MOLD!!! What to do NOW!!

[Account Closed]

Hi guys, so my tenant was on vacation for 2 weeks and when he got back; all of the floors were buckled and mold growth was on 2 walls of the garage.  During further investigation, the kitchen supply line shark bite connection failed and was spewing for 2 weeks.  The crawlspace was flooded, all the floors were pulled, partial drywall and crawlspace insulation.  More into it.....

Mold remediation was completed $2800; all crawlspace remediated.  Kitchen cabinets destroyed etc, etc.....

After all remediation completed and labor costs the total came to $20500....So far insurance is covering but have not received complete estimate yet. 

Also, the Restoration aspect is being litigated as well and will probably run about another $20-25K. My deduct is $1K

Now MY QUESTION

I bought this property at $65K and owe $50K; I already have $22k into it when I bought it (DP & Rehab). The ARV is in the range of $100-110K. It rents for $925mo.

Do I rehab it with ins money with the restoration company (or my contractor) and put on the market and worst case scenario sell at $95-100K and I come out with about $20K after my previous rehab/DP and sale costs. 

Or Keep and continue to rent? The cash flow on this property is $250, COC 13%

After complete rehab I could push $950mo.
I just feel this is a lemon of a house right now, especially with the previous rehab I had to do when I bought. BAD MOJO

Thanks in advance

Rob

[Colleen F.]

what does this mean "the  Restoration aspect is being litigated as well" . 

It is all about what you want.  Do you want a rental or a flip?  If you are going to buy a rental this one has a lot done new already, despite the MOJO. You could do water alarms if you think the risk of flooding remains.  Also run the numbers on this vs a new rental that is what really decides the better investment. If you want to get a different rental do a 1031 exchange. 

If you prefer flips you could finish it for the market which is probably a little better then rental unless you are selling direct  to another investor.