When I received the inspection report back on my third BRRRR property, all the red ink highlighting deficient items made my head spin and palms sweat. I was just starting out with this phase of my investing and hadn’t really tackled many repairs past cosmetic and mechanical items. If you can make the numbers work, those repairs are slam-dunk wins.

But the inspection report for my third BRRRR flagged a major foundation repair. My heart sank.

On paper, the property still penciled out very well—even if I had to sink $40,000 into the foundation repair. But was I ready to take on such a challenge? What could possibly go wrong?

If you’re dealing with foundation damage, you’re probably panicking, too. Believe me—I feel your pain. For both homeowners and real estate investors, foundation damage is one of the scariest to-dos you’ll find. This damage manifests in a number of ways, from foundation cracks to a damaged concrete slab to leaks in the basement walls.

Regardless of the severity of your foundation damage, here’s how to assess and tackle the problem.

First: Signs of foundation issues
While you should always hire a structural engineer to evaluate any and all properties with suspected foundation, there are a few easy clues visible to the naked, uneducated eye.

Plumbing problems: Leaky pipes don’t always indicate a foundation problem, but they do always indicate that further investigation is necessary. Dripping water can damage concrete over time.
Poor drainage: Ground sloping toward the house—also called negative drainage—can cause water pooling. Remember: Water plus foundation is always bad news. If one part of the property is located on loose, wet soil and another part on compacted clay soils, for example, it can cause differential movement. That’s when parts of the foundation shift in opposite directions, leading to cracks.

Trees: If there are trees located too close to the property, keep an eye out. Tree roots can push against the foundation or dry out the soil, causing your foundation to shift.

Hairline cracks: These can be common, especially when they appear in the mortar between bricks or concrete blocks, but they can be a sign of foundation issues. While sometimes these are caused by seasonal expansion—especially when located around window frames and doorways—make sure a structural engineer evaluates the scene.

Know what you’re willing to handle

When you dive into real estate, you have to understand what problems you are willing to deal with—and which ones you need to walk away from. This list might change depending on your investing stage. Most first-time home buyers will want to skip properties with foundation warning signs. Seasoned flippers who’ve scored a serious deal, however, may brush these off as no big deal.

Technically, anyone can do anything. However, every investor will eventually find the sweet spot problem they like solving… and the ones that will make their skin crawl. In addition to foundation damage, other big-ticket snags include:

Electrical damage
Termite damage
Extensive mold damage
Fire damage
Flood damage
Your list may grow as you encounter more problems during your real estate journey. Personally, I’ve added raccoon infestations and trees breaking through the second story.

Still, keep in mind that staying strict with your “no” list may hinder your investment success. Sometimes, what makes a deal so smokin’ is the fact that there is a HUGE problem to solve with the deal. Think financial distress, owner distress, or property distress. A deal where all three distresses are present? This could be a home run… if you’re up for the challenge.

Back to my third BRRRR, with that terrible inspection report. In this case, I had all three: a probated property where the family couldn’t afford the repairs and a caving-in foundation.

Keep reading the article here: https://www.biggerpockets.com/blog/foundation-damage

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