First BRRRR, seeking out advice & analysis. (Dirt floor basement)

First BRRRR, seeking out advice & analysis. (Dirt floor basement)

Rental Property Investor · Butler, PA · Member since 2019 · 38 posts · 15 votes

Hello Everyone!

I starting out with house hacking last year, moved into my primary residence, and now have been thinking about my neighbors house that has been vacant since 2019 and not selling. I started working my numbers, getting more information, was hoping you all could provide your insight on this property, and ultimately if I should go further with this or not. It may not be the most ideal BRRRR, but prior to learning about the dirt floor basement and potential shifting back porch roof, was figuring the numbers worked, would be a good learning experience, and the only time to acquire my neighbor house BRRRR wise. Along with the other improvements I can do down the road DIY at my own pace since it's next door. Much appreciated in advance for insight provided as I am still pretty new to rehabs costs, money pits to avoid, and ARVs. Property Listing, Google Drive with Picture of concerns, Comps. 

I linked the listing, pictures of the questionable support beams and dirt basement (maybe back deck roof is shifting? 1998 tile roof), and local zillow comps. ARV wise based on the comps I am hoping would be around 110k, with some properties this year going for 120+, but last year across the road a property went 77k which is confusing. My property next door, different type of house, appraised 20k more than purchase price. Contrary to the pictures, all the flooring besides the kitchen and bathroom tile is now bad hardwood floor. The seller recently ripped out the main floor LVP that they just remodeled due to the hardwood underneath bowing, I assume due to the dirt basement floor. They bought and have carpet scheduled to be installed by Lowes next Thursday. I assume for the BRRRR numbers I would have to get a contract going asap to stop that from happening or else they wont accept a lower purchase price. This does seem to be a possibility, as the property is currently off market and once my realtor acknowledged I wouldn't be interested in this property with carpet, hurried up to let me into the property.

I overestimated the flooring costs for 6k carpet for now, intend to remove the back deck steps, and just make a balcony to reduce liability with those steps. The basement and potentially shifting roof is what I am unsure about if I need to do something for either the acquisition with a mortgage and/or refinancing for the numbers I need to get my money back. If I would have to do something with the basement, what would that be, along with an estimated repair costs, is what I am clueless for now until I do more digging.

Again thank you all so much!


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Contractor · Evans City, PA · Member since 2019 · 15 posts · 12 votes
5y

The dirt basement floor would just be considered a ‘Crawlspace’. Also I would lock the door and not even allow tenants access. They would store stuff down there, that stuff would get mold, or water damage, then when they move it’d be your problem to move it out. 
If the support posts or beams are questionable, they can be replaced with house jacks and new or additional beams. You would need to dig a hole and pour concrete to get a solid base to set them on, not the dirt like the existing ones. 
I would have a competent carpenter look at the basement and the back porch. The porch may have shifted, but it may be done shifting. I good honest carpenter could say why, how, and how to fix. 

Hope some of that helps!

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  • Contractor · Evans City, PA · Member since 2019 · 15 posts · 12 votes
    5y

    The dirt basement floor would just be considered a ‘Crawlspace’. Also I would lock the door and not even allow tenants access. They would store stuff down there, that stuff would get mold, or water damage, then when they move it’d be your problem to move it out. 
    If the support posts or beams are questionable, they can be replaced with house jacks and new or additional beams. You would need to dig a hole and pour concrete to get a solid base to set them on, not the dirt like the existing ones. 
    I would have a competent carpenter look at the basement and the back porch. The porch may have shifted, but it may be done shifting. I good honest carpenter could say why, how, and how to fix. 

    Hope some of that helps!

  • Rental Property Investor · Butler, PA · Member since 2019 · 38 posts · 15 votes
    5y

    Hey Brent!

    Having the basement locked is something I didn't consider, but is interesting! Not sure if the workshop area down there would appear to a tenant, but if not sounds like a smart idea. 

    My engineer friend who lives in this area says this kinda of basement is somewhat common for the area and doesn't see anything wrong with the beams right now. With that in mind, I would definitely want to do something with them down the road if it could wait. 

    Based on the basement and porch picture it overall seems to be sinking some and my friend thinks if anything just rip out the porch roof since it is extra. I was able to find out the tile roof was done in 1998 and guessing it wasn't designed for that weight and could either be taken down or reinforced.

    Appreciate the insight! Biggest thing I still need to feel more comfortable is the comps for accuracy of the ARV and will do more research tonight. My Realtor acknowledged it is harder to guess the ARV due to the smaller area, but going to use the websites and relook over my properties appraisal for more information.

    Thank you,

    Will

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    If you know things like the roof are causing problems, get an estimate of how much they'd cost to fix and use that to bring down the sales price.  It is costing them to hold the house, so selling it for a bit less may net them more money than holding on to it for another year.

    Do other houses in the area have finished basements?  If so, that could be one way to increase the value of the home.

  • Rental Property Investor · Butler, PA · Member since 2019 · 38 posts · 15 votes
    5y

    Hey Theresa,

    I have been thinking about doing something like that, giving a list of things wrong to reflect the lower price and going from there.

    This is an older town that does have these kind of basements within the older homes semi often. Just a project I haven't done and something people often say to avoid, "money pit".

  • Specialist · Ottawa, ON · Member since 2021 · 2 posts · 1 vote
    5y

    Hey,

    I’d get a contractor and get him/her to write up a list of deficiencies you can use to drive down the price and put in a firm and final offer. If they say no? Ok 🤷‍♂️

    If it’s been sitting on the market for a long time it’s probably because they want more than it’s worth. Also, if it’s a neighbor and you like them what I’m describing may not be a great approach 😂 I actually had a neighbor once who got divorced and his house foreclosed on and I stayed clear of the deal cause I didn’t want any bad blood between us.

  • Rental Property Investor · Butler, PA · Member since 2019 · 38 posts · 15 votes
    5y
    Originally posted by @Brent Whitcomb:

    Hey,

    I’d get a contractor and get him/her to write up a list of deficiencies you can use to drive down the price and put in a firm and final offer. If they say no? Ok 🤷‍♂️

    If it’s been sitting on the market for a long time it’s probably because they want more than it’s worth. Also, if it’s a neighbor and you like them what I’m describing may not be a great approach 😂 I actually had a neighbor once who got divorced and his house foreclosed on and I stayed clear of the deal cause I didn’t want any bad blood between us.

    This was the game plan I plan on pushing forward tomorrow. My impression is they are wanting more than what it is worth based on how long they have been letting it sit vacant. Fortunately, I just moved here and have had zero interactions with this neighbor since it has been vacant for some time.

  • Rental Property Investor · Butler, PA · Member since 2019 · 38 posts · 15 votes
    5y

    After analyzing in more depth after figuring out more scope of the work and how they appraised my house next door, the margin was just too thin and they wouldn't take an extreme low ball offer. Appreciate all the insight everyone! 

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