Deal breakers for ARV appreciation

[Dave Blackman]

Hi everyone,

I've been recently growing my knowledge on the BRRRR method and am quite intrigued -- I'd actually entered escrow on a deal before researching it more...but wanted to get your thoughts on plumbing and whether issues that arise during inspection related to non-conforming stacks/cast iron replacement are dealbreakers. There's lots of updating that could be done to head down a BRRRR path in this unit, and it cashflows quite nicely at the LP...but...

Property was already appraised at 10k higher than my offer, but sewer inspection showed multiple cast iron pipe and non-code stack issues that will most likely be 10-20k of work (my guess, haven't gotten formal estimate yet). My assumption is that doing that work doesn't really raise the ARV and thus if I can't get the current owner to do the work or at least a significant portion of it, it's a bit of a dealbreaker, right? We're talking about 30 ft of cast iron replacement (9 of which is behind walls between the duplex units, rest in basement), stack replacement, and excavation to find the outside access to the lateral line (underground somewhere so they werent even able to scope that yet).

I could also go the route of lowering the offer based on the estimates, but is it worth me doing that work myself if it doesn't raise the ARV and thus my equity to get the money back later?

Thanks for your thoughts!!