you can play soccer in and is connected to the master bath which has a separate bath tub and a stand up shower. Roof is 4 years old. Fully fully fenced in yard. Quarter acre lot. My agent believes it is worth at least $250k if it didn't have the horror problem I'm about to show.



Foundation issue. And it's bad due to the previous owner ignoring the problem for so many years. Sure, he hired someone to poorly put in some braces about 10 years ago. Didn't really do much in my opinion.

Well, it just happens that in my past life I was a structural engineer. Foundation problems aren't as scary to me as it is to most other people.

Previous owner had been trying to sell it forever. He couldn't. Everybody ran off screaming the moment they saw the basement.

Ladies and gents, I just closed on this property for *drum rolls*..................... $20k

At this point, they just wanted to get rid of it before the city condemns the place and they have to spend tens of thousands to replace those walls. They get to walk away with $20k cash. Yes, I really drove a hard bargain on this one. This property was literally days away from being condemned.

My people will be starting the process of repairing the walls today. The first step is they will have to remove those useless braces.

We are talking about moving them back some places as much as 4 inches. So will take at least 6 months to a year to accomplish this. It took the walls many years to move this much. It will take time to move back.

Once the walls are moved back fully and everything passes inspection, will be renting this baby out for at least $2k/month.

I will be posting pictures of the process and progress from time to time. I'll be there later today. I'll take a few more pictures to show you how bad it is. You guys will get to see these walls literally and very slowly move back into place.

 

[rareboy]

Just shifting the wall back won't solve the problem.

I would highly recommend having an engineer (yes I know you were a civil engineer) also take a look. You need to eliminate the reason that the wall is being pushed in and that clearly has to do with drainage and likely freeze/thaw.

I should note that 20K was a steal, so investing a proper amount of money on the foundation should still give you a good ROI over the lifetime of the investment.

 

[Dominus]

Just shifting the wall back won't solve the problem.

I would highly recommend having an engineer (yes I know you were a civil engineer) also take a look. You need to eliminate the reason that the wall is being pushed in and that clearly has to do with drainage and likely freeze/thaw.

I know. There are other issues to address. But moving the wall back is the first priority as bad as it is now. Gotta get it from being condemned first.

I got plans for keeping it from moving again after we move it back.

 

[jjonn3]

You have a lot of work in front of you -

BUT at $20K is less that just the land value based on the location.

Congratulations!

 

[Dominus]

You have a lot of work in front of you -

BUT at $20K is less that just the land value based on the location.

Congratulations!

I actually been watching this place for a long while now. The owner really wanted a lot more for it. Closer to it's true value minus the problem. I wasn't really in the market to expand my portfolio so I had no problem waiting. Funny that last year my offer was a lot more than 20. Several times more. He turned it down because he was really hoping someone else would snatch it up for closer to 200. Or something like that. Now that he was days away from getting condemned, which will effectively turn this place into negative value and would have started costing him thousands in fines, repairs, and demolition cost, I offered 20 and he said yes immediately.

Yes, practically the land value.

And yes, there's a lot of work to be done. The immediate thing is to prevent it from getting condemned. I've been working closely with the city inspector for years now. We have each other's numbers on speed dial. So, they are giving me some time to prove that I'm working on the problem. They'll pretty much revisit this every month until they are satisfied.

Again, something like this is super scary to most people. To me, all I'm seeing is a gold mine. Just gotta address the immediate concerns and then this place will start paying for itself.

 

[Rickrock]

We had a similar problem, but not that bad. We paid to have the house braced up and two basement walls removed and rebuilt. The other walls aren't too bad yet but will eventually need bracing. I'll be watching your reports.

 

[Dominus]

We had a similar problem, but not that bad. We paid to have the house braced up and two basement walls removed and rebuilt. The other walls aren't too bad yet but will eventually need bracing. I'll be watching your reports.

How much did you end up paying for that?

See, keep in mind that I'm an investor. I aim to not pay full price for anything. For example, if I pay full price for basement wall repair/rebuild the same as a normal homeowner would, I wouldn't have any money left for anything else.

 

[backagain]

I actually been watching this place for a long while now. The owner really wanted a lot more for it. Closer to it's true value minus the problem. I wasn't really in the market to expand my portfolio so I had no problem waiting. Funny that last year my offer was a lot more than 20. Several times more. He turned it down because he was really hoping someone else would snatch it up for closer to 200. Or something like that. Now that he was days away from getting condemned, which will effectively turn this place into negative value and would have started costing him thousands in fines, repairs, and demolition cost, I offered 20 and he said yes immediately.

