Mold everywhere....run or great opportunity?

Question

Hi everyone, I'm looking to buy my 1st rental property around Pittsburgh. I found a potential great deal on a 2br 1 bath house in a great school district for 30k when comps in the area are selling for 60-100k. Problem is that this house has been vacant for some time, and due to lack of temperature control and stagnant air, there is mold everywhere. Every wooden surface in the house is covered with mold. There is wood paneling in the living room, and it looks like it was painted with mold.

Should I forget about this place and move on, or can the mold situation be fixed without costing a fortune. I also don't want to expose future tenants to mold issues

Also if anyone in the Pittsburgh, Beaver, or Butler area reads this and wants to connect, let me know.

Thank you!

Should I forget about this place and move on, or can the mold situation be fixed without costing a fortune. I also don't want to expose future tenants to mold issues

Also if anyone in the Pittsburgh, Beaver, or Butler area reads this and wants to connect, let me know.

Thank you!

Jeremy Taggart · Answer

@Frank Faust Might want to start with something a little less daunting for your first one.

Fred Shatzoff · Answer

@Frank Faust  Get a mold inspection and then decide what to do.

Frank Faust · Answer

@Jacob Sampson thank you for the tips. My hope for this property was sort of the same as your first.  Low risk if I crash and burn and this property could be my training wheels. We have our finances all lined up and I'm optimistic I'll find a deal soon

Frank Faust · Answer

@Kenneth Garrett thanks Kenneth.  I was thinking that this could help with negotiations, this property is a reverse mortgage foreclosure, so my understanding is that there is no negotiation allowed. The price is the price, so that makes it much less appealing

Frank Faust · Answer

@Jeremy Taggart thank you!  I'm thinking that as well after looking into this all day today and consulting with my mentors. I want to make sure the first one goes as smoothly as possible

Kenneth Garrett · Answer

@Frank Faust

Unless your paying cash, you may have a problem with a traditional lender, but the saying goes “Mold is Gold”.  Due your due diligence and have a mold remediation company come out and give you an estimate.  Calculate your rehab cost.  All of the remediation and rehab cost are negotiating tools.  Might want to partner with an experienced investor on this one.

Good Luck.

Jacob Sampson · Answer

Frank - I'm excited for you.  This is a fun time.  You are in the period where you are most likely to make mistakes so my advice is:

1. Make sure you are well capitalized.  I recognize this can be tough in the beginning.

2. You will have plenty of opportunities to make decisions in real estate.  Try to avoid making emotional ones.  Gather the needed data and decide based on that.

3. Especially at the beginning ensure your mistakes are small ones.  For example, our first purchase was a 30k home.  The mortgage was $200/month.  If that was a mistake it was unlikely to break us.

4. Similar to number 3, nothing is worth the risk of being knocked out of the game.

Just some random thoughts.

Frank Faust · Answer

@Jacob Sampson Thank you!  Being our first time even looking at an investment property, there is definitely a negative response seeing this mold everywhere. We just looked at the house last night so trying to figure out if it's worth taking it on

Jacob Sampson · Answer

You need good data to make good decisions.  have you contacted a company that can deal with the mold to see what it would take to clean it up?  It's hard to know whether it is a good deal or not without knowing what the repairs will cost.

I wouldn't walk away simply because there is mold.  That would be an emotional decision (fear).  There is no place for emotional decisions in investing.

I recommend getting all the info you need to know what is a good price and what isn't.  Then, if you can buy it for a good price, go for it.

Mold everywhere....run or great opportunity?

Most Popular Reply