An instructive lesson…

I recently showed a foreclosed property in my area to a prospective buyer family. The husband and wife were quite enamored of the home – before they actually saw it in person. Then, when they got to actually go down into the basement, things, well, fell apart for them. There was a wet stain on the basement floor along one side of the foundation wall, where it met the floor. It was originally assumed that this water damage was due to poor drainage issues with the house at the exact point on the exterior side. However, upon closer inspection, this was definitely not the case.

Though poor drainage problems exist with many houses, and a good home inspector can help suss this problem out, as well as offer suggestions as to how best to fix the problem with some basic water damage repair suggestions, this particular home did not have this problem. Instead, it was clear that a water heating pipe directly above the wet area had been slowly leaking for some time. Our best guess: the house had developed a freeze-up due to being vacant in the middle of winter, and the caretaker had not been doing a very good job taking care of the property. We inspected the heating pipe, only to find a gaping hole in it right above the wet area on the basement floor below. Whatever water had been in the pipe had obviously drained out, since the heat was already off in the house.

Finding the mother lode

For any experienced property investor, this is liking striking gold. You can certainly use the property owner’s misfortune against them when it comes time to make a bid on the house. While the average homeowner buyer gets scared off by the prospect of a huge bill to pay to fix the problem, the experienced investor knows better: it’s simple math to guesstimate the repair costs of utilizing the services of any number of water restoration companies available in the area, bracket those costs by adding in an extra overage percentage, then taking that amount and deducting it from the amount you’d be offering for a purchase price. It also offers one the opportunity to ask for an even greater amount off what the asking price of the property may be at the time – in essence, it offers a property investor the ability to make a very sweet deal.

Different types of water damage

In the case of a plumbing leak, either while the house is occupied, or, as I described above, with a vacant home, when the water has been turned off, you won’t be able to get a good idea of any potential problem lurking in the house, especially if there is the presence of much older piping. In this case, you must plan for the worst – and expect the pipes to have burst or leaked at some point in the past. Sometimes you just won’t be “lucky” like the family in my example above, where a leak is obvious. Using “caveat emptor,” you’ll need to either plan on a rehab of all plumbing in the building. Or simply be prepared to walk away. However, as I mentioned before, be sure to utilize this fact against the seller in any negotiation to try and make a great deal.

Ground water issues

I have written in prior articles here about the potential problems associated with ground water infiltration into basements, as well as high water table issues. I have noted before that it’s imperative you use a licensed house inspector, or commercial building inspector. They can scope out any potential property investment problems associated with high water tables in the area, poorly graded building siting, underground streams and the ever-popular cracked foundations. I have previously written how “sometimes existing water or mold issues can be easily fixed. For example, an unmaintained building may have damaged or non-existent gutters and leaders. Hence, rainwater is dropped right next to foundations, and in heavy rains, there will usually be some form of basement seepage. This can then translate into standing basement water problems and/or mold growth – which of course, can spread. The solution – repair or replace existing gutters and leaders where needed, thereby stopping the problem from re-occurring.

In addition, make sure the area around the building is properly graded to allow for property rainwater to escape away from the foundation walls. Simply sealing foundation cracks is usually not enough. The perimeter grading is what is all-important. Your inspector will also be able to tell if any underground streams and/or a high water table will require you to install an interior French drain system in the basement, complete with sump pump and outflow pipe considerably far enough away from the building. Mitigating water problem costs known before you buy can easily be figured into your offer price on any potential acquisition.”

Using water restoration companies

Most water damage restoration companies will utilize an interior drain solution. There are basically two common ways to waterproof a house – one involves landscaping and the other installing an interior curtain drain (also known as a French drain). Landscaping is the more expensive solution, and can involve not just re-grading the entire perimeter of a house, but installing an exterior curtain drain at the same time around the perimeter. Naturally, you should look for simple solutions to a water problem first. For example, if gutters are broken or missing, or if downspouts are emptying directly onto the perimeter, rather than being led out many feet from the house, these can be inexpensively corrected.

Installing a gravity-fed curtain drain system leading to a sump pit equipped with a sump pump inside the perimeter of the basement is the next best alternative for waterproofing. The main drawback: if the sump pump were to fail. That’s why, in a very flood-prone area, installing a secondary, battery run sump pump is always a good idea. Of course, if power were to go out for an extended period of time, you’re still going to have a problem. Unless you get a back-up generator to run during any power outage…mergency water problems with tenants

As a landlord, you’ll always be at the ready for burst pipes. These emergencies can be harrowing – but easily fixed. I have noted here that “any burst pipe will cause your tenant to call you – at any hour of the day or night…so you better have your emergency plumber (or two) lined up to call after you hang up with your frantic tenant. A plumber you can trust to get right out to your building and handle the bleeding, as it were, immediately. Sure, you’ll be paying double-rate for an emergency call – but think of the damage a burst pipe can do to your building. The worst-case scenario with a burst pipe, is when you don’t have a tenant in place to call you…Walking in on a flood as a property investor is one of the worst feelings you can have…So to hopefully avoid this, conduct regular inspections of your building(s), looking for potential water and or/pipe problems. Especially if you know you have any older, or rusting pipes. Maybe it would be best to replace them with pex (plastic) piping now to avoid any major problems later.

Do you have reliable tenants?

Beware the slow leak! This is the kind that your tenant never reports…the tenant with the long-term lease. The one who will “just live with” the minor annoyance of a small drip emanating from the base of the toilet, or under the kitchen sink, or behind the refrigerator. The leak you won’t notice until they move out, and you discover a warped floor, damaged carpet, or ceiling stains from above. Or worse – if you discover mold that’s been growing for quite a long time – requiring you to remove entire walls or ceilings, and completely replace them with new sheetrock, as well as painting them.

I have previously recommended that you train your tenants. And perform regular maintenance “visits” into your tenants’ units. Train them to call you immediately – if not sooner – when they discover the first drip out of anything in the unit Then call your trusty plumber to make the necessary repairs. You’ve budgeted for repairs and maintenance as part of your cash flow analysis – make sure you follow through and get your tenants to alert you to the smallest of problems as quickly as possible. In this way, you can avoid the much greater hassles in dealing with any growing water damage issues, and the overall monetary damage they can truly represent.

 

Photos courtesy of  the-purest-of-treats.blogspot.com, mosbybuildingarts.com, home-dzine.co.za, brookfieldangler.com, quality1stbasementsystems.com, johnbatorplumbing.net, trexglobal.com