Buy or Pass? Possible Foundation Issues...

[Ericka G.]

Let me know what you think of this deal...it's a tiny bank owned 2 bed/1 bath cottage.  They were initially asking $31k and I got it under contract for $20.9k, I asked for another $5k off after the inspection and the bank agreed to drop the price to $17.9k. I've not seen the house, but know the area and it is a good area (B-/C) near the airport, schools are meh to bad (4, 4, 2).  I already have tenants interested.

Purchase Price: $17.9k (needs at least $10k of work), ARV: $38-$40k, Rent: $1,200. Monthly cashflow after expenses: $655

My inspector, who I trust, kinda hates every house but cautioned that this one in particular could be a money pit.  There is water in the crawlspace because they didn't secure it properly, that appears to have washed away some of the foundational support.  There are cracks in the walls and around the door frame that suggest foundation problems.  A chunk of the kitchen ceiling has fallen down but the roof appears to be in good condition.  

My inspector, handyman, and even one of my prospective tenants (a pilot who used to be a contractor) is advising that I pass on this house...this would definitely be our biggest repair job yet and the foundation issues scare me, BUT the numbers appear to work, so I'm wavering.  I kinda want to buy it.  What do you guys thinks?  

[Julie Marquez]

I don't know exactly what your issues are, but I got multiple estimates for new piers and / or jacking up the spread footing for my 1380 sf house, and they ranged from $44,000 - $64,000. At that cost, your house is "totaled" and I would stay clear of foundation issues.