Mold, Termites, and Tenanted..

[George Leeman]

Hi, I have a property under contract in florida for 6 units 400k at the moment, and recently found out that the place should really have a full gut and rehab for the most part. Its currently fully rented, but my handyman has never seen such bad mold in a place where people are living. It also has extensive termite damage. My handymans chest got tight from minutes of experiencing the mold, and the 2nd floor of the building recently had some shabby repairs to the flooring that makes me worried about liability.

The thing is, these units (currently rented at 750 I am told) should be rented for about 900 when the necessary updates are done. So there is room for some good equity if I can get it purchased and fixed for a reasonable price.

I have a new offer in at 300k instead of 400k, tho its not been accepted yet (the former offer was based off the realtor saying that only minor touchups were needed, which is anything but the truth. However I am out of state, so thats my downfall here) 

I am hoping to buy for around 300k and own it for around 400k with it being worth around 500k and rented for 850-900 per unit.

I am wondering if I should run a mile from this, or take a swing at getting the tenants out, gutting it, rehabbing it, and coming out ahead in equity?

My handyman can handle everything, but obviously he is not licensed to do a lot of the work, tho he may be able to work with a contractor to pull permits and I may be able to have plumbers/etc come in for what my handyman cant do. I am just worried that if the county was to come out and see the condition of the place, that I would have to go a far more expensive route.

I am uncertain what to do about this, I like the property a lot, and do not want to lose it. However, I have no experience with this type of extensive issues with a tenanted property. Im guessing I will have to pay the tenants a couple thousand to leave, provide a 60 day notice, and then spend easily 4 months getting it rehabbed/rented. 

Can anyone advise? I do have plenty of cash reserves at the moment, however I still dont want to spend all of them on only 6 units.

I am thinking I should get a quote from a licensed contractor to see what things are at worst, then have my own handyman do all he can do on his own, then maybe get some plumbing and electrical quotes from licensed individuals, and then let a contractor handle the rest if I feel overwhelmed. 

Please advise, any help is appreciated.

[Mark Fries]

@George Leeman

I would get a 2nd opinion, your handyman maybe exaggerating. But I dont like your idea about using a licensed contractor to get a real estimate and then turning around and having your handyman do those repairs. Seems like your wasting a real contractors time. Speaks volumes about your business approach.

[George Leeman]

Normally I wouldnt, but Im going to explain myself because I don't want other people to assume what you are. I may miss out on some useful advice if people were to think negatively.

Generally speaking in situations like these (im dealing with another situation now) I request the contractor allow me to pay something for their time, tho its usually offered to have a look at it for free. I prefer a more timely and detailed look that comes with the request to pay something, I think its fair.

[Sabine French]

From a safety standpoint, certain amounts of mold (if I recall correctly: anything over 10 linear feet) require certified remediation (with negative air scrubbers, etc) to avoid cross contaminating the entire property and, frankly, to protect nearby people. In my experience, severe mold problems not properly remediated can lead to lawsuits. At the very least it can make people very ill. At the levels you seem to be talking about, my concern would be having an untrained handyman do the work (versus a certified remediator) leaving you open to legal action. 
Get an independent (someone who doesn’t have the conflict of interest of also offering remediation services) certified mold inspector’s opinion and you’ll have more pertinent data with which to decide. 

[George Leeman]

Originally posted by @Sabine French:

From a safety standpoint, certain amounts of mold (if I recall correctly: anything over 10 linear feet) require certified remediation (with negative air scrubbers, etc) to avoid cross contaminating the entire property and, frankly, to protect nearby people. In my experience, severe mold problems not properly remediated can lead to lawsuits. At the very least it can make people very ill. At the levels you seem to be talking about, my concern would be having an untrained handyman do the work (versus a certified remediator) leaving you open to legal action. 
Get an independent (someone who doesn’t have the conflict of interest of also offering remediation services) certified mold inspector’s opinion and you’ll have more pertinent data with which to decide. 

Thank you very much, this is the type of extremely useful information I was hoping to get. Thank you!