Would you purchase a property with termite damage?

Question

Would you invest in a property with significant termite damage? The seller is ‘taking care’ of damages in the first floor unit. But I’m unaware of further damages. I’ve asked my real estate agent if I can obtain the pest inspection report, she’s unsure. I’m worried if there’s visual damage inside a unit that there may be much more damage that’s not obvious to me.

Storm S. · Answer

@Nikki Cuozzo these deals have the best potential to make money if you know what you are doing.

Nikki Cuozzo · Answer

Hello!

Thank you all for the feedback. I'm getting some mixed answers on FHA requiring pest inspection or not...I'm located in CT, and looking for properties in CT. The sellers have actually temporarily taken the property off the market while they make repairs.  In the mean time, I'm looking into pest inspections and loans.  Also looking for input on loans:  I'm looking to put a minimal percentage down, which I have found around 4% for FHA loans, but this is as a residential mortgage.  I can't get a straight answer from the bank as to how long I technically have to live in the property before I can rent it out and no longer owner occupy.  I would love for it to be an investment loan so I can rent it out fully and immediately, but I don't have the 20-25% to put down, and the rates are horrible.  Any input on this?

Chad Boyers · Answer

@Nikki Cuozzo I wouldn't be deterred, but would be very diligent in obtaining my own pest inspection by a trusted inspector.  I would generally then recommend getting a price reduction to offset expected repair costs as, like some others mentioned, seller repair jobs aren't always the greatest.

FHA does NOT require a pest inspection (VA does), but certainly in this case you want to have one done.

Good luck!

Scott Patterson · Answer

Don't trust any inspection reports given to you from the seller.

Lore Postman · Answer

As someone who lives in the Charlotte metro area and buys distressed properties, I don't think any of our investment properties didn't have some sort of termite damage when we bought them. When I first started investing a decade or so ago, the idea of a termite infestation conjured up all sorts of nightmare situations. In reality, the termite damage we've experienced has always been contained to a portion (or two) of the house, was easily repaired with new framing, and wasn't a headache because we were already demolishing to the studs.

In your shoes, I'd prefer to handle the remediation instead of the seller doing that work. Satisfactory work to the seller may end up being substandard work by your standards. I also echo the sentiment about having a thorough inspection performed and negotiating a good discount. Good luck!

Lisa Misuraca · Answer

I would certainly not wait for the inspection from the seller.

Part of your due diligence and a requirement for your FHA loan is to have a termite inspection. What they find will depend on the severity of the damage and if they are active or not.

And would need to be remediated before closing.Treated and repaired.

What state are you in? Is the building brick or frame stucco.Look for damage at all door and window jams

and around any source of moisture.

Nikki Cuozzo · Answer

Thank you! Yes I’m trying to get the pest inspection report from the seller, if not I can get my own. However I may not be able to get an FHA loan with this issue.

Tj Hines · Answer

@Nikki Cuozzo, this why you should really consider getting an inspection on the property before closing on it. This will give you an opportunity to back out of the deal, if the inspection report revealed something that wasn't to your liking

Andrew Syrios · Answer

I would, but only if 1) it came at a discount (obviously) and 2) I felt like I was in a position to take on such a renovation. I would definitely get a pest and dry rot inspection to make sure you know the extent of the damage before buying.

Bjorn Ahlblad · Answer

@Nikki Cuozzo if you are interested in the property you need to get an inspection or move on. In some parts of the country you will not find a property without some termite damage. You need to know your exposure, get your own report if you are concerned.

Would you purchase a property with termite damage?

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