When buying an investment property, there are lots of fun things to focus on, like envisioning the monthly income you will make when renting out or the profit you will get when selling, to name a few.
But before you start envisioning your return on investment, drop your eyes down a bit and focus on the home’s foundation. After all, the foundation is, well… the foundation! It’s the “thing” your property rests on.
Your real estate property’s foundation is one of the most vital structural element of your house. When it’s strong, your property will last and remain structurally sound for many years to come.
Foundation damage is more common than you might think. A 2012 study done by the National Association of Builders, in fact, found that close to 25% of US homes had foundation problems.
So whether you are buying or selling, it pays to check the condition of your existing or potential investment property. It goes without saying that foundation problems can be costly to fix. According to HomeAdvisor, a typical homeowner pays between $1,843 and $6,375.
In this article, we share 5 things you should know about foundation repair whether buying or selling a home.
1. Look for signs of damage.
As a savvy real estate investor, you want to check whether your potential investment property is structurally sound or not. The last thing you want is to buy a property in need of serious repairs. The following are common telltale signs of foundation damage.
- Counters and cabinets separating from the wall.
This is often a sign that foundation movement has occurred. When the foundation moves, walls tend to become out of level. This, in turn, causes cabinets, counters, and lots of other things in the home to cease to be level, too.
- Floors appearing to be sagging, dipping, or bowing.
This is also a sign that the foundation has moved. Aside from being unsightly, these floors are dangerous especially for elderly individuals and small children.
- Gaps appearing around exterior doors or window frames.
You may also notice that the doors no longer latch properly. If you notice something like this, the foundation is almost always the culprit.
- Doors and windows not functioning as they should.
You may notice that they stick. This is often a problem that affects all kinds of slab and pier and beam foundations.
- The slab foundation appearing to have moved in an upward direction.
This is what foundation experts call ‘foundation heaving.’ It mostly occurs in areas that have expansive clay soils like Texas.
- The house appearing to be sinking or settling into the ground.
Foundation experts refer to this as ‘foundation settling.’ Unlike foundation heaving, foundation settling occurs downwards.
- Cracks on the foundation, walls, or floor.
Cracks are often the #1 indicator that something with the foundation is off. They usually appear as a result of foundation movement.
2. Hire a foundation expert to assess the extent of the damage.
If you spot any of these issues on your current or potential rental property, your next call of action would be to hire a foundation expert. They will help assess your home foundation problems.
In some cases, the cracks you see on the foundation could just be the result of normal settling. In others, they might be an indicator of something serious.
3. Make your decision – should you fix the problems or run?
Once you get the inspection report, decide your next course of action. Now, this is a no-brainer. If the inspection report reveals serious foundations problems, then it’d be best to just walk away. It’s not uncommon for some foundation problems to cost tens of thousands to fix.
If, however, the inspection reveals minor problems that you are comfortable fixing, then, by all means, consider purchasing the investment property. You could even use this as a major bargaining chip to get a better deal.
In addition, you could even consider adding a contingency clause on the contract.
4. Selling a house with foundation problems? It’s possible.
If you know your house has a foundation issue and you want to sell it, you have two options.
The first option is to sell as-is. Some people, like house flippers, may see this as an opportunity to make repairs and then sell it for a profit.
The second option is to fix the problems first before putting it on the market. If you decide to take this route, just remember to disclose the information to potential buyers in your listing.
Problem is – “foundation problems” are two words that are sure to make any potential homebuyer run screaming.
As a result, very few property buyers would want to even look at your house. Thus, you may even have lacked the chance to explain that you already fixed the problem.
5. Be prepared to sell it at a reduced price.
You should price your property relative to the cost of fixing the damage. Broadly speaking, be prepared to sell it for about 20 to 25% lower on average.
There you have it. 5 things buyers and sellers should know about foundation repairs. Just remember, if you decide to fix the problems, hiring a professional foundation expert is key.
This article has been contributed by our friends at Granite Foundation Repair.