Mold at basement_ what's the risk/potential cost?

[Chelsea Zhou]

Hi guys, I'm very new to the RE, and starting off looking at the BRRR. This townhouse property is in city, with very enticing price (110k) and needs some rehab for rental, a foreclosure by the bank. I've checked the numbers and about 1.3% under 2% rule (rare in the area), rooms looked pretty decent, only some bugs around kitchen and raw basement. Coms is >200k as neighbors. I was going to give a FHA rehab loan for it, but was told by seller's agent there was a cash offer and was off the market. However it's back to the market after 2 weeks and agent said: the buyer walked away after the inspection: mold in the basement. I want to hear your suggestion as: how bad it could be? What's the risk I'm facing in such deal? And what's the best next step if want to assess the situation? Thanks very much.

[Fred Weinkauff]

Mold will scare away many buyers. It can be a very expensive renovation. The real issue is the water that is coming in thru the foundation and that is not always an easy remedy. If the basement is finished with Sheetrock and studs then most of that will have to be removed until you can find the places that the water is coming in. Generally you can walk around the outside of the house and look for poor roof drainage. Also other sources of water are hydrostatic pressure forcing water thru the walls. Another source can be water running down hill under the ground that winds up against the foundation. It can be a great bargaining point if you can find someone knowledgable
That can fix the problem at a decent cost.