Buying a Property with Mold in it

[Danny Duran]

BP community--I went under contract on a north side Chicago multifamily property (4-flat) this week (thanks @Brie Schmidt  ). Basic inspection (thanks @George Foster ) and mold inspection occurred on Wednesday. There was mold found in several places. Not just in typical moist areas like bathrooms--but in the corners of closets, under sinks, under a staircase and around garden unit windows and some walls. 

The mold inspection results, which include air analysis for airborne mold, won't be ready until 9/30/14.

The inspector wasn't too worried about the garden unit mold because it's common in basements. A dehumidifier is a must there and would prevent future mold from forming (after the current mold is re-mediated). The under-staircase, under-sink, closet corner, was of concern. If remediation is required, I would need to hire a special team to seal off mold areas of the units with plastic and execute the removal. 

I've never had to deal with mold in a building, let alone one I may purchase. I'm looking for guidance from the BP community on mold issues, what I need to know, and what to consider if I decide to move forward with the purchase. I plan to rehab these out of date units and can't risk kicking up mold and spreading it around the property. Does anyone have stories (good or bad) to share about mold issues in properties?

My first thought is to go on Angie's List for remediation providers. However, I want to crowdsource from the Chicago BP community as well. Please recommend mold remediation companies that did a good job for you. 

Another note, this property is sold "as-is." I need to quantify the re-mediation costs so I can request a justifiable credit from the seller. You're insight is greatly appreciated!

[Travis West]

@Brie Schmidt In spite of what the current owner is trying to say, the mold levels that were reported in the airborne samples - along with the photos that were originally posted in this thread - confirm that the mold did NOT come from anywhere else.  Rather, it is actively growing on the walls, sills, and other discolored surfaces shown in the photos.  In fact, you could even collect a swab sample from one of those surfaces (choose the blackest one) and sent that sample to a lab.  Let the current owner or their representative watch you take the sample.  Hopefully that would prove to them what's occurring.

Toxic Mold Hazards
Toxic mold is toxic TO OTHER MOLDS!  The toxins that they create will kill other mold, thereby allowing molds (like Stachybotrys) to take over the other mold's real estate.  

No one has ever been documented to have died from exposure to Stachybotrys.  Horses in Russia - by the thousands - died at the beginning of the 20th century, but they ate hay that was severly contaminated.  They ingested the molds.  They didn't breath the molds.  Maybe Stachybotrys could kill people if we ate it ... but we don't!

Remedation Companies
@Andy Kaye  you have a very low opinion of mold remediation companies.  There are certainly folks out there who do the bare minimum and bill big bucks and they screw up the reputation of the other good remediation companies.  And trust me ... there are hundreds of remediation companies that are in the business of doing this correctly and safely!  Dont just lump all of them together though.  They're just like real estate investors.  How would you like it if people always related YOU to some scumbag investor who wants to steal a home from someone at the lowest possible price, and then doesn't fix anything and wants the highest rents.  It hurts us as investors to be lumped into the same category as the bad investors.  I'm sure the remediation contractors feel the same way!

Our Daily Spore Exposures
We also do NOT breathe in millions of spores every minute.  The readings provided in this thread showed levels in the 1200 - 1400 count range for a 3 minute sample.  Those are relatively high levels of mold spores.  That's not "millions per minute" but rather equate to 400-500 a minute (in a heavily contaminated environment).  Exaggeration is not helpful when trying to sort out these issues!

Remediation On Your Own  -  a.k.a. Are You Self Insured?!
As I said in an earlier post, you can do the work yourself.  I even provided direction to an EPA document that helps you learn what you can do, and what you should avoid.  If you (whoever is reading this) has NOT downloaded or at least looked at the document I referenced, then do it now!

@Andy Kaye used the "magic number" of a 5' by 5' space.  I don't know where that came from.  There are NYC guidance documents that state dimensions.  There are industry guidelines that state different dimensions.  In Texas (where I am licensed) there are dimensions that are much larger than that.  Is that arbitrary or were you quoting a specific guidance from some government or industry reference?