Yes, practically the land value.

And yes, there's a lot of work to be done. The immediate thing is to prevent it from getting condemned. I've been working closely with the city inspector for years now. We have each other's numbers on speed dial. So, they are giving me some time to prove that I'm working on the problem. They'll pretty much revisit this every month until they are satisfied.

Again, something like this is super scary to most people. To me, all I'm seeing is a gold mine. Just gotta address the immediate concerns and then this place will start paying for itself.

I am curious as to what the cost to fix the foundation problem that you have estimated? Also, I was really surprised as to the land value. Very inexpensive. I know I live in an expensive location, the value of the land of the house I live in is on 6900 square feet and the tax assessed value of the land is $370,000, house value $940,000

 

[unloadonme]

As you've only paid $20,000 for the property, would it be economic to demolish the existing structure and build something with solid foundations designed specifically for your lettings business?

 

[rareboy]

How much did you end up paying for that?

See, keep in mind that I'm an investor. I aim to not pay full price for anything. For example, if I pay full price for basement wall repair/rebuild the same as a normal homeowner would, I wouldn't have any money left for anything else.

This is poor business logic.

As an investor, you want to invest the amount of money needed to increase the value of the asset.

For instance, if you invest $10,000 in replacing some of the obviously unreinforced and buckling walls. you may have just added $40K to the value of the building for resale.

What you are describing is slum landlord or slum developer thinking.

 

[Dominus]

This is poor business logic.

As an investor, you want to invest the amount of money needed to increase the value of the asset.

For instance, if you invest $10,000 in replacing some of the obviously unreinforced and buckling walls. you may have just added $40K to the value of the building for resale.

What you are describing is slum landlord or slum developer thinking.

Nah, you're thinking big money folks. Yes, if I have unlimited money, sure I'll knock it all down and rebuild a new house.

I'm still small potato in all of this. The house is actually perfectly fine minus the basement walls.

Not every rehab project is "slum landlording".

 

[Dominus]

As you've only paid $20,000 for the property, would it be economic to demolish the existing structure and build something with solid foundations designed specifically for your lettings business?

Not really. Do you know what's involved with knocking down a house and build a totally new house in its place? Not worth it.

I'm still small potato in this world. I know there are some people with big money and to them it's nothing at all to knock something down and build something brand new.

But you see, I'm working with a very limited amount of resources. Hence I go for the properties that nobody else wants and rehab them. I would not qualify to appear on HGTV. Every rehab project on HGTV costs hundreds of thousands.

Sorry, no unlimited pool of money here. If I had more money, I would not have gone after properties like this one.

 

[Dargelos]

Well done Dominus for doing the right thing, even though it might not be for the best reasons. It is always better to rescue a building if you can. Demolition is hugely polluting and wasteful of energy. Too often it is the first option when it should really be the last resort. Doing good restoration means paying more for skilled labour,

 

[Rickrock]

How much did you end up paying for that?

See, keep in mind that I'm an investor. I aim to not pay full price for anything. For example, if I pay full price for basement wall repair/rebuild the same as a normal homeowner would, I wouldn't have any money left for anything else.

We had checked with a few companies in 2019. We may have not picked the cheapest, I don't remember because it is awhile ago, but we decided on a company we liked after some months and their estimate was for $19,600 which was 53 feet of wall, a new garage floor, a new sewer, and a new front stoop (porch). The garage is attached to one of the walls that was being removed and rebuilt and the garage floor had sunk by a foot or so. By the time we agreed to them they had other jobs and put us off. Eventually covid came around and one of the brothers in the company retired and the other one took over. We eventually talked to them again in 2023. The new estimate was $28,000 for 60 feet of wall with steel rods and waterproofing and a sewer and garage floor and front step. I think something was added after construction started and we agreed to it and the final bill was $39,100. We are satisfied.

The house was new when we moved into it and after about 30 years the wall was leaning and my father dug in front of the wall and it straightened on its own and my father inserted some iron bars into the wall and put gravel in front and it was okay for 30 or so more years when we had to do this again. We are not the only house in the neighborhood that has had a problem. I know of at least 6 houses in the neighborhood which have had repairs to their foundations and at least 4 of them had some reconstruction. The house is now 67 years old.