Foundation is 1 foot deep! What could we have done differently?

[Charlie MacPherson]

I recently helped a flipper to buy a home in a very upscale town.  It's a total gut - right down to the studs.  The entire roof structure needs to be replaced.  Estimated rehab is $175,000.

I was able to negotiate the price down to $230,000 and the ARV is $600,000, so luckily, there's a lot of meat on the bone.

At one end of the house, there's a big leak in the roof and that wall seemed to be sagging as the door in that wall was jammed shut.  Both the home inspector and the rehabber felt that the leak had gotten into the wall and rotted out the framing.

It turns out that the foundation at that end of the house is only 1 foot deep - and that's why that wall had settled. 

The foundation there was not easily visible from the basement as that section is a crawl space that's too small to fit into.

I had recently heard of a company called RAM JACK that does this sort of work.  They quoted him $30,000.  He's exploring other options now.

I feel badly that we all missed it.  The assumption that a leak directly above was causing lumber in the wall to rot seemed reasonable, but even without the leak, I don't think any of us would have expected a foundation issue like this.  None of us had ever heard of anything like this before - especially since the rest of the foundation looked really solid.

Luckily, there's so much meat left on the bone that he'll still come out with a really good profit.

My question to BP land is what could we have done differently?