My GC told me "everything rots to the same place eventually, the question is whether you bought it before or after it showed up

Question

I bought a three-unit in Pawtucket last March, 112k, and I thought I had done the hard thinking. Opened the walls in unit two and the rot had been traveling from a second-floor bathroom for what looked like ten or fifteen years. Subfloor, joists, one load-bearing wall. Nobody could see it from outside. The inspection said nothing because there was nothing to see.

The GC said that line to me standing in the opening where the wall used to be, and I have been turning it over ever since because he is right and it does not actually help you underwrite anything. The rot was already there at 112k. It would have been there at 90k. I could not have known it was there at any price, not without opening walls during due diligence, which nobody lets you do on a competitive listing in that market.

The extra work came to 38k and six weeks. I had a 15 percent contingency built in and it covered most of it. The carry on six extra weeks at the rate I was paying hurt more than the repair cost did.

What I keep getting stuck on is whether the lesson is to buy cheaper or to hold more contingency or to expect this on anything pre-1970 and just price it in blind. I am leaning toward the last one. Old wood in a wet climate hides things. I am not going to find it until I open it, so maybe the only honest move is to assume it is there before I close.

ayesha_qureshi · Answer

The carry killing you more than the repair cost is the part nobody believes until it happens to them. I am not in a flip yet but I have been running numbers on a 1940s duplex in Central Falls and the thing that keeps shifting my pro forma is not the repair estimate, it is the rate on the construction loan sitting there accruing while a subcontractor is three weeks out because every GC in Providence County is booked until fall.

The piece I would add, and I have not seen anyone say this clearly: the six-week slip probably did not start when you found the rot. It started the moment your GC had to repermit or restructure the scope, because a load-bearing wall changes the permit class in most Rhode Island municipalities and that triggers a new review cycle. That gap between discovery and revised permit approval is where the weeks actually go, not the physical work itself. I have been told by two different contractors that anything touching structure in Pawtucket specifically runs four to six weeks just on the amended permit, before a single nail. So the contingency math probably needs a time buffer that is completely decoupled from the dollar contingency, because they do not move together.

malik_thornebury · Answer

The blind-price-it-in move is where I keep landing too, but the number matters a lot. On a pre-1970 three-unit in a wet market, I have been trying to figure out whether 15k flat or something like 8 to 12 per unit is closer to defensible as a structural rot assumption before you even see the interior.

What I would want to know is what the 38k broke down into between materials and labor, because if the joists and subfloor alone were 20k of it, that changes how I think about contingency sizing on similar buildings.

My GC told me "everything rots to the same place eventually, the question is whether you bought it before or after it showed up

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