Move over meth: ‘Grow houses’ an increasing menace (© Alex Horvath/The Bakersfield Californian/ZUMApress.com)

Police removing marijuana plants from a grow house. // © Alex Horvath/The Bakersfield Californian/ZUMApress.com

When Mikey and Zeina Kostelny found their first home in the suburbs of Altadena, Calif., it appeared to be a buyer's dream, complete with fresh paint, carpet and fixtures.

But that dream quickly dissolved into nightmare after the sale closed in late 2008 as the couple began to discover problems hidden behind its glossy finishes — from mold to gas leaks to bad wiring — all stemming, they believe, from its undisclosed past as a marijuana grow house.

"After we moved in, we smelled fresh paint and then another smell," Zeina Kostelny says. An inspection later revealed dangerous Stachybotrys mold throughout much of the house, forcing them to move and foot the tab for more than $42,000 in remediation and repair. Months later, an electrical fire pushed them into an apartment again.

The tsunami of vacant, bank-owned properties in many parts of the country has helped fuel a surge in indoor marijuana production, turning once-empty homes like the Kostelnys' into high-dollar and high-risk pot farms that spell trouble for prospective buyers and neighbors.

"In the last several years, we've seen a dramatic increase in the number of grow houses," says Covina, Calif., Police Chief Kim Raney, who has overseen several busts. "It's almost a perfect environment, because you have had a housing market that's upside down, people losing their houses to foreclosure and people trying to find ways to make their mortgage," he says.

Pot house 101
A total of 4,666 marijuana grow houses were busted in the U.S. in 2009, according to the U.S. Drug Enforcement Administration — just a tiny fraction of the number in operation, experts say.

Most grow houses go unnoticed or unreported, for fear of retaliation from the gangs — many of them Asian — that run them, according to the DEA. And the houses are often in places you'd hardly suspect, such as gated Florida communities and upscale Georgia neighborhoods — even Beverly Hills, Calif.

How can growers afford such high rent? It's easy. With only 50 plants in a house, and at least three growing cycles a year, growers can easily net as much as $300,000 a year from sales to dispensaries and buds sold on the black market, says Ron Brooks, president of the National Narcotic Officers' Associations' Coalition.

"Marijuana is so lucrative as a crop," he says, and it carries less prison-time risk than other drugs.

Of course, it's not just the grower taking on risk. Once marijuana-growing operations move into your neighborhood, they bring more danger and more damage than vagrants, thieves or taggers could ever do.

"You've got fire hazards and properties that aren't being well-maintained," Brooks says. "No one's living there, or maybe someone's there who's armed and guarding the house."

The damage they do
Indeed, police say, indoor growing may sound benign, with row after row of bushy pot plants sprouting up under ultraviolet lights, but these operations can devastate properties.

Most grow houses wind up having extensive mold damage because of the irrigation and moisture needed for the plants, says Dennis Rommelfanger, a home inspector with U.S. Inspect in Huntington Beach, Calif., who has seen several of these houses.

Mold is an expensive problem to deal with. It is also one of the hardest problems to accurately assess, Rommelfanger says, especially if the surfaces have been painted over, as they were in the Kostelnys' home. 

"We do use moisture meters," he says. But the reading has to be 20% moisture or higher for him to advise deferring a sale, and he says a home can have mold damage with a lower moisture reading than that.

What's your home worth?

Big-time marijuana growers also cut holes in the ceiling to provide ventilation to their plants and run water lines. Many change the ductwork and rewire the house to accommodate the hot grow lights and other equipment such as humidifiers and dehumidifiers.

And most growers snake wires up to the power line to bypass the electric meter, not only because their work is electricity-intensive, but because high meter readings can tip police off to their whereabouts.

One Pennsylvania real-estate investor, Steve Babiak, commenting on real-estate investor site  BiggerPockets.com, recalled a house where growers had cut holes in the foundation to hook up jumper cables to bypass the electric meter.

The Kostelnys have filed suit against Wells Fargo, the trustee for the mortgage on the home, which was bank-owned — as well as the bank's asset manager, Phoenix Asset Management, and its broker and contractor — alleging fraud and breach of contract, claiming the home's criminal past should have been disclosed before the sale.

Their California attorney, Julia Swanson, says the broker, contractor and asset manager knew of the mold damage and other problems and yet chose not to fix them. Moreover, the repair work they did do on the house was unpermitted and not up to code. Phoenix did not return phone calls seeking comment, and its broker said she could not comment on the suit.

Wells Fargo said in a statement, "As trustee of a securitization, Wells Fargo may at times be named in property actions, but we are not the owner of this loan and do not make property management decisions."