It seems that the word “mold” has become a four letter word in the real estate industry over the last ten years. As more and more lawsuits have been brought against landlords or sellers who unknowingly fail to disclose the presence of mold, real estate professionals have become increasingly cautious when dealing with a property that is a likely candidate to contain this “toxic matter.” As contradictory as it sounds, the general “fear” surrounding even the remote possibility of mold in a property can actually spell opportunity to a savvy investor.
A perfect example of this is a foreclosure that I am currently assessing in one of the most sought after school districts in my state. It’s an REO that has been on the market much longer than would be expected in this area. When we visited the home last week, it was immediately obvious that it’s still on the market because of a fairly large mold infestation in the basement. In fact, the problem was so severe that the bank recently changed the listing to cash buyers only after determining that owner occupants would be unable to obtain conventional financing on the house in its current condition. Having dealt with mold in the past, I know that a mold remediation company should be able to remediate the infestion for around $3,000 to $4,000. While I plan to have this house inspected by a mold remediation company as a first step, I anticipate picking up the investment property with excellent retail potential; all the result of buyers being scared away or unable to get financing.
With that said, please don’t assume that all underpriced properties with mold infestations make good investments. Mold always indicates the presence of moisture somewhere in the dwelling. When mold is discovered in a house, the immediate action is to figure out the source of the moisture. Sometimes it’s as simple as a leaking interior pipe or failed flashing on the roof. Other times, it may be an indication of something much more serious such as a deteriorating foundation wall.
Whatever the case, it’s important to have a good mold remediation company to help you assess an infested property. If the company knows their stuff, they can usually help you to quickly determine the cost to do away with the infestation as well as fully addressing the source. With the high number of foreclosures sitting vacant through the summer season, having the ability and confidence to identify, assess and remediate a mold problem can give you a tremendous advantage in today’s market.
So, maybe mold won’t become your best friend, but knowing the ropes of the issue and not allowing the “fear factor” to dominate may well result in a prudent and profitable investment.