A new one for me, possible deal here? - Posted by Jim FL

Real Estate Investing Retail
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Posted by SandyFL on July 20, 2001 at 12:56:27:

Wow, I learned more in your one post …

I have been in South FL for 8 yrs and the ground is hard as a rock. (Or crushed coral- grin) Never even heard of a sinkhole in Fla before… at least down here. I had to chuckle at Bill’s comment about how can they call a state with 80 inches of rain a year as being “in draught”. But his explanation is sound. I was wondering, Bill, how does a property “test positive” for a sinkhole? And I agree with everyone else. A competent local engineer is what is needed! Does Ray Steadman know of one, Jim? Or Art?

Last comment, Jim. I told you about the property here that had “settlement cracks” as wide as my hand. Since the property was near a turnpike ramp, the figured the runoff from the ramp when it rained dropped the property a bit. (just … no one ever used the word “sinkhole” - lol) NO ONE wanted to touch that thing, even the hard money guys, even at 50% FMV. A little riskier than the pros like. It’s fun to guess and wonder and learn new stuff, but don’t throw a bunch of money away in the process, ok?

SandyFL

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A new one for me, possible deal here? - Posted by Jim FL

Posted by Jim FL on July 19, 2001 at 17:55:34:

Hello all,
Well, as you know, I am now in Florida, and things are a little different here. I am learning new things daily, and seeing some problems that sellers have that I have never encountered. This does not scare me, it just makes me excited to learn something new.
So, my marketing is almost in full swing, and the calls are coming in.
I also have my website still active, and it has my new FL contact info on it.
I got a call yesterday while I was out, and my wife took a message. I called the seller back and we talked.
I am not at all sure how to deal with this one, or what my next step is.
So, I’d like to run the situation by you all and see of anyone out there has any ideas.
I “think” there may be a possible deal here, but not totally sure.
Anyone ever here of “Sink holes”? I had, but hav never dealt with them before.
I know that typical things from up north that scared most sellers only thrilled me, but this is different, because I am so new here.
Here is the situation:
Seller has a home in Florida, 3300 sq/ft, bought in 1999 for $188k. Comps show it valued (in good shape, no problems) at about $220k.
The seller says that the home was built in 1974, 2600 sq/ft, and an addition of 600 sq/ft or so was added in the eighties. The addition has tested postive for “Sink hole”, and also had termites. The termites have since been erradicated, and the addition torn down to studs. It needs to be finished.
The seller filed an insurance claim, and is about to settle it, via a lawsuit, and will pay off the mortgage on the home, owning it free and clear.
He does not want to stay in the home any longer than he has to. (cannot blame him, just hearing “Tested postive for sink holes” makes me shudder.)
The seller wants $10k for the home, and will walk away. This will be AFTER he gets his settlement and pays off the existing loan on the home.
I have no idea what it would cost to fix a sink hole problem.
I know I can get contractors to re-finish the addition to being liveable again, that is not a problem. I just do not want to do that, and then have it cave into the earth.
I’m sure this is not cheap, and will gather info as fast as I can to see what it will cost to fix, and keep safe.
Heck, if I can get everything done, purchase, rehab, and fixing the sink hole, for 50% of FMV, there could be a good deal here.
I also have already called my insurance guy, and he says the home could be insured, as long we are okay with excluding any future sink hole problems from coverage.
This does not make me feel too good, but even if I had to eat the cost again, at 50% of FMV, it may be worth it…or not?
The addition has not dropped at all, just tested postive for sink hole.

Getting the cash to do the deal, if it makes sense is not a problem.

Any guidance here would be appreciated.

Lord knows, I’ve seen some homes with BIG problems before, but nothing like this. I know this is common here in Florida, because it is on the news all the time.
So there HAS to be a way to deal with it, right?

thanks in advance, and sorry this was so long,
Jim FL

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Spring Hill, FL had one a week ago that started… - Posted by SusanL.–FL

Posted by SusanL.–FL on July 20, 2001 at 09:21:24:

…to swallow part of a house. Tenant was on the news. He and his family had leased the house and then suddenly had to move.

If it were ME, Jim, I’d steer clear of it. You might be buying into something that you could never resell.

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house eating sinkholes - Posted by BillW.

Posted by BillW. on July 19, 2001 at 22:44:51:

Jim,
I lived in Fla for 8 years while wife attended college. Here’s some info.
The bottom 2/3 of the state is a giant reef of oolitic limestone (check with the county)several thousand feet thick. The water from rains seeps into this and goes every which way, forming underground caves and springs everywhere. The lakes county region in central Fla. is especially full of them, hence all the lakes.(Lake= big sinkhole). The thing about them is that when the water table is high (lots of rain) there is not too much of a problem. When it gets low,(drout)(never lived anywhere before where you got 80 inches of rain in a year and they called it a drout, but what the hey), the caves become less full of water and the roofs of the caves start to collapse, thus giving you a sinkhole. These things can quickly get larger and take the whole house. Read the archives of your local newspaper. Most don’t really get that big, however and they just fill them in. Some however are connected to the labyrinth of underground “piping” that the coral provides and cannot be filled in. The continual flow of water washes away the fill. You’ll want to check carefully with the local engineers and experts to get a feel for your particuar situation.
Good luck.
BillW.

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Re: A new one for me, possible deal here? - Posted by Nate(DC)

Posted by Nate(DC) on July 19, 2001 at 21:45:38:

Jim,

I don’t know much about sink holes. We don’t have them here in the Washington area often.

If it is only the addition, and not the original house, that is vulnerable to sink holes, then maybe you could just demolish the addition? Even rebuild a new addition somewhere else on the house? If you’re getting it for $10K and it’s worth $220K, seems like you have a bit of room to maneuver??? :slight_smile:

One thing I will add, however, is that I have heard (second hand - most likely from others on the board?) that sink holes can “move” or “grow”. Just because the addition is vulnerable to a sink hole, doesn’t mean that the sink hole won’t swallow the house next.

Maybe it would be worth a few hundred dollars to have a civil engineer come out and evaluate the property??? If I recall correctly you said you were moving to Lakeland. Coincidentally I was in Lakeland about 2 yrs. ago working with a local developer there and he indicated that soil conditions (sink holes, quicksand, etc.) are a BIG problem in the area and that out of towners sometimes miss them. He told the story of a shopping center that had been built on quicksand, because the civil engineer (from Orlando) didn’t check carefully enough!

So if you do decide to have it checked out, make sure you use someone LOCAL (Lakeland) who is qualified in soils issues.

Anyway, just some thoughts…Good luck!
Nate

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Man Eating Roaches!!!. - Posted by AWWMi.

Posted by AWWMi. on July 19, 2001 at 18:29:12:

Well at least it wasn’t that! Would it be logistically feasible to move the house to firm ground on the property? Still have to move the utilities and put in a new foundation.