Regardless of what method or treatment you choose to employ (I'm talking to everyone here) you MUST do it under containment to make sure that you don't allow spores to migrate to other unaffected areas.  Containment, a.k.a. known as plastic sheeting, must be firmly affixed to walls, ceilings, floors, and other surfaces to build a plastic barrier.  Yes, you will also need to put an air scrubber in there to clean the air while you're removing the mold - and that must run for 24-48 hours AFTER you completed the job to make sure that all spores, dusts, and hyphal fragments are captured.  No Andy Kaye - Scrubbers are not used "so that when they take an air sample of your room, it will show a lower concentration of mold spores than before."  They are really placed there to scrub the bad stuff out of the air - i.e. remove all remnants of mold remediation debris.  NOTE: In an earlier post, I aid that the proteins of the mold fragments and spores are what the hypersensitive (allergy and asthma sufferers) are reacting to.  If you just "tear out some drywall, wipe the studs, and seal the studs" and don't choose to do it in containment or use a scrubber of some type, then you are choosing to accept the liability.

Attorneys love it when someone who thinks they know what to do, choose to do it incorrectly.

Personally, I am tired of hearing all of these "closet mold experts" describe how mold isn't a problem when it really is an issue of concern to owners, buyers, sellers, and even occupants.  Just because YOU don't react to mold, does not mean that the next person ... or perhaps your next tenant or their child does not.  

Unless you're going to personally screen every potential tenant for allergies and asthma, then you'd better provide them with the healthiest environment that you can ... and if that means paying a professional to do it right - rather than just "ripping and skipping" with a 5' x 5' removal and some wiping and painting, then DO IT!

Once again, I am attempting to help people on this forum and trying to educate (or re-educate) those who have the wrong information ...

Travis West

• CIEC - Certified Indoor Environmental Consultant, American Council of Accredited Certifications
• MAC0325 - Mold Assessment Consultant, Texas Department of State Health Services
• Single Family Fix and Flip Investor

[Travis West]

Sorry for another lengthy post.  I am tired from a long day and lots of road miles.  I hope I helped answer questions without hurting egos.

Travis

[Brie Schmidt]

no @Travis West I really appreciate the time you took to respond as thoroughly as you did.  Your insight and experience have been really helpful to us. 

[Damian Baynes]

The sellers response of "scaring the tenants" and basically denying that there is mold would be enough to make me not even want to deal with them. They sound sneaky and if they're willing to keep this issue from the tenants who knows what they might try to keep from you. I know there are seller disclosures but what's to keep a dishonest or shady seller from shrugging their shoulders and saying "Oh, I didn't know that. That's why I didn't put it on the disclosure statement".

[Danny Duran]

BP Community—to summarize where we are to date: we were scheduled to have two mold experts walk-through the property on 10/3 in order to provide me with estimates for remediation. On Thursday, 10/2, around 7 pm, the seller’s agent called @Brie Schmidt  and questioned the validity of the 3rd party mold inspection and lab analysis report. The seller’s agent stated, [paraphrasing] “how do we know where that sample came from? It could have been taken externally and used in this report. I’ve been in this unit dozens of times and I’m fine. If there were toxic mold in there, the tenants would be dead. Be advised that the buyer will not issue a credit for anything.” To make it painstakingly clear, the seller is accusing me of manufacturing a positive Stachybotrys airborne test as leverage for a credit on the sale. In the 18th century, such an allegation would trigger a challenge (white gloves flapping) and a duel to defend my name and achieve satisfaction. Alas, it is 2014 and such rituals have been replaced by less grisly formalities: the attorneys unsheathed their cell phones, unleashed their silver tongues, and spared toward a civil solution.

To add more detail, the seller’s agent told @Brie Schmidt  that the tenants are not to be informed or “tipped off” by us as to the (alleged in their eyes) toxic mold presence in the unit. If the mold experts were going to bring with them any equipment that would alarm the tenants, the seller would not allow the walk through. Frantically, I touched base with both remediators that Thursday evening and they both confirmed they would use a flashlight and a breathing mask (personal protective equipment) when walking through the unit in question. The mask was not acceptable to the seller as he feared this would alarm the tenants. The remediators would not conduct the walk through without masks as they both reviewed the lab results and asserted that this concentration of airborne Stachybotrys is dangerous and must be taken seriously. Frustratingly, the seller denied the 10/3 walk through and I called it off with the two remediators.

