Good numbers but foundation problems in eastern Connecticut

[Chad Fagan]

Hi all,

New to BP forums and this is my first topic, so I apologize if it's in the wrong forum.

I'm looking to get my first deal and started off with a 37-unit condo association located in eastern Connecticut. Long story short, this particular area of the state is known for having bad foundation problems because of defective concrete. I ended up agreeing to a $81,000 purchase price, everything was going smoothly, etc. then the bank began worrying big time about the foundation. This association did some repairs on the foundation on other buildings in past years. My unit does have the characteristic horizontal cracks but it's not something that's going to fall apart any second now. Therefore my thinking was to buy for a low price, hold, and rent with positive cashflow. Even if the value decreased because of the foundation, I'd still be generating income. Side note: this property is located close to universities and would easily rent. 

My question is this: even if I can still get financing or potentially do a seller finance situation, is it worth the risk with the foundation? Hopefully this is enough information to get advice but I'd be happy to provide more.

This is the breakdown of the numbers.

Overview
Purchase price: $81,000 
Appraisal value: N/A
20% down payment: $16,600
30 year mortgage: $66,400 @ 3.175% fixed
Closing costs: Est. $2500
Repair budget: $10,000
Estimated total investment: $94,000

Monthly breakdown
Mortgage payment: $286
HOA Fees: $255
Taxes: $168
Electric: $200 (there is electric heat)
Insurance: $42
Net operating costs: $951/month

Anticipated income
Rent bedroom 1: $700
Rent bedroom 2: $725
Rent basement: $0 (I'd live in basement)
Gross income: $1425/month

Cashflow: $1425 - $951 = $474/month plus I live there for free