Active Termites...Renegotiate or walk away?

[NaTarrio Jones]

Hi BP Community,

I just got an accepted offer on a Duplex in a class C neighborhood. After accounting for vacancy, maintenance, capex, and property management I'm looking to cashflow around $415 per month with an 18% ROI. On the surface it looked to be in very good condition, roof, tile and wood flooring. Kitchen and bathrooms could use a little sprucing up, as well as some cosmetic work throughout. Not a very extensive rehab is required; however, upon inspections an active termite infestation was discovered. Because this would be my first true investment property I'm wondering if I should use this as leverage to renegotiate a better purchase price point to cover the anticipated cost to exterminate and repair any damage or should I walk away? I would love to hear thoughts on this scenario? Have you dealt with a similar situation? What did you chose? Thanks in advance for your comments.

[Kathryn Daniel]

How much does the extermination cost, is the property occupied currently and what are the numbers you're working with?

[Max T.]

termite treatment is not that expensive.

the big cost will be replacing the damaged wood. you need to find out how much needs to be replaced.

[Rod Hanks]

Find out how much it would costs to repair the damage and get rid of the termites and renegotiate a smoking hot deal!

[Matt H.]

In CA if you walked away from property with termites you would own no property.

[Manuel Gonzalez]

termites are very common also where I invest. They can wreck havoc if left alone  i would  use it as a negotiation  point . Also I don't replace the wood  2×4 etc. If you get rid of the termites  the wood  most times  is still strong especially for a hold flip that might be a different story is it on slab or pier and  beam

[Zach Scheer]

Where is the termite damage?  Structural pieces of the home or just the facade?

[Jim Shepard]

One of the best deals I've ever got had termite damage. Negotiated $13k off of the original contract. Fixed all of the problems for $8k! The seller will have to disclose active termites and the damage thus far to any other prospective buyer. Start re-negotiating!

[NaTarrio Jones]

Kathryn Dillon Thanks for your response. The cost for treatment ranges from $1200-1800 for professional services. Also depends on the type of treatment. Both units are currently vacant. I'm under contract for 57.4k each unit should rent out for at least 700.

[NaTarrio Jones]

Thanks for your responses Max Tanenbaum Rod Hanks Matt Hoyt What I am most worried about is the amount of damage that has been caused. However I can't know the full extent until the walls are uncovered. Zach Scheer For sure it has damaged some wood siding at the base near the ground mainly on the sides and front of property.

[NaTarrio Jones]

Manuel Gonzalez Yes It's rather common in this area. Im hoping it's being discovered in the beginning stage and has minimum damage to the studs. Jim Shepard I'm leaning towards renegotiation. Do you furnish to the seller a copy of the full inspection report?

[Jim Shepard]

@NaTarrio Jones Yes I provide the full inspection report.  The size of the report will intimidate a lot of sellers into thinking they have a bunch more problems than what they actually have.  Translate that into $'s for me!

[Stanley Parsley]

ive seen properties that needed to be tented and eradicated

this is not cheap then you have rehab on structure areas and these may be load bearing

look at all the areas that were infested and make some numbers

if you can pull off the extermination and rehab for 25k then you may be sitting ok depending on how you structure the deal and what they think the property is worth

25k is just a number youll have to really sharpen your pencil to see if the project is worth it

enjoy

[NaTarrio Jones]

@Stanley Parsley I researched that process also.  The ones I'm dealing with are subterranean so it does require to be tented.  Inspector suggested non repellent liquid chemical around foundation which is less expensive.  Thanks for all your comments.  I'm in the process of renegotiating now.  I will keep you posted on how it goes.

[Mike Landry]

I've used a local pest control person for some termite damaged base boards. About $500 to treat the full perimeter of a $1200sqft house.