Mold! That’s a scary word in real estate. No one wants to live in a house with mold. And what investor would ever want to tangle with that icky problem?
If that’s been your thinking – listen up! You might be leaving a lot of dollars on the table.
Hi Moguls, Jason Lucchesi here, and I have some insight for you when it comes to finding deals—and finding the right kinds of deals that will bring you consistent profits.
In this lesson, I’m talking about finding mold-infested properties – why and how to find these deals. No, I’m not kidding.
The mere mention of mold will nearly always steer anyone in the opposite direction, including real estate investors. The main reason is that they don’t know the level of the mold that’s in the property, so it tends to scare people off. The first scary thought is that it will require a sizeable investment just to get the property safe and livable.
The Only Major Problem
Let’s get this part out of the way first...
I can tell you that the only major problem that you might run into, is if the mold has spread throughout the entire house. It’d be best to stay clear of this one, unless you could get a really great deal and have the property demolished.
Otherwise, you would have to redo the entire interior of the property—the floor joists, all the walls… and that would depend on how thorough the mold remediation company can clean it. But you should also know that this extensive type of mold problem is rare and you’ll seldom see it.
Start with the MLS
Having gotten that out of the way, let’s talk about ways you can find these properties and get some great deals.
You can start with the MLS. Let your investor-friendly agent do a search for you. Define the types of properties that you want in order to locate mold properties. It may be in the description fields if there are any properties that have significant amounts of mold in them.
You’re going to find mold in properties that are in a distressed state. This could mean short sales, probate and divorce deals. (Just remember that you’ll want to stay away from bankruptcy deals if it’s a lengthy Chapter 13. That could take several years.)
People tend to move out during times of duress, so chances are the house will be vacant.
In the case of probate, for example, the surviving family members will probably not want to pay for the mold remediation. They could face possible fines from the city if the house does become dangerous to the neighbors. Black mold can cause significant level of toxicity in the air and affect others who live in the vicinity.
All of this means they’ll be a highly motivated seller.
Mold Remediation Companies
The next potential for leads is to go to the mold remediation companies and talk with them. These are the people who are taking care of properties that have mold problems, and they may know of individuals who are looking to sell.
Leave your contact information with them, because this is also a great way to build your professional network. You start building rapport with people who can help you on down the road.
There’ll be homeowners who are not willing to pay for the service of a mold remediator, but you are willing to pay if you buy the property. This means you could potentially create business for this new contact of yours. This makes a win-win for all who are involved.
Property Insurance Agent
Yet another potential contact might be an insurance agent. The agent will find out about the claim, and they’ll be the ones who find out what kind of work is needed on the house…
What is the severity of the mold that’s in the property and how will it be taken care of? Are the owners going to file a claim? Or do they just want to move out?
Having an agent as one of your contacts could lead you to houses that have mold issues. These could even be vacant rental properties. Or, it could be someone who has a second home.
Point is, they’re worth looking into.
How and Where Mold Becomes a Problem
Mold has a tendency to grow in warmer weather and in warmer climates. When I travel to Florida, I see high levels of green mold on the exteriors of the properties that I look at. But, that’s a simple fix.
In the Midwest, on the other hand, where it goes untreated, there’s black mold. That’s the dangerous stuff.
The insurance agent will be notified regarding those claims. And, the homeowners’ insurance does cover that.
My Take on Mold
My take on this whole issue is that mold is gold.
It can create lots of lucrative deals for you—especially in the Midwest. As long as the mold hasn’t reached the state where the floor joists have to be replaced or repaired, then it could provide you with some really great deals.
This will be true either way—whether you’re wholesaling or rehabbing.
Time to go searching for your mold gold.
Have You Run Away from Mold?
I’d love to hear your reaction to the subject of mold! Please leave your comments below.
Open your mind to the possibilities of investing in properties that have mold.
Use your investor-friendly agent to search the MLS.
Contact mold remediation companies and use them to build your network and find mold properties.
Connect with property insurance agents who settle mold claims.
Jason Lucchesi
Jason Lucchesi is the co-founder of real estate and marketing company Global Fortune Solutions, LLC. Jason has been in the real estate industry since 2002, where he began his career as a Loan Officer. His career flourished in the mortgage business when he accepted an Account Executive position with Countrywide in 2004. Within his first six months, he had achieved the #1 Account Executive in the Midwest territory. In January of 2006. During this time, Jason began investing part-time in multi-family rental properties while also becoming involved in wholesaling. By 2006, Jason was transferred to the Indianapolis area to save a struggling branch. He quickly took the branch out of the red into the green while also beginning to purchase distressed residential properties part-time. In 2007, Jason began pursuing his ultimate dream of becoming a full-time real estate investor and began investing in REOs in 2008. Since then, Jason has been involved with many aspects of real estate including short sales, tax sales/deeds purchasing, purchasing homes in distress, wholesaling, and many other avenues. Jason has been married to his wonderful wife Jamie since 2007, and they are proud parents to their sons Brady and Gavin.