Sinkhole Home as a Rental?

Question

There is a home for sale locally that has had a sinkhole repair. By all accounts the problem is solved but it's value is obviously damaged irreparably. Would you buy a house with a repaired sinkhole to be used as a rental? Can you get insurance for such a beast?

Tom

Charlie Miller · Answer

Yes you should disclose it.  Even if legally you don't have to, the first day the new tenants talk to the neighbors they'll find out they're in the "sinkhole house"

If you can buy it cheap it might cash flow really well even with discounted rent.

Andrea W. · Answer

Is it possible to get a certification from an engineer that the ground is stable, or at least some sort of report on the stability of the ground? This is Clearwater, Florida where I understand that the ground is mainly sand with underlying structure made of a sand & shell "stone," so I doubt that complete stability ever can be guaranteed. I'm thinking of buying a house near me, but then remembered that another house very near that one could not be sold because it is affected by a sinkhole, but it has been used as a rental property for well over 15 years and doesn't seem to be going anywhere. Do counties do ground stability reports for the general area?

Tom Scott · Answer

@Chris Adams

You are correct in that they really don't "repair" the sinkhole. In general they fill it with a grout that "should" flow into all the voids and stabilize the cave in. This particular area is full of subterranean caverns that tend to move in times of drought and heavy rain. I too would say that it is never really fixed. The possibility of a recurrence is always there.

@Tom Reynolds

I haven't looked into insurance, but that was my major concern.

@Bob Estler

The statistical probability of someone getting hurt due to a sinkhole is astronomically low. They seldom collapse all at once and are more typically a very slow settling type event that can take years. I'd say the major hazard would be to the house itself.

After all my research I am fairly certain it's not worth my effort to pursue this deal. I would not be concerned about tenant safety at all but more worried about reduced rents and the stigma associated with a sinkhole making the house hard to sell in the future. Additionally, the repair cost associated with another sinkhole repair would probably make the house a money pit unless you could get it super cheap and in my market I really doubt I could get it that cheap.

Tom

Chris Adams · Answer

The more I think about this, besides filling the sink hole how do they repair this problem? Is there seismic testing that is done to the earth? In all my years of construction bad ground is bad ground and you have to keep excavating until you hit solid earth then backfill in compacted layers. I would love to hear how having a toilet bowl under your dining room can be "repaired"

Chris Adams · Answer

My first question would be is the market so bad that I have to start looking at a property like this to find good cash flowing rentals. I just don't see a reason to buy a house like this.

Tom Reynolds · Answer

Have you checked on insurance?

Jean Bolger · Answer

would I buy a sinkhole property, personally? not in a million years. I'm relatively phobia free, but the possibility of the earth just giving way under you is massively disturbing to me.

Perhaps if I lived in Florida I'd get inurred to such things... but i doubt it

Bob E. · Answer

How could you not disclose a former sinkhole?  What if the problem was not resolved and it reoccurs and is larger?  What if someone is injured as a result?  Try and explain that to a jury, how the big, bad greedy landlord did not disclose the problem.

Steve Babiak · Answer

Here is a collection if links about sinkholes at a very well known location - the King of Prussia Mall; note the dates to see it is an ongoing issue.

http://articles.philly.com/1999-10-08/news/25508958_1_first-sinkhole-three-sinkholes-underground-cavities

http://articles.philly.com/2000-02-02/news/25573623_1_three-sinkholes-parking-lot-penndot

http://www.umtownship.org/documents/12/sinkhole_map02.PDF

http://www.pahighways.com/us/US202.html

http://philadelphia.cbslocal.com/2011/02/04/sink-hole-opens-up-on-route-202-near-king-of-prussia-mall/

http://www.uppermeriontoday.com/2010/08/06/third-head-here/

But there is some buyer in FL that seems to specialize in buying sinkhole properties ...

Tom Scott · Answer

@Matt Swearingen

That's a good question, I am not sure if you would have to disclose the sinkhole repair to a renter. I wouldn't think so, but stranger things have happened.

Tom

Sinkhole Home as a Rental?

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