buying flooded property with new walls. Anything i need to know?

Question

Hi Guys,

I am looking to purchase my first flooded property. I have found one that looks good for a buy and hold situation. They have already put up new walls do i need to ask anything like proof of no mold prior to putting up new walls or anything? Not sure if that is something my future buyer would ask me so any information regarding what questions i need to ask would be appreciated.

Edgar Cifuentes · Answer

A certification from a air quality and mold testing company is a must. If they had it tested before installing the drywall and have the certificate that is a good sign that they did their research and understand the dangers. I have already ran into a investor who already flipped the property, did not get a mold test until after completion only to find out they indeed have mold. Now they have to pay 6k for the remediation and do a rehab all over again as they will need to rip out all the drywall. There are alot of low standard rehabs going on so I would highly recommend you avoiding that. Use a home inspector that is a member of TPREIA's houston chapter. We meet once a month and have been discussing the proper ways to protect our buyers when they are buying a flooded home that has been flipped. Again, I can't stress enough with these investors and contractors taking shortcuts to get as much profit as they can. For example in bear creek people are buying these houses at 75-90K to flip with arvs pre-harvey in the 150's-160's. A proper rehab alone is going to cost around 40K. I am putting in offers in the 50's and I myself am a contractor.  So just imagine what people are doing to cut costs. Sorry, I am not trying to scare you and investing in flooded homes imo is a great investment as long as you do your due diligence.

Anthony Dooley · Answer

Some of you are really overthinking this and have a fear of the unknown. Here is a tip for the crowd. Mold can only exist in a damp and dark place. If there is mold, remove it. It isn't that difficult. Once removed, it will not come back so long as the place is completely dry. Then you proceed with the rehab. If there is no existing mold and the house is dry, then there is no reason to think mold will grow in the future.

What I would fear in that market more than mold, is out of state investors bidding up the properties to the point there is no margin.

Edgar Cifuentes · Answer

@Tuan Dang

I would say it depends on the square foot of the house. From my understanding they supply you with cassettes and each one is for 500 sqft. I think that seems like a fair deal, just do your due diligence on the company. Make sure they give you the certificate and have them ensure you that you can proceed to rebuild in writing. Feel free to contact me at anytime Tuan, I can explain in better detail speaking vs typing.

Cara Lonsdale · Answer

Proceed with caution.  Mold is one of the riskiest liabilities to deal with.  The key will be in what kind of documentation the previous owner/rehabber can provide you about their remediation process.  If they don't have everything by the book, walk away...no run away.

Tuan Dang · Answer

Hi Edgar,

I have received a quote from Thumbtack.com that is a State Licensed Mold Assessment Consultant. Charging about $375 for visual, moisture testing, thermal imaging and air or swab sampling in up to 4 areas. Do you think this is a fair assessment?  I am not sure if we are supposed to test like every room which would increase costs i'm sure or would 4 areas be enough?

Tuan Dang · Answer

Thanks  for the insight.

Tuan Dang · Answer

Thanks. I think i will avoid it all together for my first rehab then.

Sam Shueh · Answer

Ask mold inspector what he is looking for.

Edgar Cifuentes · Answer

@Huy Thai, unfortunately I haven't.  I bid one for 55K after they had a 75k offer, so I get what you mean about the wholesalers. It had mold and would need to have been properly remediated. I am signing a contract for one at 65K on monday but it is a good house. 2000+ sqft, detached garage, corner lot, has new pex pipe, new electrical so that saves around 7k as every house that I would get in bear creek I would replace the plumbing and electrical. Its got alot of potential and its pre-harvey arv was in the upper 160's lower 170's. I am mainly focused on cinco ranch though, trying to get some properties out there.

Huy Thai · Answer

Hey Tuan, I've been avoiding the houses with recent drywall installed. My thinking is this: If the seller is selling for rock bottom prices to get out of the home, why would they come out of pocket 5 to 10K to sheetrock, tape, and float the walls? As others have mentioned, I'd get proof of remediation for peace of mind for you, your renters if they ask, and for your future buyers when you sell.

@Edgar, have you been having any luck buying in the 50K range?  I'm rehabbing in Bear Creek but can't get them that low because wholesalers are buying up everything.

buying flooded property with new walls. Anything i need to know?

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