Flood and Mold

[Phil Oduse]

I'm a newbie investor and came across a property recently that caught my eye - I should probably walk away from it but I thought I would first canvass the views of the professionals - hence my question!!

Looking at a property in W. Oregon - the seller is asking $30K with a APR of about $100K-$110K. - it's a 3 bd, 1 bath - 1,058 sqft on a 8000 Sq ft lot - rentals in the area are commanding about $600- 700 per month.

From what I have been able to ascertain from the seller - the city is requiring the property to be raised.  The house has a crawl space and foundation.   The roof is leaking (valley of the roof is leaking and a couple of areas of the roof are giving way) and there is evidence of mold in the master bedroom closet and a little in the kitchen. It flooded in 2007 (which was only the second time in 100 years) and the house was remodeled at that time. 

It looks like the seller bought the house for $8500 in 2012 (and then realized he had taken on more than he could handle) so I'm guessing that there is a little more give on the price.

Is this one that I should run away from as quickly as possible or is there enough skin in the game to make it a worthwhile proposition - perhaps as a flip?

Would certainly appreciate your advice on this one!

Thanks,

[Colleen F.]

I can't respond on the house but I am wondering what is the flood insurance? What flood zone is it in? When was it mapped by FEMA. If it is raised what would be the base flood elevation (BFE) and insurance rate for flood then. These are the questions you need to ask to figure what it is going to be worth in the end. The ARV may change and the marketability based on these answers. I am not saying don't do it. I am saying be an educated flood zone buyer if you are looking at a house in that area. I would be less worried about mold then the answers to the questions above. Mold can be remediated but these features of the house can't.

I am  waiting for our post-sandy Real estate  situation to resolve itself. I didn't buy into the house, it was a family thing but I learned a lot from the experience.  I think as an investor when you are walking into it do so with clear expectations and a good amount of due diligence.