All Forum Posts by: Bobby Balow

The situation:
We very recently purchased a property based on a home inspection that was currently occupied by a tenant. Turns out there was a LOT of hidden damage. From what I understand, there is little we can do because the tenants lease had expired with the previous property management company and they refused to sign with a new one. Upon moving out, the house was vandalized (door kicked in) and some appliances were taken. We are $5 under our deductible for our insurance.

How to prioritize?
This is the first property that we will be renovating remotely. I never owned a property this damaged and I'm not quite sure what is the best way to approach this.

• 1. Some outlets don't hold the plug anymore and others aren't properly grounded
• 2. Some kitchen cabinets have water damage and are stained (see picture)
• 3. Bathroom vanities show water damage
• 4. Many doors show damage/mismatch throughout the house
• 5. A few windows do not open and are missing protective coverings for the opening mechanisms
• 6. Missing transition pieces throughout the home, air register covers rusty/don't completely cover opening
• 7. Furnace is quite old and will likely need to be replaced in the next year or two
• 8. Vinyl flooring in kitchen has lots of burn holes and black paint/stains all over
• 9. Some structural issues also need attention (sistering 3 joists in floor due to old termite damage - no active termites)
• 10. Front porch is missing several spindles and handrails need securing. The plan:

We have a rehab budget, but I'm very concerned we will not have enough to get it to "modern rental standards". Our plan was to clean/paint the entire interior of the house, replace the bathroom vanities, and add transition pieces and registers throughout to try to give it a cleaner, more consistent look. Our property management says we probably want to replace all the kitchen cabinets. Is this excessive at this point? We want to attract better clients to the property.

Location:
This is in a C+/B- area in Lafayette, IN relatively close to a large university (although, we aren't sure if students will be looking to live in this area).

Suggestions on durable flooring/vanities/cabinets/paint that will hide damaged walls, and suggestions on what repairs are necessary to attract better tenants would be greatly appreciated. I hope we can turn this around without going broke!

 I know this is an old post, but I'm curious why you wouldn't pull from their deposit? 

Thanks for the quick response! The issue we are running into is the credit union won't give us the mortgages because the price of each loan after down payment is close or less than $50K. We were told it's unlikely another credit union or bank will give us this loan because of this technicality. Any other ideas?!?

Hey Shaun,

They are in Indiana.  Thanks!

Ran into an issue with financing. We got an offer accepted for 132K for two SFHs we plan to rent. Our lender won't do one blanket loan and with the required 20% down payment, it drops the value of each loan too low and they won't work with us. Our lender said other Banks in the area probably won't help us either. Hoping to solve this problem quickly with the help of BP! 

The goal is cash flow, so longer terms are better for us. Also if it helps, the asking prices were $70 and $80K before we got it down to $132k. 

Thanks in advance! 🤞🤞🤞

Thanks so much for the suggestions! Putting in a  bid for two properties at once is very new territory for us and something not really discussed at great length in the books I've read. So I have no idea of what leverage I have in this circumstance with my lender or seller. Appreciate both your insight. 

My wife and I put in a bid that was countered. It is for 2 properties, but our lender requires us to obtain 2 loans. I'm assuming this means we will have to pay 2x closing costs. Can anyone offer negotiation tactics we might consider using for either the lenders fees or seller? If we get these properties we will finally begin our investment journey! Thanks so much in advance. Cheers!

@Mayank S. Did you end up finding someone to work with?

Wow, I love this community! Thanks so much everyone for contributing. We were able to pull up a detailed report that stated the problem is differential settlement of the foundation, with the recommendation to "underpin the
west foundation wall with an underpinning system such as helical piers." Not sure how standard this procedure is, but it seems pretty straightforward (but costly). I also snapped a picture showing how much settling is occurring. It's pretty substantial as can be seen by the stairs now having a few inch gap between the deck. 

@Jaysen Medhurst thanks for that info! That puts me more at peace with the possibility of tackling foundation problems in the future.

@Andrea Townsley, the property is in Indiana and the report said it is likely due to the soil like you were stating.

@Costin I., can't thank you enough for this info. We did not even consider the possibility of other damages resulting from the remediation of the foundation problems. As these costs keep adding, we think this property might be better suited for for someone else capable to taking on more risk than us. 

Again, thanks so much for taking the time to share your thoughts with me! Cheers-

We found a great, recently redone 4-plex in a location that our property manager says is ideal. The sale is as is and will be our first long-distance property that we will not see before placing an offer. We found out that there are foundation issues that are estimated to cost around $18K, which isn't a total deal  breaker, but I've never dealt with foundation problems before. Can these issues come back? How likely is it that these problems might lead to other problems? We are pretty new to real-estate and haven't purchased a "fixer-upper" before. Thanks so much in advance.