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Updated over 10 years ago, 06/22/2014
Does water damage in a property automatically disqualify a home when looking to buy a new property?
Hello! Can someone tell me if water damage in a property should automatically disqualify a home when looking to buy a new property? I'm new to REI, so I'm not sure. Several properties I've seen online obviously have signs of water damage such as mold, water stains, on places where the ceiling has fallen in some or a lot. Would you still purchase a home with any of those conditions?
@Tiesha M. Would I buy them, yes. One good reason is that any sensible retail buyer will shy away from such properties if the mold and leakage are significant. So you have essentially established a reduced price. If it is extensive, you will need to do a total gut to remove the mold. That might sound bad, but again you have eliminated more buyers, which will drop the price some more.
The main thing is determining the cause and extent of the damage, and what it will take to fix it. That should include legitimate mold remediation, and repair. Without certified mold remediation you may not be able to sell it.
That said, I would not advise buying a property with that type of damage as your first purchase. Rehabbing contains enough risks for someone who is new to it, but no sense in buying a property that you know has added unknowns. Stick with basic wall repair, new kitchens, new bathrooms, etc. for your first few purchases.
okay thanks @Walt Payne
You have received good advice. For your first venture you should not be looking for such a large challange. What you should concern yourself with is the numbers, acquisition cost, repair costs, carrying costs and after repair value. And don't forget Murphy's law. Food for thought.
thanks @John Moore !
I would stay away from water damaged properties unless you can get it for a pretty substantial discount. I just had to rebuild a bathroom and utility room from the studs up because a leak had rotted all the floor joists away. I honestly don't know how the floors didn't give way. There was little sign of water damage before I started ripping up the old floors.
Everything can be addressed and fixed with the right budget though.
I would agree with @John Moore and I love @Walt Payne enthusiasm and understand where he is coming from, but as a contractor and home inspector the cost can get out of hand quickly, so I would not start out with a water damage property. If you do decide to go ahead it is "critical" that your hire a reputable contractor to over see the project. Listen and learn everything he says and does and you will be ready for next venture.
Monty
Originally posted by @Walt Payne:
Would I buy them, yes. ....That said, I would not advise buying a property with that type of damage as your first purchase. Rehabbing contains enough risks for someone who is new to it, but no sense in buying a property that you know has added unknowns. Stick with basic wall repair, new kitchens, new bathrooms, etc. for your first
I would agree with @John Moore and I love @Walt Payne enthusiasm and understand where he is coming from, but as a contractor and home inspector the cost can get out of hand quickly, so I would not start out with a water damage property. If you do decide to go ahead it is "critical" that your hire a reputable contractor to over see the project. Listen and learn everything he says and does and you will be ready for next venture.
Monty
I answered the question from two viewpoints, my own experience of having done rehabs many times and having an extremely experienced crew to do the evaluation and work. Yes, I would do a water damaged house without flinching, assuming there was adequate profit involved.
Then I answered stating my opinion about an inexperienced person. And I take a stronger line than many here about that. Many here advise just jumping in, I say rehabs are much more involved and risky than an inexperienced person should tackle without an experienced advisor. Even a "basic" rehab can have many skeletons and gremlins waiting to bite you right in the profit. Not to mention the tendency to over-improve.
I wouldnt say it is a clear yes or no. Do you know the source of the water damage? That can be a large clue on how hard it will be to fix and where and what ammounts of damage may exist. As mentioned above worst case scenerio minimum deduction.
If you are financing, I do not believe conventional or FHA will lend on a home with existing water damage.
Not just where its coming from, but the cause (ie- when I repair this will I have future issues)
@Walt Payne You are so right. I am absolutely on the same page with you and in no way wanted to take your position out of context. Its hard to go into detail in a forum and express everything in one thread. My first though was "yes" as well, and I would for all the same reason you have already expressed.
Thanks
Monty