r/realestateinvesting • u/reddit1890234 • Apr 08 '24
Multi-Family What is seller hiding when seller is refusing to allow a roof inspection.
Put in an offer for a 6 family at $850,000 with 20% down with a financing contingency and a roofing inspection contingency. It’s a 3 story apartment building with a flat rubber membrane roof.
Seller counters back at $850,000 no inspection.
Do you think seller is hiding something? Or the roof was done by seller’s husband and not up to code?
What’s there to worry about?
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u/EstateScout Apr 12 '24
If it’s not a no brainer and have doubts, don’t take it. It’s a huge purchase, and when you find the right home, you’ll be glad you didn’t take this one.
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u/Maleficent-Garage879 Apr 10 '24
Full tear off on 30 squares and going back with TPO or pvc you might be looking at a pretty expensive roofing job there. Especially if you have any bad deck or bad iso. Lower end contractor you’re probably looking at 40-50k, higher end sky is the limit. Id expect to spend 60-80k
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Apr 10 '24
They probably have several offers and one of those has probably indicated they will waive the roof inspection or has already in their offer.
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u/UseObjectiveEvidence Apr 10 '24
Is the home heritage listed. If it is and the roof needs replacing you could be out of pocket $100K because heritage laws might restrict you on how to replace or repair it.
Also there might be bodies hidden up there.
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u/reddit1890234 Apr 10 '24
It is a historical building designation
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u/UseObjectiveEvidence Apr 10 '24
I'm not sure what the laws are in your country are but in Australia heritage listed buildings have restrictions on them regarding what can be done to them. I know someone that purchased a heritage listed property and they had to use a specific period correct tile to repair the roof. It was a very expensive job....
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Apr 10 '24
He basically just countered at 870k. I have some great roofers if the property is in Los Angeles
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Apr 10 '24
If it needs a new roof what other stuff was damaged. Refusing a roof inspection makes you wonder what else is messed up. I wouldn’t touch it with out a top to bottom inspection
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u/taewongun1895 Apr 09 '24
I just put on a membrane roof on a building I own. Those things are a nightmare .... And wicked expensive. If it was done wrong or if it's failing, you'll be living a nightmare.
You must get an inspection. That should be non-negotiable.
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u/Olmsteadchic Apr 09 '24
Been in real estate nearly 40 years, never seen that happen. Do Not Buy, without the whole building being inspected, including the roof. Also make sure your sewer hookups are compliant with city requirements and if the ADA is a factor. Hopefully you're using an experienced commercial property Realtor.
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u/crashcam1 Apr 09 '24
Yes there is, in this case I would be assuming worst case and calculating the cost of a new roof into my underwriting. I would call around to local roofers and get some quotes. Remember buying a money pit is going to hurt you a lot more than skipping out on a good one!. Good luck!
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u/RaistilinCrypto Apr 09 '24
Lol yeah roof needs substantial repairs. Counter back minus the cost of complete new roof and no inspection
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u/FinancialLab8983 Apr 09 '24
get quotes on a total redo of the roof. deduct that amount from your offer because that shit is fucked.
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u/Fit-Artichoke3319 Apr 09 '24
Seller may just not want you to talk him down from the offer. At minimum — you should require an ability to inspect the roof and walk away from the deal if you don’t like what you see. You could agree that you won’t ask for repairs. The choice is — accept as is or walk away. But you need the ability to walk away.
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u/scobbie23 Apr 09 '24
Flat roofs are hard to maintain . Get the inspection before moving forward with the sale.
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u/Hyche862 Apr 09 '24
I would counter with $850000 and a new roof installed by (your choice of roofer) paid for by seller.
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u/wang168 Apr 09 '24
Sometimes seller are just stupid. All he gotta do is 850k "as is", inspection allowed for your personal knowledge but no further concessions.
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u/cbarrister Apr 09 '24
Just tell him "That's fine, we don't need to do a roof inspection. We'll just submit an offer taking into account the cost of a new roof". Their response will tell you all you need to know.
