A Grow Op Property is any property that Marijuana has been grown in illegally.
The first thing that you will notice about a listed Grow-Op property is its low selling price due to its status. Many will probably jump at the opportunity to secure a good deal but we seriously suggest you stay in your seats for this.
There’s a popular misconception that if the property gets remediated and cleaned up that the “Grow Op” Status will go away but this is not true.
The only way the status is removed is if the property gets completely demolished and a entirely new property is built on the lot.
Until there is a new property built and the status is removed, the listing agents for the property must disclose the Grow-Op status to any interested buyers.
Who are Grow-Op’s for?
If you’re interested in rebuilding in the future, Grow-Ops are something you can consider. Depending on the status of the home currently on the lot, you could also rent out the place to a tenant. This is a a way to manage costs until you’re prepared to tear down the whole building to rebuild.
I’m Still Interested
Financing for a Grow-Op property is incredibly difficult. Our recommendation is to prepare a substantial down payment to make the mortgage process easier. You need to be prepared and know that just as you bought the property at a price below market value, if you sell the home with the Grow-Op status still there you will also be selling under the market value in the future.
How to Get Financing?
Major banks such as RBC or Scotiabank will have many rules in place that make acquiring a mortgage very improbable. Few other banks, such as Vancity, may consider or have more options if you still have interest in a Grow-Op property. There will be more work and due diligence necessary on the part of you mortgager’s underwriting team.
Any bank will require an air quality test normally by a qualified hygienist and a full appraisal before they decide whether or not they will providing any financing
How to Prevent Grow Ops
A common denominator of “Grow-Ops” is to rent out the property to other tenants. Chances are the owner does not frequently visit the property, or properly cross check the tenants references. Just to make sure that they are legitimate and the clients won’t cause damages to your property. Our recommendation is to hire a property management company, or to make sure to vet the tenants properly.
If you want to learn more about real estate and about investing in the right property contact us today with your questions.
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