I'm quite new to this, like the majority of others posting here, and would very much appreciate any advice or thoughts from you seasoned investors.
I am getting ready to pull the trigger on my 3rd flip.
First, the numbers:
1st floor unit (2 story building) >1000 sqft
Estimated Rehab: 30-40k??
Rental (option): ~$1,100/month
I was a little surprised by the low asking price, and consequentially, am a little hesitant. It is not a large unit (under 1000 sqft) and has black mold throughout, in every room.
I am anticipating needing to have full mold remediation and replace all the drywall in the entire condo, including the ceiling. I've done a pretty extensive rehab before, but I've never done anything this large and certainly nothing with mold. I've called a few remediation companies and have estimated a worst-case scenario of 12k for remediation (before replacing the drywall)
My questions are as follows:
1) One remediation contractor mentioned that in some cases, the condo association might be liable and could file a claim with their insurance for the remediation expenses. He also mentioned that the drywall is actually owned by the association, not the homeowner, which was news to me. Is there any truth to this, has anyone had luck with this happening?
2) If the mold was caused by a leak, and if the leak resides between the 1st and 2nd unit, would the association also be liable here? I understand that if the source of the leak is in the above unit, that owner would be liable. Could I potentially run into problems relying on others to correct this problem, if it exists?
3) Will having to disclose the prior mold situation scare away potential buyers or hurt me on the resale?
Thank you in advance for taking the time out of your days to share your experience.
I've never heard of the association being liable, but that doesn't mean it's not possible. Usually if there is a leak from an above unit, then that owner would be liable, but If the top unit is vacant or unowned then you would be liable. If it's as bad as you say, you may have to replace the a/c unit and possibly the air ducts, just something to think about. If you completely remove the mold and all is good then it shouldn't scare away buyers or hurt your resale. Just my .02 cents.
The contractor was likely talking about a case where the water source may have come from a common area. That is an area that belongs to the "condominium association" rather than individual owners. That would involve sources in the common hallways, common mechanical chase, at the elevators, near windows at the end of the hallway, etc.
I agree with Steven that the owner above or a neighbor to the side would be liable if the mold was caused by something that occurred in their spaces.
As for saleability of the condo, I'd say that so long as you remove it in a safe manner and have some kind of documentation that it was done by professionals who stand by their work (and carry general liability and environmental liability insurance) then the fact that mold was there at one time should NOT be an issue affecting the sales price.
@Steven Velez Yeah, replacing the A/C and having the ducts cleaned is something that looks more than likely at this point. By the way Steven, I am flipping in your backyard! Just submitted an offer in Pompano Beach. Thank you for your input.
@Travis West I doubt that it was caused by a leak though, seeing as how I could not locate any water spots on the ceiling. The unit appears to have been vacant for about 5 years. Hoping for the best, thank you very much!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing