REO is a former indoor pot farm

[Vince M.]

One of my Real Estate agents showed me an REO today. I checked the comps in the neighborhood within a half mile since January and they average $405,000. The bank is asking $371,500. They have it listed "as-is" but the condition is way beyond anything they could imagine. This is a 3,815 sq. ft. 10 year old house. Apparently the last owner(s) used the entire square footage as a way to enrich themselves through the time-honored tradition of growing substances with elevated THC contents until the local constabulatory broke down their front door and put an end to their enterprise. All of the flloor space has tracks of where racks of plants were grown. The carpeting shows the patterns of racks and planters. There are holes cut through the walls where venting obviously went as well as holes cut in the ceiling for lights. The watering and humidty levels required to grow cannabis has created spots on the walls where mold is growing as well as water damage on the walls, ceilings and floors. I noticed the problem when my foot went through the MDF flooring and carpeting as I surveyed an upstairs bedroom. The agent said she knew the house history but had never been inside and was shocked by the condition. From what I can see this place will require a complete removal of most of the drywall and flooring as well as addressing the mold issue. There are also a few structural problems because they weren't really concerned about avoiding wall studs when they cut the vent holes out of the wall.

I haven't completed the analysis yet and thought I'd ask what you all think before I go any further. I know this will require a major amount of work for a rehabber and it may not be worth it even though the ARV could be over $400,000. It looks like all or nearly all of the surface areas in the house will need to be replaced or repaired. The agent has offered to write up a lowball $50,000 offer and I countered by asking her to see how much the bank would give me to take it off their hands.