Mold and water damage in the basement/soil contamination inNJ

7 Replies

Hello real estate community. I came across a good deal in Garfield NJ, built in 1910, the price is very promising, short sale, cash buyers only. Listing disclosed mold and water damage in the basement and soil contamination. Is it something worth pursuing for a newbie real estate investor in your opinion? The most concern I have is regarding soil contamination. I assume that soil needs to be replaced? Thank you for your time and sharing your knowledge.

It could still be worth it. Just like you're thinking about walking away from this, so is most of your competition because they don't have access to smart people like us at BiggerPockets. LOL. You need to find out exactly how much contamination. I'm assuming they've already had a licensed environmental company test the soil and come back with official results that have already been reported to the state. So you need a couple of quotes from a soil remediation company the Realty listing of property probably has at least one and then use it to crunch numbers to determine if this is something you want to deal with. Usually the numbers you're quoted are pretty much solid. However there are some scenarios where it has not yet been determined how extensive the soil contamination is and whether or not it hit the water table. Once it goes down that deep is hard for an environmental company to put an exact number on it until they've actually started the work. Also check to see if the sellers had some type of insurance policy that covers the remediation and maybe don't feel like doing the work. Perhaps you can step in ams manage the job while their insurance company still pays for all of the work.

Mold is typically a reasonably easy fix, as long as it’s stayed in the basement.

Soil contamination is probably something I’d tread lightly on. Had a friend in NJ have an oil tank leak that required excavating UNDER their house, and up to their neighbors house to remediate. Not only was it expensive, but it took months.
My parents also had an oil tank remediation done, they took out about 200yd of soil. What a mess.

Of course these are probably worst case scenarios... but it’s been enough to make me worried. :)

Thank you Mike and Ibrahim for quick tips! Agree I feel privileged to reach out to all smart investors   on BP for advice. The property I wanted to persuade is under contract already. Withn couple of days. Foud out from the broker today. I will continue with my search. Best of luck to you. Let me know if I can help you with anything.

Hi @Ibrahim Hughes just found this thread and thought I'd ask you- do you know if it's required to disclose any potential soil contamination when selling?

I asked because we just bought a property in NJ in which the prior owner ran a construction company on the premises. He also lived here (and had double filtration for the water in his kitchen), which makes me wonder if there might have been the potential for soil contamination and it wasn't disclosed? OR am I being paranoid? Nobody mentioned this (and inspections were completed with no issues). 

Should I pay to have the soil & groundwater tested or am I going down a rabbit hole?!

(Note- we had the underground oil tank inspection and nothing turned up. There is an above ground oil tank used to heat the garage. It was inspected but isn't being used right now. We decided not to have it removed as my real estate agent said it's more of an asset than a detriment)

Thanks!

Originally posted by @Jen Anderson :

Hi @Ibrahim Hughes just found this thread and thought I'd ask you- do you know if it's required to disclose any potential soil contamination when selling?

I asked because we just bought a property in NJ in which the prior owner ran a construction company on the premises. He also lived here (and had double filtration for the water in his kitchen), which makes me wonder if there might have been the potential for soil contamination and it wasn't disclosed? OR am I being paranoid? Nobody mentioned this (and inspections were completed with no issues). 

Should I pay to have the soil & groundwater tested or am I going down a rabbit hole?!

(Note- we had the underground oil tank inspection and nothing turned up. There is an above ground oil tank used to heat the garage. It was inspected but isn't being used right now. We decided not to have it removed as my real estate agent said it's more of an asset than a detriment)

Thanks!

Hi Jen. that really depends on the history of the property. You'd have to explain a little bit more about what you mean when you say they ran a construction company on the property. Did he just park a few trucks there? Did he have an office there? My understanding is that you would only need to do some type of environmental testing if the property was ever used for industrial use. Were there chemicals stored on the property? Was it technically considered a commercial property? For certain commercial properties you would want to run what they call a phase one inspection. In other words they would check local County and state government records to see if there was ever a usage of the property that would possibly point to the soil or groundwater being contaminated.

so again the question is what do you mean in construction company operated on the property?


 

what makes you think there is soil contamination? is there a phase 1 report that discloses contamination? The cost of a cleanup will of course depend on the extent of the contamination (depth and width), the kind of contamination and if it has impacted the groundwater. 

You have to ask yourself, how much can you afford to pay for the cleanup? If you are contemplating financing, your lender would likely want you to do a phase 2 and might escrow the estimated costs of the cleanup so that you might have to pay for it out-of-pocket. Bottom line-you need more information. 

@Ibrahim Hughes environmental issues are not limited to industrial properties. commercial properties can have impacts depending on how they were used (beware of dry cleaners!!!!!). state or local records might not reveal any spills. really need an environmental consultant to walk the site and review the site history.