Recently we have been called upon to give estimates and remediate fungal contamination in many soon to be purchased homes.  Properties with extensive contamination can be the diamond in the rough for some who are not afraid to combat with the MOLD.  This black stuff that grows on the walls after a good flooding of the basement can actually be an investors dream home.  Get yourself a good Mold Remediator work out a deal on the various projects and negotiate your socks off with the banks on the REO/Bank Owned properties.  If the Remediator has the right skill sets, then you are off to the races.  After they abate the growth, have a Clean Air Test done ($250~700), and when it passes you are ready to put the house back on the market for a true appraised value.  I know of an investor who only wants to buy MOLD houses, why?  Because he can get a deal/steal.  He knows that the work after completion will pass the clean air test and he is safe, and the new buyers can also order a clean air test if there are any doubts.  Example:

Property was bank owned, had an active roof leak for 6 months of vacancy.  There were more mushrooms on the floor and walls than in the Wizard of Oz.  The property and neighborhood appraised @ 280,000 and up.  Everyone that viewed this property walked away after cracking the front door.  The location was in prime location to an affluent university and hospital so it had a lot of interested parties.  The investor negotiated a deal with the bank somewhere in the high 70,000 range and was tickled that he got a great deal.  2 unit 4 bedroom place.  The remediator was able to come in and tkae care of the problem and rehab the property for under 25K.  I beleive it rents for a total of 1500/month.  Currently appraises around $270K Investor is happy, property looks brand new, and he is working on his next mold house. 

Build your netowrk of quality vendors willing to work with you on repair/remediation costs, give them the volume of work on each deal and everyone wins.  MOLD infested houses are over exagerrated in terms of liability, because at the end of the day it gets taken care of, reads acceptable/passable scores on a clearance test and the liabilites and dangers are lifted.  I feel there are a ton of deals out there for the investor or smart buyers willing to take on the challenge, becasue the rewards can be SWEET!