Multifamily Deal Analysis - Foundation Repairs

[Drew Murtaugh]

I'm looking to buy my first rental property, that I would live in and use the BRRRR method on. I found a 3-unit property for $629K on the west side of Chicago (Wicker Park area) that will cash flow.

Issue is that the foundation is settling and will need to have a significant amount of work done according to the sellers agent and the inspection that they had. All-in-all the renovations (including a new patio and new plumbing will cost around $90K). I'm worried about the permitting process on the front end taking too long in order to get these renovations done (mainly the fix for the foundation). My background is in construction management, so once the work begins I'll be able to facilitate the construction in a timely fashion and oversee the work that needs to be done well, but my concern is actually getting started.

I'd also like to make sure I know the root cause of the foundation failure and am not sure if that would be covered in the inspection or if I'd have to have an additional consultant come out and figure out what is going on. I know that this is a big risk property but I believe that it has the potential for high return if I can get all of this permitting and renovation work figured out on the front end.

I'm just looking for any advice on how to cover myself on the front end prior to making an offer and how to expedite the work so that I can get renters in and start recouping on the investment as soon as possible.

[Ivan Tello]

Hey Drew, get yourself an engineer to provide you with a report on the current conditions and the repairs needed. Best to invest on this due diligence now than when you own the property and the budget sky rockets if you need to underpin the entire foundation. 

In terms of the permitting process, an architect that can self certified drawings would reduce the wait time to receive the permit.