Real Estate Investors & Landlords: Are You Buying a “Grow House”? Learn The Signs & Problems To Be Aware Of

Real Estate Investors & Landlords: Are You Buying a “Grow House”? Learn The Signs & Problems To Be Aware Of

If you are a real estate investor, rehabber, or landlord, do you know how common grow houses are?  A total of 4,666 marijuana grow houses were busted in the U.S. in 2009, according to the U.S. Drug Enforcement Administration — just a tiny fraction of the number in operation, experts say.  Do you think grow houses are only found in low income neighborhoods?  You are mistaken if you think they occur only in poor areas.  Most of the grow houses I have come across were in the suburbs and in really nice neighborhoods, where we typically look for our investment properties.

I travel all over the country looking at investment properties.   Many of the investment properties we target are ones that need major repairs.  Mold is one of the condition factors we run into the most.  Recently, I have seen a lot more properties that were grow houses, so I have decided to help real estate investors, rehabbers, and landlords identify and stay away from these properties.  If you know what to look for, you can avoid some of the expensive and extensive repairs that are associated with these properties.

First, let’s discuss how you can spot a grow house.  There are a few key indicators that any real estate investor, rehabber, or landlord should look for in the property they are looking to buy as an investment property.  Here are a few indicators:

  • The house will have newspaper or other material over all of its windows, even tiny windows in the garage or second-floor foyer.  You might find them spray painted, covered in aluminum foil, or boarded up.
  • Often you will see additional wires leading up to the power line avoiding the meter, so they can avoid being identified on the grid by the police for excessive power usage and to avoid paying for all of the electricity they need to power their crop.
  • Many times the landscaping will not be maintained and it will become overgrown.
  • You will see odd and additional ventilation added to the area where the plants were being grown. In a lot of cases, the ventilation will be directed up into the attic, so they can prevent neighbors from smelling the crop outside the home.  For this purpose, there is going to be a lot of moisture retained in the property.
  • Due to the amount of moisture retained in the property, you will find abnormal and random occurrences of mold all throughout the home.  You will not see a set location and obvious water stain.  It will be on walls, ceilings, etc.
  • You will find red encased wiring coming into the home, specifically where the pot was being grown.  White and black encased wires are the norm throughout most properties.  Red encased wires are typically used for higher voltage purposes.
  • Many of these properties will have “hidden rooms”  where the pot was grown.
  • You will find water sources redirected to the area where the pot was grown.  I have seen hot water heaters with hoses and release valves soldered into the existing plumbing going out of it.
  • The house may be the only home in the neighborhood with security doors and bars on the windows.
  • There will be unusual wood stands built, tarps, or even just black circles on the floor where the pot was growing.
  • You will find shadows on the ceiling near where the joists or rafters are attached to the wall.  It will be a lot easier to see if the ceiling is painted white or a light color.
  • The property will tend to be just plain filthy with intense pet odors.

Next, I want to help you understand some of the issues that come with these properties.

  • Mold is one of the biggest and most common issues.  It is hard to fully assess the level of damage, so it is hard to gauge the level and degree of damage.  It can be an expensive issue to resolve when done on a large scale.  Often, the level of mold damage can be hidden by primer and paint.  I recommend getting a moisture meter in the property to evaluate the level of moisture in the air.  If the level of moisture is over 20%, you may want to walk away from that once upon a time grow house.
  • The wiring within the property will usually be altered by the pot growers, so they can avoid the meter on the property and run their grow lights. Basically, it creates a fire hazard throughout the property.  In fact, most of the grow houses are discovered when a fire occurs. I have seen wiring that was not up to code throughout many of the properties that appeared to be grow houses at one time.
  • I have seen holes cut into ceilings to direct ventilation for the grow room.
  • They tend to alter the duct work.
  • There are some cases where foundations have been altered too.

Hopefully, I have been able to shed some light on the condition factors you need to take into consideration when run into a grow house.  Additionally, I hope you can identify what are some of the indicators that the property was a grow house.  If you can identify the warning signs, you can better estimate the level and cost of repairs needed to resolve the issues in that investment property.  In most cases, it might just be safer to walk away.

November 1, 2012 / by / in , , ,

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