Author Topic: Should I buy this house? Concerned over major inspection issues  (Read 416 times)

greenbeanjoanna

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Should I buy this house? Concerned over major inspection issues
« on: November 23, 2022, 05:29:40 PM »
Hi All!

Newbie over here! I'm looking to house-hack in Chicago and have been looking at multi units for a while..

Finally found one ithat's been contingent three times with price decreases, made an offer, and am currently under contract!

However...Just got my inspection summary back and now I'm really worried if this might be a money dump.. Agent is saying the property would need around $60K of work, but I'm not so sure. It seems like someone has been fixing this property on their own and it's not great.
Somehow (i have no idea how) this property passed FHA appraisal.

Main concerning things about this 3 unit:

- It's actually legally zoned as 2 unit, but seller didn't disclose that

- Back deck is literally falling apart. Bad enough that I did not even attempt to walk up the staircase

- Carbon monoxide present in the basement (I want to create another unit in the basement..)

- Mold/moisture present in the basement / fungal growth

- Exposed wires / wire defects all over the place

- Major foundation cracking in the basement

I don't know much about construction so I would be paying someone to fix all of this. Am I walking into a potential disaster? Or am I freaking out over the above needlessly? Listing price was $450K, so it's a hefty sum for me already.. I want to avoid a financial disaster.

Any help would be greatly appreciated! Posting major hazard notes from the inspection below.

lhamo

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #1 on: November 23, 2022, 06:33:32 PM »
Not the kind of property to take on as a first-time landlord.  Heck, I wouldn't even take that on as a primary residence unless I had a solid roster of reliable contractors and very deep pockets.

Be patient.  This is not the right house for  you right now.

Sibley

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #2 on: November 23, 2022, 08:14:41 PM »
Well, the house needs a decent HVAC tech to fix/replace whatever is going on with the furnace, or possibly a plumber to fix/replace the gas water heater. Or both, who knows.

Carpenter to build a new deck.

Dehumidifier in the basement, after you clean up all the existing mold. Possibly more is needed, depends what's going on.

Electrician, or you learn what you're doing well enough to clean up a bunch of it.

Foundation contractor to inspect and repair foundation.

Real estate lawyer to advise on the zoning.

I would pass. If the place is currently occupied, please report it to the fire marshal as that's a serious safety risk and the current owners deserve to be raked over the coals. If its vacant, then no need.

Edit:
I completely missed the inspection report you attached. Have looked at it now. RUN. Between the foundation and the crazy bad DIY electric, that tells me the house has been neglected and abused, which means who knows what other problems you'll find.
« Last Edit: November 24, 2022, 10:44:11 AM by Sibley »

SunnyDays

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #3 on: November 23, 2022, 09:02:47 PM »
Foundation issues can mean major problems.  That alone would scare me off.
Also, electrical problems could mean a full rewiring is necessary.
And if thatís not enough hassle, if the house doesnít meet zoning requirements, it may need to be reconverted to a 2 unit.  In addition to the work that would involve, it might also mean lesser income.
I would run.

Telecaster

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #4 on: November 23, 2022, 09:38:59 PM »
Am I walking into a potential disaster?

Sounds like a true disaster. 

Freedomin5

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #5 on: November 23, 2022, 10:18:07 PM »
Foundation work would be a major red flag for me.

Several years ago, we were interested in purchasing a house in a beach town. It had been renovated over 10 years ago. We found out that the renovations didn't match the blueprint/floor plans submitted to city hall for approval, and thus it didn't have a proper occupancy permit, since the occupancy permit was granted based on the floor plans. We asked the seller to submit accurate floor plans to city hall and get a proper occupancy permit. The seller refused, basically gave a bunch of excuses why it wasn't possible (the renovations were done too long ago, etc.).

We walked, because without a valid occupancy permit, we were technically not allowed to live in the house. Without a valid occupancy permit, we were also not allowed to rent out the house.

Your house seems to have many more issues. I would walk. The realtor is underestimating the cost of the repair work because they want to make a sale, especially because this house has been sitting on the market for so long. I would compare it to other 2-bedrooms in the area to find a comparable starting price, triple the estimate and then deduct it from the offer price if you're really wanting to buy it and are up for the challenge and potential headache.