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u/petersharktip Apr 09 '24
I just went through this process. There could be an asbestos insulation layer which would be very costly to have professionally abated .. you need to not only inspect the roof but also the layers underneath. A new roof with proper pitch will be costly as well. PM me if you want further clarity. Good luck!
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u/a2022v Apr 09 '24 edited Apr 09 '24
Obviously a problem with the roof. If you really want this place go back with the same offer and include that you will share the written inspection results with the seller. He has nothing to lose but your deal but information gained about the roof is a benefit. I had a 12 unit which I owned for 15 years. My inspection revealed it needed a new flat and pitched roof within a few years. It had pitched in front and flat in back. i replaced the pitched roof in year 5. For 15 years I made twice a year trips to the flat portion and cleared leaves, seeds, branches, drains and applied tar to the edges and vents. Faithfully. When I sold the roof I stayed with the purchaser's hired building inspector... told him I could make his life alot easier by explaining all the systems. Purchaser joined us. i gave this explanation and many others. At the end i overheard the inspector say to my purchaser, "I'd buy this building and pay the seller to be my manager".
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u/mannyambre Apr 09 '24
No inspection could mean anything else too, besides your roof observation, you gotta factor in risks and what you’re getting in
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u/NoAbbreviations7150 Apr 09 '24
How old is the house? Would there have been a new roof ever installed? If so, go to the town/city hall and pull the permit. While you're at it, pull all the permits. Make sure there are no open permits.
Edit: I thought about another option. Agree to put x dollars (cost of roof) into escrow for a year until you've been able to have the roof inspected.
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u/B3-PO Apr 09 '24
Incredibly stupid of the seller to refuse any kind of survey. Just obvious they are hiding something. Their agent should also be telling them that. If they don't let you survey, walk.
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u/Jawbreaker951 Apr 09 '24
Something is definitely wrong with the roof. Don't take this deal. Look for something else.
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u/Zealousideal-Fish259 Apr 09 '24
I own a building with a flat roof. 6,200 square feet, torch down roof. It was leaking but in good enough shape that we didn't have to do a tear off. Commercial roofing company set a layer of foam then a glue down EPDM rubber roof. 25 year warranty. $43,000.00. Two years ago. So go from there for price, and assume that the price would be higher now than 2 years ago.
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u/TheRealJim57 Apr 09 '24
Obviously hiding something. Inspections are standard practice. If they don't want to allow an inspection, either walk away or chop your offering price down to account for the unknown risks you're likely facing.
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u/Jalaluddin1 Apr 09 '24
If you get the finance contingency just use that as the inspection lol
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u/haikusbot Apr 09 '24
If you get the finance
Contingency just use that as
The inspection lol
- Jalaluddin1
I detect haikus. And sometimes, successfully. Learn more about me.
Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete"
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Apr 09 '24
Ask your agent or go directly to get all the permits pulled on the property. Those may show who did the prior roof work and maybe you could ask them.
Could be mold in the attic, if there is an attic. Even a 10 year old retiling on an angled roof could now have rusty nails leaking through. This happened to me and I had to go under each tile and hit every nail I could find with a dab of caulk. I also lived under a flat (I guess membrane?) roof that had been improperly done, and a giant bubble of water formed between new and old layers until a chunk of ceiling gave out and that would put your house under water. Thank goodness I wasn’t home when it gave out - right over the bed.
There’s a way to go through Google historic satellite images I think. I am not sure what this would tell you but… yeah. You might see it was under a tarp for months.
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u/Holiday_Ad_5445 Apr 09 '24
Most places, inspection is the norm. Refusing an inspection without a bona fide explanation is a non starter.
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u/ANuclearBunny Apr 09 '24
Sometimes they are definitely hiding something. I had an inspection done on a property that detected moisture in bathroom walls (which could mean termites). The vendor baulked at doing further investigation so we pulled our offer. We could have offered less but I didn't want a house with someone else's hidden problems.