On Friday evening the seller communicated (through his attorney): “he has made his position clear - no credits, no more inspections - buy it or terminate now.”

I am uncomfortable proceeding without an estimate for the remediation. How am I to know if I can absorb the cost and risk of remediation without a professional opinion (I’ve not dealt with mold issues before).

After giving time over the weekend to cool off, I’ve asked @Brie Schmidt  to contact the seller’s agent to ask one last time to allow a mold remediator walk-through. We are going to suggest that the seller ask his tenants not to be present for this walk-through so they don’t see the men wearing breathing masks.

Hopefully, emotions have settled and cooler heads will prevail.

We are under attorney review and inspection until 10/8/14. I’d welcome your comments and suggestions on this situation. Thank you!

@Brandon Turner what do you think?

[Account Closed]

I would not do it for any price!  To big a project/risk for me personally.

That said, I have taken on properties needing foundation repairs once in a while, which have turned out to be great investments... (1) know the risk; get accurate estimates, etc.., (2) decide whether or not it's a risk you're work taking... 

Everyone has different tolerance for risk.  What is yours? 

[Brandon Turner]

Tough to say. I know people tend to make a way bigger deal out of mold than it really is, but maybe this case is different. I mean, living in the Pacific Northwest, mold is EVERYWHERE. We just give tenants a bottle of mold killer bleach and tell them to wipe it when they see it. But again, your case could be different. 

I guess I'd probably get a "worst likely case scenario" bid from the remediation company and then base your decision on that and forget the walk through. If the deal makes sense even with remediation, then proceed. If not, back out. 

[Danny Duran]

BP Community—a big thanks to everyone who commented and gave guidance on this matter. Unfortunately, the seller would not allow access to my mold experts to generate remediation estimates. Last night I cancelled the contract and requested my earnest money deposit back. Now, it’s back to the drawing board.

I feel really bad about the tenants who are living in airborne toxic black mold. I’ve found out through talking with various attorneys that I could expose myself to serious economic loss damages (from the Seller) if I were to inform the tenants. Unfortunately, I must just move on. Thanks for your comment @Brandon Turner  

[Jacqueline Mann]

so, how did this turn out? did you inform anyone?

[Drew Leo]

Currently looking at a  8+ month vacant, 2-story, condo 1200 sqft in California with major mold issues.  All 2.5 bathrooms (no windows, just broken fans)  have 40% of visible mold, meaning the 40% of the room I can see mold hence 60% I probably can't see (inside walls, floors, non visible on walls).  The garage's interior roof has a 5'x5' torn, shredded dry wall ceiling and exposed plywood with dampness where the upstair's bathroom toilet is located.  Lots of urine stains from pets which the smell caused us to depart after 2 min (I worked at a animal shelter, been in a room with 40+ dead cats but the AC was working, this condo was up there being vacant min 8 months)

My agent's rehab estimate is $40K, I'm overshooting to cover bad pipes, interior beams need to be cut out and replaced, new hvac, etc so $75K.  Ad & selling agent states strict $285K listed price (indentical comparable sold at $315K) I'm going to offer $185K cash, and tap my uncle's personal $100K loan of 2% + prime (at 4.6% currently) variable 4x a year adjusting. This personal loan would hopefully over cover remediation of the mold and complete remodel of 75% of the interior: new 2.5 baths, kitchen, flooring, walls, ceilings, doors, etc.  

My concerns are if my rehab costs of $75k is enough. Reading this thread has taught me that remediation requires sealing up EVERYTHING but in a condo that has 1 side that is shares walls with next door neighbor (where all the mold sits because the pipes are located between the units)  we could be spreading the mold to the neighbor which is a real concern since I can't control the other side of the wall we are removing, tearing, or sealing.  

If it was $100K or even $120K cost to rehab , I'd still can:

1. rent will positive cash flow within 15 months  2. spent $285-300K for a investment at market value of $315K.  

The factors of uncontrollable remediation pushes this investment in 30% more risky.  Share your serious, extreme mold stories