The unfortunate phenomenon of the 'Grow-Op' homes springing up all over British Columbia can be devastating to a neighborhood and seriously impact on values of surrounding homes. The home containing the Crop of Marijuana itself can suffer great damage, mildew, mold, water damage, etc. and the resale value of the home almost always is seriously impacted, sometimes causing resale to go below BC Assessment Authority appraisals and upwards of $100,000 less than comparable homes
Sound Familiar?
In the 90's the leaky condo crisis did exactly the same thing, taking down an entire class of property with it. Condominium values were slashed across the board with the leaking buildings themselves having strata lots selling for 1/4 their original sales prices. My wife and I could not believe the prices that Condos were selling for, in some cases less than the cost of a new vehicle in the Coquitlam area where we were very familiar with the market at the time. I could not believe the mass hysteria against these properties, in many cases caused by those that owned them. Sure it was a huge financial tragedy, bankrupting many and causing untold others to lose their homes but the reality was, like any home with a problem, TIME, EFFORT & MONEY can fix almost any problem.
The rental market then, like today was very tight if not near 0% vacancy. Renting out the condos for more money than the cost of the mortgage and strata fees combined was a piece of cake, even when the buildings were draped in scaffolding & tarps as long as they were not Rental Restricted. The declared assessments were being paid by the Owners/Trustees in Bankruptcy and after my first couple of purchases I came up with a formula that was almost always true or near true:
"There shall be three Strata Special Assessments, the Second will be half of the first and the third shall be half of the second" ie. If the First is $20,000 then the second will be $10,000 and the third $5000.
If as in some cases we picked up a condo for $75,000 which originally sold for near $200,000 or more, we didn't pay the first assessment as explained above, someone else did, then we get hit for the $15,000 later our total cost is still only $90,000, rented for between $600 to $800/month at the time. There is the MONEY, and the EFFORT is renting it out and waiting for it to get fixed but the TIME is the key! 8 years later, 2008, same condo valued between $250,000 to $290,000 getting rents of between $1000 to $1250/month and did I mention in some cases the Strata paid back excess money collected for the repairs to the present owners of record!?
Now lets look at Grow-Ops, are they nearly as bad as leaky condos, usually no! Most declared grow-ops are small sized and are easily judged by almost any keen observer. Damage can be removed, many times by replacing drywall and attic insulation. Moulds & Mildew can be purged from a home by use of an inexpensive process called Ozonation which basically sterilizes a home. These homes can be picked up way below the prices of surrounding properties are easily rented out once repaired and in my opinion, will gain back market value as they are LEGITIMIZED by respectable owners over TIME.
TIME EFFORT & MONEY the key to making money with Grow-Op homes, just as it was with Leaky Condos!
by Scott Leaf - Keller Williams Results Realty
604-839-8239 sleaf@telus.net http://scottleaf.com
Maple Ridge Real Estate
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