Buying a house with "settlement issues"...maybe not such a bad idea?

This is a total hypothetical because I've never been through this neighborhood so who knows what it is like. While perusing Zillow, I came across this gem which (without including its issues and location) is like a 7 out of 10 for my wants in a home. It's also around $75-100k cheaper than everything else I have found. Because of it's issues, you would have to pay cash (which I could potentially do) and you wouldn't be able to get insurance for it.

It's not like the thing is going to come crumbling down, and it actually looks pretty decent as is. There would be very little closing costs, obviously no insurance, and no mortgage. Basically to live there I would have to pay property taxes, utilities and the opportunity cost of losing almost all my savings. Plus, even if a hurricane did come barreling through there and took the entire house away the lot would still be worth maybe 25-30k?

Reselling may be interesting but I don't think it would affect using it as a rental property. Would something like that have to be disclosed to a potential tenant?

Not an awful plan is it?

http://www.zillow.com/homedetails/1088-76th-Ave-N-Saint-Petersburg-FL-33702/47177121_zpid/

And then when you want to sell it what do you do?

Buy every home as if you're selling it.

Basically it boils down to what you think the lot is worth, cause that may be all you can sell it for when it's your turn.

carguy123 wrote: Buy every home as if you're selling it..

This guy. X2.

Can you price the rent high enough to get quality tenants? Are you sure there isn't someplace that will insure it? What if "settlement issues" turns out to be a giant sinkhole that swallows your tenant and the entire bedroom of the home?

How's this for an analogy: if the price of the home is less then/equal to an amount you'd be willing to pay for a dedicated racecar(and be willing to walk away after balling it up), then maybe.

No insurance? WTF

carguy123 wrote: And then when you want to sell it what do you do? Buy every home as if you're selling it. Basically it boils down to what you think the lot is worth, cause that may be all you can sell it for when it's your turn.

Well, considering it's only been on the market (according to Zillow) for 6 days and it's already under contract. Seriously, how bad could it be? I'm imagining cracks in the tile and the occasional creak here and there.

Would you be able to insure it if the "recommended stabilization" was done?

didnt some poor soul down your way just get sucked to the center of the earth, i wonder if it was the same builder?? i once worked for a builder and he piled all his building trash on th the last two lots in the sudivision then buil a couple of houses on top of the trash pile, needless to say both had severe settling issues, Deflection is the term engineers use when giving expert testimony in court, where this dude found his self........if the crack is wider than a quarter or the tops of the crack are not level, you got a problem, capital P!

Hmmm you guys aren't as gung-ho about this as I was. I was seeing $$$ signs.

carguy123 wrote:

Buy every home as if you're selling it..

smart man said it all right there.....

Enyar wrote: Hmmm you guys aren't as gung-ho about this as I was. I was seeing $$$ signs.

Been fixing "settling issues" for a living since 1998. Can be very expensive depending on what the issue is.

Im wondering if it even needs fixing. I'm kinda viewing it as a disposable house. Use it for 3 years, basically have really cheap rent and then pawn it off on the next GRM sucker.

Datsun310Guy wrote:

carguy123 wrote: Buy every home as if you're selling it..

This guy. X2.

X3. Had to have a foundation repair done to a rental property due to a big tree root. $16,000.00.

What is the land it's on worth? Are you saying it's about $75K less than a house in it's neighborhood? If so seems you could buy and fund the engineering work (unless it's on a sinkhole) or live in it until you can get a construction loan to buldoze and build a new house (Assuming its in a decent neighborhood). Set up a Corp and rent it to yourself that way you can get renters insurance?

I have a friend that's done just that, although I'm pretty sure he has insurance, but I'm guessing not on any of the preexisting conditions. He got the house very cheap, and he and his family have been there for several years. He was quoted about $20k to fix the foundation, and so far the worst that has happened is the back door doesn't open and close correctly.

I have a file in my office where the Developer filled the lot over 40ft with construction debris and then sold the lot to Builder who built a McMansion on it. The fault line runs from front to back thru the garage, laundry room and kitchen with major deflection along the foundation due to wall movement. Atlas jacks were installed under the slab but movement continues. Builder tried to buy the house back but no Bank will loan him the money. Case is now in court since the insurance company for the Builder, Developer and Subs is the same. Developer refuses to accept responsibility. Cost to repair is more than double the original cost of the house and no one is sure that it will work. I keep expecting to get the call that part of the house has collapsed in the middle of the nite.

I really cannot recommend getting into this house without a report from geologist, construction experts and builder all paid by you. Free may not be cheap enough. YMMV

Sounds like about as good a bargain as a free boat.

whenry wrote: I have a file in my office where the Developer filled the lot over 40ft with construction debris and then sold the lot to Builder who built a McMansion on it. The fault line runs from front to back thru the garage, laundry room and kitchen with major deflection along the foundation due to wall movement. Atlas jacks were installed under the slab but movement continues. Builder tried to buy the house back but no Bank will loan him the money. Case is now in court since the insurance company for the Builder, Developer and Subs is the same. Developer refuses to accept responsibility. Cost to repair is more than double the original cost of the house and no one is sure that it will work. I keep expecting to get the call that part of the house has collapsed in the middle of the nite. I really cannot recommend getting into this house without a report from geologist, construction experts and builder all paid by you. Free may not be cheap enough. YMMV

BITD, that place would get hit with insurance lightning in the next storm.

Have you been watching the news about Florida Sinkholes lately?

The house you listed isn't very far from where that happened.

Seeing that the house is likely built on limestone or dolomite, I don't think ground subsidence is necessarily nothing to worry about.

Travis_K wrote: Seeing that the house is likely built on limestone or dolomite, I don't think ground subsidence is necessarily nothing to worry about.

Sinkholes in FL commonly occur in limestone. Karst topography is the term describing susceptible areas.

http://en.wikipedia.org/wiki/Karst

Time to bring this back from the dead!

2 years later, still renting homes and not finding anything to buy. We're now looking in another area which is known for sinkholes/settling issues. Seriously almost every house we have looked at had some sort of settling issue. Some sinkhole related, some because of the clay content of the soil.

This particular house had an engineering report done and it was determined that the cracks were NOT from a sinkhole, but because of the clay content and how it expands/contracts with moisture. The whole house has cracks (built in 87) but nothing too nuts, we've definitely seen much worse. The one thing that does bother is that most houses we saw had isolated major cracks while this one seems to have small cracks everywhere.

Enyar wrote: Time to bring this back from the dead! 2 years later, still renting homes and not finding anything to buy. We're now looking in another area which is known for sinkholes/settling issues. Seriously almost every house we have looked at had some sort of settling issue. Some sinkhole related, some because of the clay content of the soil.

You must move out of that state.

Everything within 100 miles of me is built on clay. It's a pretty good building material when used right.

What's a small crack? Can you fit the edge of a a quarter in it? Are the faces uneven?

Yeah, everything up here is on clay too. There's different kinds of clay, mind you; the red stuff up here is like concrete until it gets wet, then it turns to goo. To have a solid foundation you just have to dig down below how far rainwater soaks in but not deep enough to hit the water table, then put gutters and drainage in intelligently to prevent softening of the deep clay.

If a lot of houses in a given area have subsidence problems, I wouldn't even slow down to look at a For Sale sign. There's just too much downside.