House Listed with Severe Water and Mold Damage. Worth It?

8 Replies

Hey guys, there's a house listed on my local market for $223k and described by the realtor as having 'severe water and mold damage, broken pipes, freeze damage and missing carpet/flooring/sheetrock. Seller will not negotiate offers with home sale contingencies.'. The property sold in 2005 for $345k and its a good neighborhood/area. Property tax is $6,500.

Wondering what people's opinions are that have dealt with something like this. How costly can issues like this run up and is this something I should avoid like the plague? (Looking for rental properties). 

For reference its 1,800 sq. ft. 4 bed, 2.5 bath. Unclear in photos, but mold appears to be bad/in multiple areas of the house. 

Prices will vary greatly by region.  Your best bet is to get a professional out to see how much it will cost.  How you describe the damage is likely only part of the extent of damage.  Sometimes you don't find the full scope of damage until you start digging into it.  There could be other things causing the mode besides the broken pipes.  I highly recommend you get someone to look at it before buying it.

First thoughts,

Sounds like house was vacant, no power, pipes froze and burst causing water damage. Need to find the extent of the water damage, in addition to the mold issues in order to guesstimate. You really need to find out the source or cause of the house's current condition in order to feel comfortable that the proposed work will restore it to proper working order. Also, capturing all water damaged areas, (subfloor, joists, studs, etc) related to the incident(s) will also factor in your costs.

Once you get all of that, then you can see if the proposed work  will meet expectations and is within your financial comfort zone.

You did not answer the most important question what will the arv of the home be after rehab? Just because it sold  for $345 in 2005 does not give you today's value. Then you can work out your rehab costs to find if its worth buying

@Brian Caulfield to add on to what Steven said above me, the price is sold for in 2005 is in no way near accurate. Prices in that time frame were commonly inflated at an artificial level. I suggest working with a realtor who is investor friendly and will help you find true comparable properties. You want to look at similar homes sold in the last 6 months.

What market is this in? Are you sure this is a good rental property? Maybe a flip with the right ARV. But $500 in property taxes each month and the sqft bed/bath makes it sound like it's more of a dream home than rental.

What market is this in? Are you sure this is a good rental property? Maybe a flip with the right ARV. But $500 in property taxes each month and the sqft bed/bath makes it sound like it's more of a dream home than rental.