This is the case of siding and a wall overwhelmed by water. When a client calls with a problem to investigate, even someone I know, like Margaret Woda, I am always excited by the prospect.
She sent me a photograph of a spot outside a house that not only showed moisture but damage. Pretty sure I had it diagnosed from the photo, but I needed to see it to determine if what I thought was the cause.
The house next door, the one to the right in this photo, has all of its rear roof rain water collected and then drained by one downspout.
I estimated the total roof surface to be about 700 square feet.
The upper roof drains directly into the gutter of the lower roof, shown in the red circle.
A gallon of rain water is contained in an area 21"x11"x1". During a heavy rain this one small downspout is expected to discharge between 400 and 450 gallons for each inch of rain.
Obviously that would overwhelm it, including splashing over the gutter, especially as so much water is rushing toward one spot. Doubling the problem is the lack of a kick-out flashing at the chimney of the subject house on the left.
Built today kick-out flashing would be required at this location. This house was built in 1984 however, and there is none. This complicates the problem.
Perhaps hard to see in this photo staining can be seen on the gutter, downspout, chimney siding and beige house siding.
Certainly this is a source of the moisture, if not THE source.
Testing my theory I turned on the hose and sprayed water right at that red circle for about 10 seconds.
After, while watching the pattern of water draining down the siding, my theory proved correct. The dripping and splatter was a direct hit onto the retaining wall between the houses.
Damage to the concrete block in the wall is evident. This has been happening little by little for a long time. Think Grand Canyon! From here a mason or engineer can be contacted about the concrete block. But the neighbors have to be contacted about the overflowing rain water!
A larger lower gutter (a covered, 6" gutter would be the Best Practice) and downspout will likely solve most, if not all, of the overflowing problem. And the gutter will no longer be overwhelmed.
My recommendation: home inspectors do small jobs too! Try calling one to see. Sometimes a solution to a problem is not found, but oftentimes it is! And an objective opinion can be rendered. Peace of mind is worth a million bucks. But your home inspector won't charge that much.
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