Rental Property Destroyed by Water Damage: Stop the Bleeding Before You Renovate

TLDR
I bought this house four years ago and I have been putting duct tape on a real structural problem. The water kept coming, the floors sank, the brick cracked, and now I have to tear up everything we already fixed. Before you spend a dollar on a leaking house, run it through three questions: is it bleeding, is it structurally safe, is it cosmetic.

Table of Contents

The House That Kept Bleeding

I bought this house maybe four years ago and I have been having constant issues with water intrusion. To the point where if you looked in the crawl space, there was standing water. Rats on rafts inside the floors.

Finally the drywall started to crack. When that happens you know the problem is deeper. Drywall should not crack like that. It is a sign that something is sinking in the foundation.

There are two foundations on a house like this. The exterior foundation, and the piers inside the crawl space that hold up the wood you stand on. When drywall cracks in the middle of the house, those middle piers are starting to sink. Which makes sense, because there was standing water sitting on them.

Then the brick on the exterior started to crack. That tells me not only are the piers sinking, so is the exterior of the building.

When drywall cracks and brick cracks, you are not looking at a rental repair. You are looking at a full structural problem.

Three Questions I Ask About Structural Problems

Every time I look at a structural issue, I run it through three questions in this order.

QuestionWhat It Means
Is it bleeding?Is the problem getting worse every day? Active water, active movement, active rot.
Is it structurally safe?Whatever damage has been done, is the house still safe to occupy or enter?
Is it cosmetic?Does it look ugly?

On this house, all three boxes were checked. Bleeding yes, because water is hitting the house and I cannot stop it. Structurally safe, technically yes after an engineer signed off. Cosmetic, well, it is a rental in the back, I do not really care about cosmetic.

The order matters. Stop the bleeding first. Always.

Duct Tape Does Not Work on Water

Let me walk through the duct tape I tried so you do not repeat it.

First, I brought dirt in on the exterior of the property so that when water came in, it could not get to the house. The water would spread off through the yard. Problem is, no matter what I do, this house is at the low point of the neighborhood. All the water comes down here. The city stormwater is part of the problem, they are working on it, but I cannot wait.

Second, a tenant at one point opened up the clean out, and basically all the sewage was coming into the yard for months. At the time I thought that was what was causing the saturated ground. It was part of it, but the bigger problem was the plumbing itself, which needed to get redone. We kept patching the plumbing too. Another duct tape job.

You can see how the floor should be absolutely level, but it is dipping. Things are sinking. The subfloor is saturated and failing. Ground and plywood should not be saturated like that.

And then there is wood rot inside the wall. That is not from water in the crawl space. That is from water coming in through the brick, damaging the exterior sheathing.

Every time you duct tape a water problem, the next repair is bigger. I put new floors in this house thinking I could mitigate from the bottom side. I had to tear up those new floors to access the subfloor and fix what actually needed fixing. Partial renovation I had to backtrack on.

Where the Water Actually Came From

I thought the water getting into the wall was coming from the outside ground. It was not. It was the air conditioning unit going through the wall. Those have to condensate and they leak water down the sides. You put in a condensate drain so the water gets away from the house. Nobody did that here. So this water has been finding its way in.

Water always finds its way in if you let it.

The saturated ground came from the brought in dirt and the sewage clean out issue. The water table came up. The crack in the brick is a telltale sign that the exterior foundation is sinking there.

Look at the whole water system, not just the obvious leak. The AC drain, the gutters, the downspouts, the grade, the clean out, the water table. All of them matter.

The Real Fix: Sump, Sewer, Gutters, Engineer

Here is what actually solves the problem.

Sump pump in the crawl space. You dig a pit, put a pump in, direct all the water into the pit, and pump it out. Right now it is temporary. Ultimately we will have hard pipes in the ground that shoot the water out the back, where there is a waterway that is a safe spot to put the water.

New sewer lines all the way to the city tap. When you have everything exposed, you run new lines. Solve the plumbing problem once.

Gutters and downspouts extended. Every house. When gutters are full of stuff and the downspouts dump water right next to the house, the ground dips, water sits, and it eats away the ground. Every house on your portfolio needs downspouts that get water away from the foundation. Otherwise pools form, pools saturate, and your foundation fails.

Signs your gutters are not working: trees growing out of them.

Engineers. On a job like this I had to engage both a structural engineer to formally say the house is safe, and a water flow engineer who deals with the water stuff. Not cheap. Necessary.

Pro Tip
On any rental, the inspection list should include pulling a downspout and checking where the water actually goes when it leaves the gutter. Most properties fail this check. It is a ten minute fix that prevents decades of foundation problems.

What This Teaches You About Buying Houses

Investing in real estate is not for the faint of heart. Sometimes you get a great deal and sometimes you get something like this and you just have to deal with it. There are ways to fix these problems. That is the thing I love about real estate. You do have control. You can solve the worst of the problems.

It just costs some money and some problem solving ability.

The lesson for you as a buyer: water signs on a walkthrough are the most expensive things you can miss. Cracks in drywall in the middle of the house. Cracks in exterior brick. Dips in the floor. Standing water in the crawl space. Saturated subfloor. Finished basements that smell musty. If any of those are present and you cannot price in a sump, sewer, engineer, and exterior grading, walk away or bid like you are going to fix all of it.

Water problems are never cosmetic. If the house is bleeding, you are not buying a house. You are buying a project.

FAQ

How do I tell water damage from normal settling on a walkthrough?

Normal settling tends to be consistent across the house. Water damage concentrates. Cracks in the middle of the house where you also find saturated ground or standing water point to crawl space piers sinking. Exterior cracks concentrated on one side point to grading and gutter issues. If you see cracks plus water signs, assume water.

Can I just put a sump pump in and skip the sewer and gutters?

No. The sump pump moves water out of the crawl space, but if the sewer is still leaking, the ground keeps saturating. If the gutters keep dumping water next to the foundation, the ground keeps saturating. You treat the whole water system or you are going to do this again.

When do I pay an engineer versus just trusting my contractor?

Any time the question is “is this house safe” or “why is this water showing up here.” Engineers sign off on safety and water flow. Contractors fix things. You need both. On a rental the engineer fee is small compared to the cost of tearing up a partial renovation.

Is water damage on a walkthrough a deal killer for a beginner?

Probably, yes. Water and structural damage are the two things I tell new flippers to avoid. Not because they cannot be fixed. Because they cannot be estimated accurately on a walkthrough. You find more once you open up the walls. Save water houses for when you have three to five flips under your belt.

What is the minimum gutter and downspout setup for a rental?

Clean gutters. Downspouts that extend at least four to six feet away from the foundation, or into a buried pipe that dumps somewhere safe. That is it. The cheapest fix in real estate and it prevents the most expensive problem.