Transcript of Video Blog:
Everybody, Rowan Smith from the Mortgage Centre. I’m here today to talk again abut a topic that seems very popular among my blogheads, which is former marijuana grow ops. Can you finance them, or how to finance them? The answer is, “Yes, you can,” and the way to do it is this. There’s typically going to be extra underwriting that’s going to be required. Not all banks are going to be willing to do that…
So what are those extra things that are going to be needed? Well, you’re going to need, first and foremost, an air quality test. Now, an air quality test is when an environmental firm, preferably one by the name of Medallion Homes, goes into the premises and takes an air sampling in an area where the grow op was and an area where the grow op wasn’t, so they have an ambient and a control comparison and they provide you with a breakdown or a readout of mold content or chemical content, if any.
Now, in most cases, this comes back fine. But if there had been significant moisture problems, it may not come back so good. In those cases, they’re going to need some additional remediation before the bank will fix it or will finance it, rather.
So, first things first, you need an air quality sample. Now, I said use Medallion Homes. Why? Just generally, that’s the firm that most of the places around me in Vancouver, that’s who they want to do it. There’s also Pacific Environmental that’s accepted by a couple of them. You want to stick with Medallion Homes where possible because it will give you the maximum choice of lenders.
Now, which lenders are they that are going to actually do this? Are they some high rate lenders? Absolutely not. There are credit unions and charter banks that will do it. Some of them simply will not look at your deal if it’s a former grow op under any circumstances. That’s the reality of the banks. They can choose to lend when they want to.
So first, air quality. Second, you’re probably going to need a full appraisal. Not every time, but in most cases, they want to make sure that the market value of the home has not adversely suffered as a result of it being a former grow op. Because there is a stigma that’s attached to it.
Lastly, you’re going to want to have something from the city that confirms that either A, occupancy is still in place or the occupancy permit has been reissued. Or C, that there’s a comfort letter from the city that says the property is conforming to all bylaws. So what that letter is saying is, “Yes, we know it was a grow op, but the current owner has taken the steps to get the property back to the level where it’s safe for human habitation.”
Now, most grow ops actually aren’t that bad. They’re not always like they show on the news with black mold and chemicals running rampant through the property. Oftentimes, it’s confined to a single room. So in those circumstances, they still need the same level of due diligence. It doesn’t matter if it was 1 plant or 500 plants that was in that grow op. If it’s a busted grow op, the stigma will remain until the home is bulldozed that it was a former marijuana grow op.
Now, if you or somebody you know is looking to finance one and having problems getting financing, that doesn’t mean it’s impossible. It just means you’re going to need the three things air quality, appraisal and a comfort letter from the city or the occupancy permit or what have you.
Now, that varies from municipality to municipality. Not all municipalities pull the occupancy permit, others do. There are different types of programs out there. So if you’re in Surrey, or you’re in Mission, or you’re in Vancouver or Coquitlam, the rules will change. It’s important to be dealing with somebody who knows what the rules are in that unique market and can get a bank that will finance it as well. For the Mortgage Centre, I’m Rowan Smith.