Mortgaging a Remediated Grow Op: Is it Even Possible?

Whether it's a conversation with friends, my clients, or other business partners, this question has come up : "Can I get a mortgage if the property was a former grow op?" The answer? 

It may seem like a good investment, as prices are typically lower than the comparable, however, you should understand the costs that may be associated with the purchase outside of just the listing price. 

Which lenders will finance a remediated grow op? 

Most local credit unions, a few B lenders, and private lenders will finance remediated grow ops. However, please note that these credit unions and B lenders expect the property to be completely fixed, with no potential issues in the future. Therefore, you should not be purchasing a property that needs to be fixed. The only lenders who may look into financing a grow op that still needs to be remediated are private lenders, but expect a high interest rate and fees.  

What costs are associated?

Most of these lenders will require mortgage insurance premium, which include only 2 of our 3 insurers: CMHC or Genworth. Not only will there be insurance premium, but also a rate premium added to current interest rates, which is typically an increase of 0.50 to 1.00%, plus any other lender fees. 

To ensure the property has been remediated, and no further issues are expected to occur in the future, lenders will require environmental air quality testing. This can cost anywhere between $1,500-$2,000. Air quality testing is to ensure there's no mold, spores, moisture, etc. growing, and ensure the property is livable.

Lastly, you may need to pull a re-occupancy permit. This is to ensure the building complies with all municipality bylaws and is in livable condition.

The concerns lenders have with financing remediated grow ops is the re-sale marketability. If the lender needed to foreclose on the property, how hard would it be for them to sell? Until the home is torn down and rebuilt, the stigma of previous grow op will stay with the home forever.

If you're looking into purchasing a remediated grow op, ask your mortgage broker! We have the tools and lender options to help you mortgage the property.