Old Duplex House Hack in Texas

[Andrew Coulton]

Hi all,

I put an offer in on a 1968 Duplex in North Texas. Plenty of upside and potential for rents to go up with rehabs required on both sides. Offer was accepted and I went under contract. Idea here is FHA loan, live in one side, the other side is already rented for another 11 months. "Live in" rehab and refinance out of FHA after 18 - 24 months.

The inspection report came back with multiple major issues:

- Roof: instead of removing the older shingles before placing the new ones old they went ahead and place the new shingles on top of the old ones, meaning insurance won't cover me, being the older layer is more than 15 years old. Total cost to repair 20 - 30K. Seller won't fix the roof or provide credit. 

- Aluminum wiring through both units. 30K to completely redo the wiring or 10K for switches to have covered with Copper. 

- Termites (seller will pay for treatment)

- Foundation issues. Decided not to get structure engineer in due to roof deal breaker. Some rooms the floor was leaning over. 

Is this normal for older houses to have so many major issues? 

I've decided to walk away from the deal but interested in how other people would have approached this situation? 

Any feedback would be great. 

Thanks, Andrew

[Costin I.]

@Andrew Coulton You forgot to include lead paint, asbestos popcorn ceilings/walls and disintegrating iron cast sewer pipes, among other pleasures that come with structures built prior to 1980.

​As for foundation, there is more to foundation repairs than just the foundation. Here is what I collected as "warnings" or lessons (from various sources and some experienced myself) about foundation problems and/or repairs:

1. If you have brick on the exterior, you might have to do tuckpointing. $$$

2. If you have tiles inside, the tiles will crack. And if they have to drill holes for interior piers, you pretty much will have to replace the entire flooring. $$$$

3. You'll have drywall cracks, so you should factor in drywall repairs and repainting. $$$

4. If the doors were adjusted to a crooked foundation, you might need to readjust or even buy new doors. $$$

5. A hydrostatic plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$

6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$

7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$

8. If you are dealing with an addition built on 12" beams (or if the original foundation is old and not built to current standards), the repair company might not be able to push the piers down to refusal depth or psi due to the beam not taking the load, thus leveling it, but not guaranteeing it will not continue to move in the future, thus not providing warranty.

9. The owner may be required to provide a structural engineers evaluation prior to warranty work.

10. Read the fine print in the foundation repair contract: Damages to the property, interior and exterior as a result of the foundation movement are not covered, during and after works completion. This usually includes but is not limited to PLUMBING, flooring, landscape, utility lines and masonry. The foundation repair does not cover any repairs that may be needed to the home during and after works completion. And you'll have new cracks in unexpected places, old cracks that will not close, but instead enlarge. My suggestion is to add at least 25% to the cost of the foundation repair as mitigation to the problems that will come from the foundation repair.

11. The foundation repair company salespeople (and even owners, in some case) of structure companies are not engineers and though they may be right most of the time, there will be gaps in their assumptions. Unless it's a small job with an obvious solution, get an engineer ($250) to look at it and sketch up a scope of work for a contractor to do.

12. Many foundation problems have water as a root cause - be that infiltration in a crawl space, drainage around the site, cracked sewer line or water line. Before solving the foundation you might want to get to the root cause of the foundation issue and resolve it, otherwise you might repair the foundation for nothing.