Real Estate Investing: What’s Underneath the Soil at This Property?

Real Estate, Real Profits Podcast, Season 1, Episode 2 Featuring Your Host, Michael Solovay

Today’s episode of the Real Estate, Real Profits podcast is all about helping real estate investors and home buyers understand and avoid some of the pitfalls I’ve experienced as, first of all, a real estate investor myself and also as a REALTOR who helps other real estate investors find profitable deals.

In my experience as a REALTOR, “What’s underneath the soil at this property?” ISN’T a frequently-asked question amongst the real estate-investing public.

That’s because relatively few people understand why real estate investors should care what’s under the soil at a property they’re thinking of buying.

So in today’s episode, we’re going to discuss why you should be asking this question. If you aren’t already up to speed about all the different ways that your real estate deals could get derailed due to problems underneath your soil, I invite you to listen, learn and become a savvier real estate investor.

Thanks for listening!

Transcript and Show Notes for Today’s Episode of the Real Estate, Real Profits Podcast:

I’m Mike Solovay, your host at the Real Estate, Real Profits podcast. Aside from being a REALTOR and real estate investor, I’m also a tech startup founder; I founded the 4BIZapp platform for real estate professionals. I started this podcast because I want to connect with home sellers, home buyers, and other like-minded real estate professionals, investors and entrepreneurs. Thanks for listening!

In my experience so far, basically every real estate transaction I’ve been involved with has been a learning experience. I don’t care if it’s deals that I’ve done as an investor or deals that I’ve done as a REALTOR helping other investors to buy or sell properties.
As you’re no doubt already painfully aware, nobody knows everything.

So it shouldn’t really surprise us that in almost every case, the players involved in a real estate deal will have knowledge gaps.

In other words, there are always going to be things you don’t know – and in many cases, you don’t even know that you don’t know them.

Sometimes these knowledge gaps happen because the world isn’t standing still. Every day that goes by, things are changing. In particular, governments are changing the rules right out from under us.

And neighborhoods change. You might think you know a particular neighborhood really, really well. But if you’ve been away from that neighborhood for a few years, it might have changed in ways that you weren’t expecting.

And each real estate transaction is multi-faceted.

So when it comes to buying or selling real estate, the things you don’t know are the things that are likeliest to create problems for you. You can lose a massive amount of money over the things you don’t know.

I’m positive that all of us here are smart, savvy people who can be counted on to ask intelligent questions going into any real estate transaction.

But I’m here to tell you that, especially if you’re new to real estate investing, there will be questions you don’t even think of asking, because there’s at least one facet of the deal that you don’t understand.

So if these issues never occur to you to start with, you won’t be asking questions about them. Make sense?

And even if you’re not completely new to real estate investing, these things can come up.

So my goal for today’s podcast is to help you understand some of the things that might take you by surprise when you’re doing real estate deals. And, I also want to empower you with some questions you’ll want to consider asking yourself and the other players involved in your deals.

This is actually going to be a series, because when my wife and I were brainstorming the questions to cover in this episode, we found that there were too many of them to talk about in one session.

So today’s Question is, What’s Under the Soil at This Property?

This seems like a weird question to be asking, doesn’t it?

What’s under the soil at any property?

Those of you who are home gardeners no doubt have answers to this question. You dig into the lawn with your shovel or your hoe, and you’re going to mostly find dirt. If you’re lucky, and you have healthy soil, you’ll hopefully find some earthworms down there. You’ll probably find some other bugs, too, and some loose rocks – things like that.

So those are the things you’d expect to find under there.

But there is a danger in assuming that that’s exactly what you’ll find if you dig into the lawn of every property. Because there can be all kinds of things down there that you probably weren’t expecting. So let’s talk about several cases where you’d be in trouble if you were to assume that a property you’re interested in buying has nothing but soil, bugs and earthworms below the surface.

The first situation you’ll want to consider is the possibility that there could be massive blocks of rock directly underneath the soil.

If this is the case with a lot you’re thinking of buying for the purpose of building on, you want to know this upfront before you start building on it – because you’ll need to correctly draw up the plans and budget accurately for the all aspects of the construction process.
For example, if you were hoping to build a home with a basement, it won’t be a simple matter to make that happen on a rocky lot. In that case, you might prefer to choose a different lot that doesn’t have rock.

Rock can have some advantages. If you’re located in an area that’s prone to fires, floods or other natural disasters, you might find it advantageous to build your home on top of rock because of the added stability that rock offers. Structures built on rock have some advantages when they are subjected to natural disasters such as floods, landslides and earthquakes, because the rock isn’t likely to shift or erode the way soil would.

But if you have to drill or blast through rock to dig your well, drop in your septic tank or build a fence, it’s going to cost significantly more than you’d expect it to. And you need to understand that before you buy that lot.

The water table is another issue to consider.

In some locations, the water table is really high. You dig into the soil, and before you get down very far, you’ll find water.

This can happen in coastal areas and areas where it rains often, or in snowy areas after the snow melts, or in cases where the property is near a sizable body of water. This is a common pitfall to beware of if you’re building in Florida, Oregon and many other places.

This is another situation you absolutely want to know about, and plan for, before you build, because with a high water table, you’ll need to approach your construction project in a different way than you would approach it otherwise.

The property’s previous history is one more issue to consider. Properties that have previously been used as gas stations or factory sites can have a broad variety of unhealthy pollutants and contaminants still lurking in the soil.

The Environmental Protection Agency maintains a list of badly contaminated sites called “Superfund sites,” and you’ll definitely want to check to make sure if there are any of these in close proximity to a property you’re interested in buying.

Some of the contaminants you might encounter in the soil at these sites are lead, asbestos, dioxin and radiation, according to the EPA.

So if you suspect that the soil at a property is contaminated, you could consider having the soil tested by a lab.

So those are just a few of the reasons you’ll want to investigate what’s under the soil at any properties you’re thinking of buying. I hope this information empowers you to make wise decisions about the lots you’ll buy for building purposes.

So that’s it for today’s episode of the Real Estate, Real Profits podcast, but if you want more solid, real-world information about selling homes, buying homes, real estate trends, investing in real estate or succeeding as a real estate sales professional, I invite you to subscribe to my newsletter. You can click or tap here to find the signup form right here at my website, michaelsolovay.com.

Thanks for listening! I really appreciate your interest.

References and Further Reading

If you want more information about the issues I discussed in this episode, you’ll want to check out the following links:

• At the Environmental Protection Agency’s Website: Superfund Sites
• At the Excavation Oregon Website: High Water Table