Mold Shouldn’t Scare Real Estate Investors

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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.

About Author

Ken Corsini

Ken Corsini G+ is the host of the Deal Farm Podcast (on iTunes) and has 10 years of full-time real estate investing experience. His company, Georgia Residential Partners buys and sells an average of 100 deals per year and has helped hundreds of investors around the country make great investments in the Atlanta market. Ken has a business degree from the University of Georgia and a Master Degree in Building Construction from Georgia Tech. He currently resides in Woodstock, Georgia with his wife and 3 children.


  1. Hi Ken~
    Congratulations on your latest investment property!

    I have found many homes over the years at a great discount due to non conventional loan status issues like mold, along with many others.

    Knowledge definitely gives you the power to make these decisions and take home a bigger profit at the end of a project!

  2. You make some very good points in your article. Many investors let things like mold scare them away from promising investments, but shouldn’t let their fears get in the way of a good opportunity. Recruiting help from a more knowledgeable source, like your mold remediation company, is a smart move for real estate investors looking to take advantage of discounted “problem” properties and turning them into a profit.

  3. Shhhh…… why let the cat out of the bag? There are so few competitive advantages when bidding against other investors I like to keep this one secret. Whenever I see a property that has mold I know that I will be one of the few investors to make an offer – it at least scares the new buyers that overbid anyway away.
    Mold is no big deal. Identify problem. Fix problem. Kill Mold. Remove affected area. Re-Build.
    Simple, easy, and oftentimes helps “make a deal”.

  4. That and 1000 sq ft of dog-pee soaked carpet were why I was able to get the house I bought for less than 50% of the banks original asking price. The VERY high “yuck” factor of the pee & the “uh oh” factor of the mold and soft spots in the floor from a burst pipe flood outweighed the large size (listed as 1950 sq ft) 3 br, 2 1/2 bath, vaulted ceilings, fabulous foundation (manf home on lot) meant that realtors were reluctant to even show it to clients. It had been on the market for 10 mos, started at $130k, dropped to $98k, I got it for $60k. The only other offer had been for $45k. The rehab was” interesting” — my first all-on-my-own project, so of course there were surprises both good and bad. Pulling the carpet, one coat of Kilz on the floor and the pee smell went AWAY! The small spots of random mold in one room turned out to be indicators of entire forests of mold on the back side of the drywall (pee+water=mold heaven, apparently). The 100sq ft of subfloor that needed to be replaced took time, but wasn’t rocket science, & other soft spots turned out to be badly done earlier repairs , simply fixed with “real” plywood rather than particle board and a bit of bracing under the repair. I did the mold remediation myself after research, & ended up replacing 80 linear feet of drywall (I’d expected closer to 20 LOL, but my motto was that if there was ANY hint of mold it got replaced, & about 20′ was replaced to make for even walls on the finished project). Over-all not a bad experience. The house is a “keeper rental” for me, so I don’t know what the actual value is right now — less than the $170 k the local tax assessor tried for (that’s another story!), but $92k wouldn’t be a bad guess, even in todays lousy market. It’s rented, no real major stuff left to do except age-related repairs. So $60k for the house, $1k for escrow/closing costs @ $10k for repairs, so overall not bad for the first time out…all thanks to the powers of mold & pee!

  5. I learned the mold lesson early in my real estate career (see link above). It scared the living daylights out of me just based on ignorance, just like you said. However, once I became informed and learn how to properly and responsibly deal with it then I have no problem picking up a house with mold and like you say look forward to it because every one else will be running away from it.

    Just got done doing the same in my latest flip and by far the most important thing is identifying and removing the source of water. Mold is persistent though, and you have to treat it more than once after you take away the source of water to make sure it does not come back.

  6. Mold doesn’t scare me but what does scare me is the resale potential of a home that was deemed hazardous due to mold due to the fact that mold does scare the vast majority of people. For example, a city deemed grow op holds the stigma of mold which sends buyers running which in return increases carrying cost and decreases profit. Does anyone have any experience rehabbing grow ops for profit that didn’t run into this problem, if so how was it averted?

    • Vonetta Booker

      If it’s treated by a mold remediation company, once they’re done you should get a mold remediation clearance letter that certifies that the situation has been handled properly. You can add this to your property disclosure forms for buyers.

  7. What is a grow op?

    Do you know how I sell a property that had a mold problem?

    I fully disclose what the problem was, the cause, how I treated it and what is the status. What sends people running is ignorance and lack of knowledge. When you educate them and show them the results from the mold test showing a normal mold count (mold is present in every house) then the fear goes away.

    On my last property the buyers wanted to love my property but they were fearful about the mold because they only knew what their agent had told them which wasn’t entirely accurate. Once I went through the above steps all their objections went away.

  8. I got asthma from living in a moldy house for 5 months.
    And for kids it can be very serious.
    Take it seriously to protect buyer and yourself.

    (bleach does not work)

  9. A grow op is where drugs are manufactured – usually marijiuana so it creates a lot of mold in a home due to the high levels of moisture required to grow the plants. Happy to hear that educating a buyer worked for you and that they trusted you over their agent – well done!

  10. Im A Mold Removal Contractor Here In Florida. The state regulates the industry. Any Mold Removal must me done by A licensed Mold Contractor. However, There is a exemtion For owners of the property. If you feel confortable doing it your self there are many web resourses. I would suggest having a Licensed mold assessor write the protocal for the mold removal and doing the Inspection after its done . If you do this you will have the clearance testing paperwork if you are ever asked for it.

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