First SFR Under Contract (Foundation Split)

[Kyle Handy]

I just went under contract for my first flip here in San Antonio. I want to run the numbers by somebody first. I'm an experience RE agent (8 years, sold over 300 homes lived in SA my whole life) so I feel my ARV will be accurate. I'm new to flipping so my repair cost estimate may be lacking.

Home is on Northeast side of SA (known to have many foundation problems).  Built in 1984 with slab.  Home is on a hill. Left side of house ground has washed away causing foundation to split in the middle of home.  Right side of house is level, left slopes down to the left a bit.  

ARV: $145,000

Repairs: $45,000

Purchase Price: $72,000

I'm using a HELOC for the purchase of the home and using a 401k loan to fund the repairs.

I had a GC come out yesterday who is familiar with investor flips in the area.  He can/will do everything minus foundation.  Foundation is split in half and he estimates it will be between $10-15k for repair.  I'm going to meet with a few foundation guys early next week to confirm this cost.  GC says he can do the rest of the work for $30k.  It's 1550sqft.  Needs flooring, AC, Paint (int and ext), appliances, landscaping including retaining wall, master bath and 2nd bath remodel, 7 new windows, lighting, fixtures, and knobs (roof is acceptable and just needs minor work).  Nothing will be high end, just getting the home to livable, clean, new standards.  Layout is great.  DOM for the neighborhood is low 30-45 days on average.  Would be selling around March-April which would be good time.

I do plan to meet at least one other, if not two other GC's to confirm repair cost of items other than foundation.  And i'll be meeting with 2-3 foundation guys to confirm pricing warranty,etc...

I plan to sell the home myself and save on 6% of the price on sale (if I can find the buyer myself) if not, i'll put in MLS and save at least 3%.

I've been looking to do this a while. I'm mostly looking for an education and to actually get started. I can afford to lose (if it so happens). I'm still under 10 day option so depending on estimates, I can either cancel, renegotiate, or proceed. Does anyone have luck renegotiating with REO after putting home under contract and during option period (granted I have the inspection to prove that home needs more work than anticipated)?

[Mike Jury]

For all of those out of Texas, just a bit of information about foundations.  All most all houses have some sort of foundation problem, from a little to a lot.  The pictures above are in the middle of the range.  Texas has a unique feature (one among many) called expansive soil.  The nature of our landscape is as the moisture changes the soil expands and contracts, thus playing havoc with foundations, whether they are slabs or pier and beam.  We don't have basements because of this soil condition.  The only subterranean structures are built to industrial standards.   

 If you google foundation repair companies in San Antonio or Dallas you will get pages and pages of companies. 

Just one of those unique issues to investing in Texas.