Post inspection cold feet on investment property in Portland, OR

[Logan Loughmiller]

Would greatly appreciate input as this is my first investment property and my nest eggs going into it. 

Stats on the place: 2/1 with a completely detached 1/1+office, back lot ADU and detached garage. Main house is 1944 build, ADU is 2017

I paid for a lot for a very thorough inspection and I got just that. 190 pages photos included. Naturally to cover themselves, everything even slightly askew is marked as "should be looked at by a professional" on up to "should be repaired/replaced". 

ADU is golden, no surprise. Issues with the main house, also no surprise. Lots of suggested repairs, most in the $1K-5K and not immediately necessary, I'm ok with those. The numbers work.

Structure on the main house is the big high dollar concern and I'm having a hard time getting past it. I will note that there is no visible problems with the floor/interior, everything is visibly normal. The inspection stated not all was level, but fully functional.

Main problems:

- Low soil clearance or *no* clearance crawlspace - under the entryway and under the bathroom could not be accessed at all unless crawlspace is dug out. There is enough room for someone to get around the rest of the crawlspace. Some beams are on or too close to the ground which is a concern for moisture/wood rot/pests. The bathroom is of specific concern for plumbing access.

- Improper footings/foundation - They have done some work to increase stability but looks as though it was not permitted, as is sometimes typical with early 1900s homes, there are no footings underneath the vertical foundation wall. They added footings to vertical beams around the house, but they're pyramid type footings mostly used for decks, etc. 

Inspector said its not something that would need immediate attention and could (*could*) be fine for years, if not indefinitely. But very costly fix to correct. 

The Value:

I'd be living in the ADU and AirBNB-ing out the front house. I've considered that in Portland, with an average annual equity increase of 5-7%, even one years equity put back into the structure could potentially solve the problem. I don't want to eat that right at the start though. I'd like at least a few years of profit/equity from it before embarking on anything like that. From the inspectors perspective, I'd likely have that. Although if plumbing issues occur in the bathroom with no crawlspace access to it, that could become a very front and center problem quickly.

The value of the property aside from all this is fantastic. As pretty much everything else I looked at even close to the price point were mid 1900s duplexes, several of which were upper/lower and could very well have similar or other issues. This was one of the only detached ADU situations I could find at a good price point. This is particularly ideal for Portland AirBNB's, as the owner must live on the property they're renting for at least 9 months of the year. So there are very few setups where you can STR a full house year round. Less competition. It's also very close to Reed College, a $60K/semester school, so it would be a strong draw for wealthy visitors, campus tours/visiting parents, etc.

Also- my primary job is an online merchant, selling on Amazon/Ebay and I require a large space for daily inventory/shipping prep. No other duplexes I saw had anything that would work for this. A *few* had basements that could work, but not ideal. This place has a detached garage that's perfect.

I realize every house will have *something*, I'm just having trouble grappling with where you draw the line with "this is too much, I'm walking" and "this is acceptable to take on for the value of the property". All input appreciated.