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Investing in Real Estate: Grading and Foundation Issues

Foundation issues can be one of the scariest property flaws for many of those investing in real estate. What issues should be looked for when evaluating a property? Can these problems be fixed? When should you walk away?

Real Estate Investment and the Foundation Challenge

Foundation problems can be very serious. These are structural defects which can prevent financing. They can also get very expensive to tackle. They are often the result of grading problems, but not exclusively. In some parts of America foundation issues are quite commonplace, like in Texas. They may be rare in other states like Florida. Most investors and companies such as ours avoid at any sign of these types of problems. There can be unforeseen costs and financing challenges associated with these properties. At the same time this makes these properties a great opportunity for those ready to take it on. There can be less competition from other buyers, and that means potential for big discounts.

Grading & Foundation Issues to Look for in a Property

Some properties have obvious grading and structural issues. Some are easily spotted by uneven building lines. Walls, floors, ceilings, or the entire structure may be at odd angles. Previous inspection reports or appraisals may reveal the presence of these problems, even if they are not immediately visible in photos.

Other signs of potential problems may include wear and erosion around the exterior walls of the home, standing water, trees in close proximity to the dwelling, and interior leaks.

Uncorrected these issues can erode the foundation. Other foundation issues are a result of excessive pressure on the foundation and pressure load which causes stress on the foundational walls. You’ve got to be alert to these issues before making an offer, or price in the worst case scenario.

How to Handle Foundation and Grading Issues

The first thing to do is to get multiple inspections and quotes on fixing the issues. You want to know exactly what the problem is, how long it will take to remedy, and how much that will cost.

If current damage isn’t that bad foundations and grading can be fixed or supported. This may range from costing $500 to well over $30,0000. In some cases you may want to tear-down and rebuild. More affordable and minor remedies and preventative measures may include; improved grading, better gutters and drainage, tree and root removal, or installing new foundation piers and beams.


Foundation and grading issues can be very common in some real estate markets. This is something to be alert to, but which can also present great value opportunities. Know what to look for, who to ask for guidance, and when it makes sense to move forward or pass it up.

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TJ Lokboj

TJ Lokboj is an entrepreneur with a passion for adding value to the real estate investing industry through adopting digital transformation. Some of TJs companies have been featured in Yahoo Finance, Morningstar, Benzinga, and many other publications.

TJ is the managing partner of Holdfolio, a real estate investment firm that leverages a premier crowdfunding platform.

He is also a member of the Forbes real estate council and co-founded SyndicationPro, which is the #1 syndication management SaaS solution in the market today.

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Ready to invest in real estate?

We make real estate investing simpler, more transparent, and accessible to individual investors.