Marijuana grow ops are still stigmatized in our area even though marijuana is now legal. Here is some helpful information on these types of homes and some tips for how to deal with buying and/or selling them.
This week’s topic is going to be about stigmatized properties, particularly marijuana grow ops. Now that marijuana is legal in Canada, I wanted to talk about how this affects your real estate investments.
Stigmatized properties like marijuana grow ops are handled completely differently in our industry than non-stigmatized properties. When a big grow op with many plants has been busted by the police, you need to do some alterations to the house before it’s sold. Here are the three biggest problem areas that we’ve noticed:
1. Wiring. You’re going to need access to a lot of extra electricity in a grow op, so oftentimes there are a lot of clips and cuts to the wiring that aren’t done professionally.
2. Mold. This also becomes an issue when hundreds of plants are kept indoors. We can’t always see it but we know it’s there.
3. Fertilizer and chemicals. These usually aren’t disposed of properly, often down drains or down the sides of houses, where it can easily seep into the home and stay in there.
Busted grow ops can still be sold and can still be financed by the Canadian Mortgage and Housing Corporation, but there are some stipulations. First, you need a minimum 20% down payment, a 1% premium on top of that, and a certification that the property is habitable. To get this certificate, you’ll need to have the city come in and make sure a laundry list of items are taken care of first.
If you’re a buyer and looking at one of these properties, keep in mind that you’ll be paying more in insurance when buying it. At the same time, you’re also likely to get a nice discount on the home’s price. Also keep in mind that when you’re ready to sell the home down the road, the property will still be stigmatized. No matter what you do to it, your sale likely won’t be as profitable as it would if the home was not stigmatized.
Now that people are able to grow up to four plants in their home at the time, it will be interesting to see whether or not this will have an impact on insurance costs going forward. I will be sure to keep you updated in the meantime. If you have any other questions for me or any other real estate needs that I can assist with, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.