Investment property with tenant and foundation issue

[Richard G.]

I have an opportunity to buy a 3bed/1bath SFH estimated to be worth $70k for $50k in cash. The home is currently rented to one tenant who has lived in it for 35 years and pays $400/month. The tenant does not want to move, has a low income, can pay up to $500/month, and would plan to live there until they can't anymore.

The house is in good shape except for one of the basement walls that started to buckle.  The owner put an anchor system in place to shore up the wall, that they claim is guaranteed for 23 more years.  

Taxes are $1725/year and insurance is $800/year.  

The owner will sell at $50k if the tenant can stay with rent increased to $500/month. 

My questions are whether this would be a good deal, too much of a headache, other thoughts?

[Aaron Poling]

If you like the return on your cash, then it may be a good deal. It does seem like you will have a long term tenant but will be nearly impossible to raise his rent, so your investment would be for the long haul. 

As far as the basement. The buckling typically occurs when water builds up hydrstatic pressure and pushes against the foundation. I am guessing it is block foundation and it is pushing out in the middle somewhere and you can see a crack in the mortar joints opening up. The specialty foundation companies typically want to put long rods in the walls with large underground stakes in the yard which pulls the wall back into place. Technically (in my opinion) this doesn't actually fix the problem which is the water, it just fixes the buckled wall. It is probably an ok fix, but I would confirm that the warranty fully transfers to you, and check out the company really well that is offering the warranty. Any warranty is only as good as who is giving it. 

Good Luck! Aaron