FHA Loan with Foundation Issues - Help!

[Kathleen McCabe]

Hey BP fam :) I have a duplex under contract in an amazing location (Lower Greenville, Dallas Tx). I've been very excited, the numbers are looking fairly good and I feel this is an amazing opportunity. There are tenants in both sides of the duplex now and everything is functioning properly. I plan to move into one side. However, the duplex was built in 1924, and I can definitely feel dips in the floor... Inspector recommended getting an engineer to check out the foundation. 

Is this the kiss of death for my deal being that I will be using an FHA loan? Are there ways around this? For example if I get a quote for the foundation and negotiate that out of the offer price? Will some lender still work with me regardless of the state of the foundation or is an appraisal mandated? I am not afraid to take on a foundation project, but I could not afford to put 25% down on this place for a conventional loan. Looking for a creative solution.

Thanks in advance!

Katie

[Steve K.]

@Kathleen McCabe most buildings from 1924 will have saggy floors (as well as a host of other imperfections which real estate agents like to file into the “charm” category, lol). It may not be a foundation issue (usually the floor isn’t directly on top of the foundation). Impossible to tell without looking at it, but typically saggy floors in older buildings are caused by rotten floor joists, for which the fix would be to jack up the floor and add some posts/supports underneath (assuming it’s accessible, if not you’d have to rip the floor up to see). You’ll probably have to replace the joists themselves or reinforce them by sistering new joists alongside the existing ones. You will likely have a lot of issues like this with a building that old. You may have plaster and lathe instead of drywall, plumbing that consists of a hodgepodge of various outdated materials, who-knows-what kind of electrical components instead of a modern system designed to handle modern loads... older buildings demand a lot of TLC. Unless everything is completely updated, you should prepare yourself for near-constant tinkering. It can be fun if approached with the right skillset and mindset. It will undoubtedly get very expensive and annoying quickly if you have to hire all the work out. If you’re interested in learning about carpentry, plumbing, and electrical, have the necessary tools and don’t mind getting your hands dirty, old buildings can be fun to work on. But this type of work and complex problem-solving is not for everyone. Hence the term “handyman special”.