Found a 1912 foundation held up by the dirt around it. 47k and eleven weeks

Closed on a 2,000 sq ft foursquare at 186, ARV 435, budget 158. I've framed houses for years so I priced this one myself and I was confident about it. That confidence is most of the story.

We were doing full mechanicals, kitchen, three baths, refinishing the original floors, and finishing a basement to add a fourth bedroom and a bath. The basement is where it went.

Inspection before purchase noted "typical settlement cracking, monitor". I'd read a hundred of those. Rubble stone foundation, some bowing on the north wall, mortar in poor condition. What I read as poor mortar was that the wall had lost most of its bond and the interior grade was the only thing keeping the north wall from moving further. Take the interior slab and the dirt out for a basement finish and you've removed the thing holding the wall.

My excavator saw it before I did, which I'm grateful for. Stopped work day three of the basement dig.

What it cost: engineer 2,400, underpinning and rebuilding 34 linear feet of foundation wall 38,000, exterior waterproofing and drainage since we were open anyway 6,800. Call it 47,200 against a basement scope I'd budgeted 41,000 for total, and that 41 still has to be spent afterward if I want the bedroom.

Eleven weeks added. Carry at 4,400 a month, so about 11,200 of extra carry, plus one extension fee.

I killed the basement bedroom. Sold as a 3 bed at 412 instead of 435. All in at 259 including the foundation work. Profit 28k on a deal modeled at 71k.

What I'd do differently. I'd stop treating my own framing experience as foundation experience. Those are separate trades and I knew that and I acted like I didn't. On any pre-1940 house where I intend to touch the basement floor or the perimeter grade, I'd pay a structural engineer during the inspection period. It's 800 to 1,500 and I've now paid 38,000 to learn what it would have told me.

Second thing: I'd stop putting the highest-uncertainty scope item at the center of the ARV. The 435 depended on that fourth bedroom. When the bedroom died the value died with it, and I had no fallback because everything else in the house was already priced in.

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1omar_haddadActivePRO11

The second point is the bigger lesson and I think you're underselling it.

I've watched three deals in my own book go sideways the same way. The ARV rests on one scope item, the item turns out to be the risky one, and when it goes you don't lose the increment, you lose the whole premise. Bedroom counts, ADUs, garage conversions, anything that changes what bracket the house sells in.

What I do now is model two ARVs. The one with the value-add item and the one without. If the deal only works with it, the item needs to be de-risked before I close or I pass. On yours, 412 without the bedroom against 186 purchase and 158 budget would still have penciled at maybe 40k. So the deal was fine, and you'd have known your floor going in.

On the foundation: "typical settlement cracking, monitor" on a rubble stone wall with bowing is a general inspector telling you he can't assess it. Mine writes it that way as a matter of course. It's a referral, not a finding.

The part I'd disagree with slightly is the engineer during inspection period. On a rubble foundation you can often tell a lot with a plumb line, a flashlight and an hour, and 800 to 1,500 per house across a pipeline gets expensive if you're looking at twelve houses a year. I'd say pay for it when you intend to touch the slab or the grade, which is exactly the rule you wrote, so maybe we agree and I'm just being difficult.

Found a 1912 foundation held up by the dirt around it. 47k and eleven weeks

2 replies