Dicey

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #6 on: November 23, 2022, 10:48:58 PM »
Piling on to second everyone else's sage advice. Several things in your post (I read your list twice) gave me the heebie-jeebies. If I was still interested after that report, I think I'd call the city building department and see what kind of permits were pulled.* While you're at it, ask if they have any experience with this particular builder flipper. You'd be surprised what building inspectors know.

*This is a trick question. The answer is most likely "none".

former player

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #7 on: November 24, 2022, 02:44:58 AM »
I'd say the back deck and the wiring are both things that can be solved for a defined quantity of money.  It might be quite a lot of money but they are the kind of things you can get someone reputable to do for a set amount of money.  If you are going to take on this sort of task you can as long as you are well plugged in to the local contractor community and have contacts with people you trust to do good work for reasonable money.

Carbon monoxide is because there is a gas appliance which is either faulty in itself or has faulty ventilation.  Again, this is solvable for certain quantities of money.

Moisture in the basement and foundation issues might be related.  These are technically solvable but not necessarily for defined quantities of money, and contractors might want to be paid for work done rather than results.  A significant potential practical and financial risk here.

Mold is solvable only after the moisture issues are solved, so is secondary to the foundation and moisture issues being resolved.  Once those other issues are resolved mold can be dealt with for money, but quality of work so that it doesn't come back is essential, so that's back to having good contractors on hand.

Zoning and permitting issues are in the hands of bureaucracy and may or may not be solvable so are a big risk to take on and one which is out of your control.  If you wanted to go ahead these are the kind of things that you make an offer contingent on the current owner resolving.  And if the current owner was the type of person capable of resolving these issues they would have done so.  So big red flag there.  Never place any reliance on bureaucracy coming up with a particular answer for you.  (If you take the risk and it works out then there's a potential big upside but it's a big risk that's out of your control and you need to be in a position to be OK if it doesn't work out for you.)

Part of the dilemma of getting into landlording is buying the right property and part is having the contacts to improve/maintain the property.  My advice would be to stay local and use your local contacts for both, and if you don't have contacts then either play it safe for a while (less financial upside though) or be prepared to deal with the fallout if you take a risk and it turns out wrong.

chasingsnow

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #8 on: November 24, 2022, 06:02:05 AM »
I echo everyone's sage advice that it's probably worth it to walk away from. If you did decide to go forward, I would probably shell out for a second home inspection, we're also searching for a house right now and sometimes the laundry list of stuff can be the product of a sensitive home inspector. It doesn't seem like that's the case in this situation, but if you were super interested in moving forward with the property. a second home inspector coming through might be a valuable insight in this case.

GilesMM

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #9 on: November 24, 2022, 06:39:14 AM »
Have your realtor arrange for estimates from professionals (foundation, electrician, carpenter, etc) on full cost of repairs. Subtract from current price and submit to seller as revised sales price. Take it or leave it.

Malcat

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #10 on: November 24, 2022, 06:46:24 AM »
Have your realtor arrange for estimates from professionals (foundation, electrician, carpenter, etc) on full cost of repairs. Subtract from current price and submit to seller as revised sales price. Take it or leave it.

Yup.

I walked away from a very similar rental property last winter.

I LOVED this property and eventually wanted to move in to the upper unit myself. It was in a unique location, and had many rate features that I won't be able to get again, but I still passed.

Why? Because I did the math on how much it would cost to repair, submitted an updated offer based on that number, and the seller rejected it.

Simple.

I'm not going to overpay for a rental property, even one that I love and might want to live in eventually. Not worth it.

I was simply not willing to overpay for the inconvenience of having to do major repairs.

sonofsven

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #11 on: November 24, 2022, 07:45:01 AM »
OP, I looked at the inspection report. Major problems in the foundation and floor structure. I would suggest walking away.
I've actually bought much worse but I'm a professional contractor. I would take that $60k repair estimate from the realtor and quadruple it.
You could use the inspection report as a negotiation tool and make a new, lower, offer, but just getting firm prices for the work required is going to be a major hassle. Like, nearly impossible.
Keep looking.

PMJL34

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Re: Should I buy this house? Concerned over major inspection issues
« Reply #12 on: November 24, 2022, 11:48:54 AM »
my type of house :)

but almost certainly not the best for a first timer unless you really want a challenge. If so, like others have said, get estimates and deduct from offer.