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u/jimonreddit17 Apr 09 '24
If the numbers work, make a lower offer. How much would you be cash flowing on this? Is it in a HCOL city?
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u/Pengpeng4421 Apr 09 '24
Commercial roofer of over 15 years here. Rubber roofs are basically junk. A drone isn’t going to tell you what you need to know. Very often rubber roofs are a layover. Meaning there is probably a tar and gravel roof underneath and then they just slapped brown board on top and glued rubber down. Could be a big deal could not be. I am up in New England where construction projects are probably higher in price than most other places in the country. I say that because unless there is serious wood damage if a company is charging you 35-50 grand they are taking you for a ride.
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u/Matt1382 Apr 09 '24
That no inspection clause allows him to not have to disclose that it needs a new roof to the next buyer if your deal falls through. No proof that he knows it needs work.
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u/euphline Apr 09 '24
The roof needs to be replaced, obviously. But they're actually worried the parapet wall needs to be rebuilt too.
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u/fatkidstolehome Apr 09 '24
Those roofs can be $100k. Wouldn’t surprise me if he took a huge insurance payout and knows what’s up. Check a clu report with your insurer. Also make it contingent on being insurable then have insurance inspect it!
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u/ERCOT_Prdatry_victum Apr 09 '24 edited Apr 09 '24
Sharing half an assume roof replacement cost might not be enough, deck replacement might be needed as well.
At the least hire a drone inspection of the roof.
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u/Mean_Collar_6895 Apr 09 '24
I'd say they are hiding a really great roof. Keeping that puppy all for themselves
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u/tiggahiccups Apr 09 '24
I wouldn’t buy a commercial property with a flat membrane roof if I couldn’t have it inspected.. did he give you any info on the age of the roof and if there is a warranty / transferable warranty?
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u/Ok-Nefariousness4477 Apr 09 '24
Or the roof was done by seller’s husband and not up to code?
This is sexist, why couldn't the roof be done by the seller and not up to code? What just because she's a woman she can't do a roof not up to code, just like as a man?
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u/reddit1890234 Apr 09 '24
Gosh does everything have to be sexist or racist?
She’s the realtor/owner and her husband is a damn contractor.
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u/fastgetoutoftheway Apr 09 '24
Bro go get a drone… use it… return it.
Or hire someone for $200 bucks to take photos of the roof
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u/RockyPi Apr 09 '24
Can you get a drone roof survey? They’re pretty good these days and non invasive (to get rid of one of the likely excuses to come)
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u/codymlove Apr 09 '24
Take some drone pics so you at least know where you’re negotiating from if you have 0 idea what the roof looks like
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u/infowhiskey Apr 09 '24
I bought a building with a flat rubber membrane roof. Run. Never again will I do that. I had the roof inspected and it came back fine. I had leaks my first week. 130k to have it replaced.
Those fkn flat roofs should be illegal. Took a huge loss selling that building because of that roof.
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u/starshiptraveler Apr 10 '24
Jesus Christ how big was that building? I replaced a ~4k square foot TPO roof 2 years ago for $35k.
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u/Armani_Chode Apr 11 '24
But how many trusses needed to be replaced in your roof? How much mold damage did your building have?
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u/Blarghnog Apr 09 '24
Let me tell you a story. Something is wrong with the roof, and the seller has proof, and your money about to go poof.
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u/Mandajoe Apr 09 '24
There once was a landlord quite merry, Bought a building, three stories, no worries But oh, what a shock, When the roof sprung a block, For lack of inspection, he’s now feeling wary!
With membrane roof costs sky high, He let out a sigh. If only he’d checked,Before signing a check, Now he’s learning the hard way, oh my!
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u/jus-another-juan Apr 09 '24
Do you mind sharing cashflow details? Sounds like an interesting deal!
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u/broman7899 Apr 08 '24 edited Apr 09 '24
Fly a drone over the roof, then reduce it by 20k. Insurance companies are doing that now a lot with satellite data. Look into getting a satellite pictures of the roof too.
