Well one good note in relation to my last post. The Fannie Mae 4 home limit was raised to it's previous limit of 10 financed homes. The requirements for new loans are much stricter and now require 6 months PITI (principal + interest + taxes + insurance) reserve for each rental property as well as a 20% down payment, but these are welcome changes to keep only financially prepared individuals in the game.
So I got an offer accepted on a short-sale property. In the process of doing my due diligence, I paid to have a Meth inspection performed by my inspector at $150. I've never bothered doing this before, but there was evidence of alcohol and cigarettes at the property so I thought it wouldn't hurt. Well the results came back positive with a 1.9 microgram reading. You may be wondering if that is a lot or a little. Well to give you some perspective, the legal limit in Utah is .1 micrograms (so we are 19 times higher than the state limit). Apparently though, this is considered a small contamination and I've since spoken with another invester who was purchasing one with 4.5 micrograms. And if they are actually cooking Meth at the property the contamination can even be much higher than that.
With this new data, I began to call Meth Remediation companies and to my dismay each company gave me a completely different story on the cleanup. I'll summarize what they told me below and I'd love to hear back from anyone that has actually gone through this process before and can give me and any future readers of this blog some advice.
County Health Dept: The county health department representative said that I could clean the property myself and to certify it, I would need to send in a sample of the carpet as well as surface swabs. He said that contractors would all tear out the carpet (which is correct, that is what all three recommended).
Vendor 1: Vendor 1 basically told me that my appraiser was probably someone with a high school education who only had a 30 minute training course on Meth and that his results would likely not even be recognized by the county health department. He recommended retesting the entire house to pinpoint the areas that need to be cleaned. If the cold area return comes back positive, they recommend replacing the heating ducts and he implied simply doing that may allow the property to pass. Vendor 1 said health department should not be giving out recommendations. He also called my appraiser and told him that he may be involved in a lawsuit if I back out of the deal (if the bank decided to sue).
Vendor 2: Vendor 2 told me that if Meth was detected in one part of the house, then the whole house needs to be cleaned. His bid was very reasonable at under $3000 to clean the entire home. The cleaner that he uses is harmful to metal and wood surfaces. He says the heater will likely need to be replaced as it can't be completely cleaned (and it's a metal surface), but that only flexible ducts would need to be replaced. He also said that new or old paint (as well as areas around nail holes) may be damaged.
Vendor 3: Vendor 3 told me that his special cleaner will remove mold, dirt, and Meth and would leave the place looking and smelling clean and fresh. His minimum charge was $5000, but it didn't sound like there would be problems associated with Vendor 2. Vendor 1 claimed that Vendor 3's special cleaner was illegal since he would not disclose it to the EPA and that no chemicals are allowed in the air ducts.
I don't think I could do business with Vendor 1 because he bad mouthed everyone and everything. He was way to arrogant for my style. I liked Vendor 2, but felt that even though he was cheap, it might cost way more in the long run to use him. Vendor 3 was reasonable, but I think I might get one or two more bids before making any decisions. I'll probably ask for references from their last three jobs.
