Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.
Hold on, you say. What are the odds that my desired property was formerly a factory for making illicit substances? Isn't this a low-probability risk?
While the answer is probably yes, the repercussions for not doing your due diligence before buying are significant and sobering.
"You want to take the time to confirm if your prospective property was used to make drugs because it can save you time, hefty renovation costs, and negative health consequences," says Chris McDermott, owner of Jax Nurses Buy Houses, a firm that buys and flips homes in the Jacksonville, Florida, area.
Health and safety repercussions
Raj Dosanjh, founder of RentRound.com, a rental agent comparison site, says the most worrisome kinds of drug-making to be concerned about are those that involve combustion, heating, and condensation -- processes that he says leave highly potent chemical residue behind.
"Data show that meth finds its way into every nook and cranny, from ceilings to carpets and furniture to air ducts," McDermott warns.
Consider that the remnants remaining in a home used to make or use methamphetamine can cause adverse health effects. Although it hasn't been confirmed, exposure to these meth traces could cause lung, liver, and/or kidney problems and, in children, possibly injure the immune system and cause neurological impairment. Other consequences can include skin-related issues, changes in behavior, irritability, loss of weight, nagging cough, dizziness, respiratory sickness, nausea, and breathing difficulty.
There's another major negative associated with buying a previous drug home, too.
"A property used for drugs will likely have been attended by numerous unsavory characters who may not be aware that the property has changed hands or now has new tenants," says Dosanjh. "If such characters return to the property, it could be dangerous."
How to protect your investment
Even if you are purchasing in an upscale, low-crime area, it's wise to do your homework. That means investigating whether the residence has a criminal history and conducting a proper inspection.
"Some states require that real estate agents disclose if the property they represent for sale or rent was used to manufacture or grow drugs if the real estate agent has actual knowledge. And in some jurisdictions, these disclosures extend to sellers if they have knowledge of the drug activity," says Suzanne Hollander, a Miami-based property attorney and Florida International University real estate faculty member.
But even if these parties aren't legally required to disclose, don't hesitate to inquire.
"Asking local police and neighbors makes sense, too," advises Realtor and attorney Bruce Ailion in Atlanta. "You can often get a report at the local police department for a particular address that lists what they were called out for and the resolution of those calls."
Additionally, visit two websites to confirm whether your property was used to manufacture drugs:
- The US Drug Enforcement Administration's National Clandestine Laboratory Register Data site.
- The American Addiction Centers' map of neighborhood drug dens.
Other action steps you can take
"If you suspect there was drug production on site, select a home inspector with specific training on this topic, and have a thorough inspection completed," says Ailion. "But don't expect every home inspector to have this training or to know what to look for."
If your search comes up empty, consider purchasing a meth residue-detection testing kit for homes, available from online retailers.
"Some states will even give you these test kits for free," notes McDermott.
Ailion says the cost to thoroughly clean a drug-infected home can range from $10,000 to $30,000.
"I would ask the seller for a substantial discount -- say 20% or more -- or take a pass on the home," suggests Ailion. "Some deals are just not worth the risk. If you or the next occupant gets sick or dies, is it worth it?"
Got $1,000? The 10 Top Investments We’d Make Right Now
Our team of analysts agrees. These 10 real estate plays are the best ways to invest in real estate right now. By signing up to be a member of Real Estate Winners, you’ll get access to our 10 best ideas and new investment ideas every month.
Find out how you can get started with Real Estate Winners by clicking here.