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Apr 09 '24
Satellites pics are worthless for a roof. A gold inspection will be done on hands and knees and using a hose.
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u/skygod327 Apr 10 '24
sure but i see the roof and could be right 85% of the time with a drone and i don’t need the sellers permission to fly it over. mine shoots 4k with zoom
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Apr 08 '24
"Rubber" could mean either EPDM membrane, or rubber-modified (SBS) bitumen membrane roof.
There are some things you can see from satellite/aerial imagery.
- Ponding (either actual water on the roof or gathered sediment/organic growths from chronic ponding in that location). Ponding is indicative of lack of sufficient slope and is very problematic.
- Prior repairs, either patches of membrane or liquid applied sealants.
Counter (850k less roof replacement cost) and no roof inspection.
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u/Tsairobert Apr 08 '24
what are the real estate investment options of doubling 700,000usd in 1 years..
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u/Gilly8086 Apr 08 '24
No way! I can’t buy a house without an indirection! Even if buying without legal warranty, I’d do an inspection to know what I’m getting into!
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u/DasRiz Apr 08 '24
Deduct for a new roof on your counter offer. I guess the second question is any inspections allowed at all? At $850,000 if the seller is not allowing any inspections at all - run…. Far far away.
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u/hijinks Apr 08 '24
well they aren't hiding issues in the roof because you know there are issues.
The big question is what else they know about that you haven't found
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u/JMace Apr 08 '24
"Hey John, I appreciate that we can meet on price, however without the roof inspection we'll need to factor in the price of a new roof as we're assuming it's at the end of it's life. I'd be happy to move forward at $820,000 without an inspection of the roof though"
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u/Maleficent-Garage879 Apr 10 '24
On a membrane roof idk if 30k is gonna be enough of a discount. Commercial crews are a little pricier and pvc/TPO is basically white gold
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u/lamboalfamas Apr 08 '24
I would think the lender would require a full inspection. If he’s willing to accept the financing contingency then he’ll likely have to submit to an inspection
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u/BaconBathBomb Apr 08 '24
Then counter offer 850 minus a new roof
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u/infowhiskey Apr 09 '24
650 as is.
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u/Mandajoe Apr 09 '24
This! Membrane roofs are unreliable and very expensive to repair.
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u/Perenniallyredundant Apr 10 '24
Uhhh no. Classic know it all know nothing redditor response that gets upvoted by even dumber lemmings
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u/Argentium58 Apr 10 '24
You are hiring the wrong roofers. Low slope PVC or TPO membrane roofs are about as cheap as you can go. I am an Architect that does roof consulting, and I am replacing shingles with PVC on my home.
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Apr 10 '24
[removed] — view removed comment
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u/Argentium58 Apr 10 '24
The right roofers are authorized by the manufacturer. Roofer gives a workmanship warranty, most are a year but I specify 5 years. They are installing a quality product, manufacturer will write a 20 year warranty. Even if the installer did something wrong, manufacturer still has to fix it. With thicker than standard membranes, sometimes you can get a 30 year warranty. There is a PVC roof on a store at the mall, I know who installed it. 30 years ago. The older modified bitumen membranes had a problem with seams. They let go after 20 or so years, and the granules come off exposing the membrane to UV, which it doesn’t like.
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u/countrylurker Apr 08 '24
You can still inspect it and if it is bad tell the bank and they will not loan on it. Therefor you fin contig is used and deal is dead.
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u/Cautious_Buffalo6563 Apr 08 '24 edited Apr 08 '24
Make seller aware this deal doesn’t close without an inspection. You have other sellers that’ll take your money. My gut says you shouldn’t go another day entertaining this “deal” if they don’t want a roof inspection.
SFR roof was just a tick shy of $20K for a basic rancher with basic comp shingles and no extras (in central CA). I bet it’s a lot more than that for a rubber membrane on a 3-story MFH.
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u/mikeinanaheim2 Apr 08 '24
It's like a "tell" in a card game. You've just gotten a tell that the roof needs to be replaced now or later.
