Huge Drug Crops in Property Investment Rentals
It is the same in most western developed countries where police have urged landlords to be aware of illegal drug set-ups in their property investment rentals. Rental properties are being used en mass by individuals and syndicates to grow marijuana of high quality and in abundance, often harvesting crops every 12 weeks.
During a large drug bust in Australia in late 2010, police executed 74 search warrants across the state of Victoria, seizing more than 9000 cannabis plants. A large number of people were charged with drug-related offences as a result of the raids.
Although stating the obvious, police said that 58 of the 68 residences raided were rentals. When landlords were contacted, the police found most of them were unaware of the illegal activity going on at their property. Most homeowners were found to be naive and had advertised for tenants via newspaper adverts and in shop windows. Consequently, their property investment rental agreements were more often than not, a piece of paper, handwritten and of little legal stature, despite full legal documentation being readily available on the internet.
Rental investment property in these cases are leased for the expressed purpose of growing 'dope' and sometimes every room in the house has hydroponic growing equipment, including reflective sheeting on the walls, a full lighting set up, watering system and air conditioning and an exhaust system to diffuse the heavy smell of maturing buds.
'Crop sitters' can be paid thousands of dollars a week to tend the crops and tenants were known to offer months and months of rent in advance and would pay each rent amount due, on time, Unfortunately when the tenant leaves, home owners would often find a house with carpet missing, new walls, water damage and a tampered with electrical system.
In every property investment rental, landlords need to formalise rental agreements and ask why they were offered such a large sum of money in advance.
Operation Entity, as the Victorian drug operation was called, was responsible for 30 people facing the judge on various criminal and drug related charges, but take note that in one house south of the city, police found more than 400 dope plants, growing in 11 rooms in a two story home!
Is Your Property Investment Rental A Drug House?
After reading an article highlighting this property investment rental problem, it got me thinking. Firstly it got me thinking of one of the properties I purchased and also of the potential of buying more 'drug houses'. If you own a drug house, then that's another problem and I hope you get out of it inexpensively and quickly, but one of the first houses I added to my property investment portfolio was an ex-hydroponic dope house.
The owners were at their wits' end and decided to sell rather than spend the money required to fix the house. The house was a mess, inside and out, especially since the guard dog had eaten parts of the side fence and the main window frames right down to the glass. It must have been devastating for the owners to see what was their family home at one time, reduced to the state it was in, just before I bought it. For me, this was an opportunity to add value to my property investment portfolio.
Benefits of Buying A Dope House As A Property Investment
The immediate benefit of a property of this nature that's for sale, is the price.
The second is the motivation of the vendor, who is often at the end of their tether.
The third is that the alterations made by the dope growers can be easily rectified, such as with many renovations.
The fourth is, the houses often look far worse than they are.
Lastly, the social stigma of the property's sordid past can drive potential buyers away.
Dangers of Buying a Dope House As a Property Investment
Walls - sometimes additions have been made and can be constructed out of any material, including asbestos, so be sure to check the nature of the walls. Most often they can be removed easily, but there could be cases where that extra room is perfect to add value, so assess the benefit as well as the professionalism of the workmanship. If you are going to remove any wall, just check it's not load bearing.
Plumbing - have a qualified plumber check your pipes and the mains. Often water had been diverted to the crop rooms and the main had been modified to register a lower reading.
Electrics - have a qualified electrician do a thorough pre purchase check and quote on the work required to re wire the house back to normal. All professional hydroponic setups have adjusted the wiring, often with amateur and dangerous results.
Ceilings & Roof Cavity - as per wiring, check the upper ceiling space carefully. Ceilings will have holes drilled into them for extra water pipes and for heavy-duty hooks to carry the weight of the hydroponic lights, so expect some plastering work. This applies also to how the growers have attached any reflective sheeting to the walls.
Police - if they are not aware already, notify them that you have bought the house and what you intend to do with it over what time period. You don't want an unexpected visit from the drug squad in the future, especially not an armed one.
What I Found In My Property Investment Dope House
I think I may have got out of the worst of the problems associated with buying property investment dope houses, but each one really needs to be assessed on its merits, like any other purchase. You just need to be aware beforehand of the probability of certain problems associated with drug crops. Please note though, I am discussing marijuana growing and not drug laboratories. I have only one thing to say about houses that were meth labs and that's "Don't Go There!"
What I found were live wires in the roof cavity, power re configured at the meter box, water pipes through the ceiling and roof, the water main had been tampered with, ceilings full of holes and some walls that needed to be re-plastered. Unfortunately, I didn't find a stash of either dope or money hidden away in any roof or underground cavity. I looked! The thought of some whacked out 'doper' leaving behind $50k stashed under the floorboards was on my mind for the first 3 weeks of the reno!
Property Investment Buyers' Ethos
I remember a chap describing his theory on due diligence for his property investment portfolio and that was " There are plenty of ways to skin a cat" and although that saying may be a little outdated, the premise and meaning behind it remains.
If you would like to get your hands on a ton of useful, relevant and time-saving, property investment tools, resources and information, then http://theblockblog.com will help you out, including an update to this article and hundreds of property links for investing in the USA, New Zealand and Australia.
Ian C Fraser
Free Property Investing Information, Tools & Resources for Property Investors with a Sense Of Humour!
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