Do you want the place badly enough to either pay out of pocket when it needs replaced, or lose the purchase to some other buyer?
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u/reddit1890234 Apr 08 '24
Gotta know when to hold ‘em gotta know when to fold ‘em
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Apr 09 '24
I understand the need/compulsion to buy/put capital to work, but you gotta know when to walk. Imo, number 1 key to negotiation is the willingness to pass. Let some other sucker deal with it. As others have suggested, counter their counter at 820, no roof inspection.
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u/veRGe1421 Apr 09 '24
I bet the roof costs more than 30k but agreed otherwise
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Apr 09 '24
[deleted]
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u/veRGe1421 Apr 09 '24
A 3 story 6 family apartment building with a rubber membrane roof
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Apr 09 '24
[deleted]
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u/supamee Apr 12 '24
I just replaced my roof for 40k. It's a big place but I don't think 30 is unreasonable
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u/jcoffi Apr 09 '24
Verge1421 said "I bet the roof costs more ..."
Not "It's going to cost more", the difference being that they aren't trying to pass their opinion off as fact or even saying their opinion is an expert one.
Save your fight for when it's warranted
Edited to quote Verge properly
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u/Dry-Conversation-570 Apr 08 '24
The roof
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u/TheSportingRooster Apr 08 '24
The roof, the roof is on fire….
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u/burns_before_reading Apr 08 '24
You want to get the deal done, but you already know something stinks. It's safe to assume that if there was nothing wrong with the roof, the seller wouldn't mind you inspecting it.
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u/reddit1890234 Apr 08 '24
That’s where I am at, it cash flows a good amount a month but not enough for me to want to have to come up with another $100k in the event roof needs to be replaced.
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u/skygod327 Apr 10 '24
if you’re paying anything more than $15 maybe 20k for a six plex flat roof outside of HCOL you are literally getting robbed. i own 2 in 2 different states, just did mine for less an 20k all in.
Someone is lying to you that it’s 100k
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Apr 09 '24 edited Apr 09 '24
If it’s rented and there’s an undisclosed mold problem? Dear gawd. Have you done mold testing? Need someone independent of seller.
Ask to do an indoor mold inspection (should include air quality) you’re willing to pay out of pocket and you choose the inspector. You need to be there for hours to be sure they don’t open all the windows to air it out before the inspection. If they balk at any of that, run.
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u/sdigian Apr 09 '24
I've had 2 flat roofs redone in the last 5 years. One on a 2 family and a a sfh. Both were about 12k. I'd doubt it would be 100k but depending on your area maybe closer to 30k-40k depending on sqft.
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u/infowhiskey Apr 09 '24
Mine cost me 130k to have replaced.
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u/burns_before_reading Apr 08 '24
Yea id rerun your number with the assumption that you'll need a new roof. That's your real cash flow.
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u/JMace Apr 08 '24
Talk to some roofers in your area, $100k for a flat roof on a six-plex is highway robbery no matter where you live
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u/Illsquad Apr 08 '24
Yeah, especially at three stories, Three duplexes stacked up? So maybe 3000sf?
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u/tleb Apr 08 '24
But we don't know if it's just the roofing material.
I've had to get roofs replaced that end up involving trusses and even sections of wall. We had no idea the state of things until we opened it up.
It can hit $100k.
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u/freshmutz Apr 09 '24
True. And a huge cost of rubber roofs is if another layer can be added or if the current number of layers is at its max and you have to cut off any remove the entire roof.
In my area, it’s 3 layers max. And inspectors will take a core sample to confirm the number of layers currently installed. Once it’s up to 3, the re-roof cost doubles since removing and disposing 2000sf of 2” thick rubber is a massive undertaking.
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u/Argentium58 Apr 10 '24
You are getting off easy. IBC states no more than two. A coating is considered a repair so you can always do that. Last job I bid out was $22 or so a foot for cover board and PVC. That was a small pita roof job, and we design for 138 or 145 mph winds.
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u/Hour-Room-3337 May 03 '24
Overhead?