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.

Unfortunately, the Kostelnys’ misfortunes might have been prevented by a home inspection before closing. They waived the inspection and purchased the property “as-is” because it appeared to be move-in ready. That’s a move they have regretted ever since.

“When you are buying a distressed property, you need to heighten the level of due diligence that you do,” says Joel Kinney, a Massachusetts attorney who has written about related property matters.

That means conducting a complete home inspection, Kinney says, and, when repairs or other construction have been done, checking to make sure all the proper permits were filed so you can be sure that the work is not substandard.

The Kostelnys, who used their life savings to buy the house and borrowed to repair it, finally moved back into the house a couple of months ago. In hindsight, they wish they’d had an inspection done.

But most of all they’re angry that the broker did not disclose the home’s history before the sale, so they could have made a more informed decision about whether to buy it.

Mikey Kostelny says, “It was all about greed,” as brokers, asset managers and others rushed to close the sale quickly.

In the Altadena home that the Kostelnys bought, the growers packed up their harvest in rental trucks and cleared out right before law enforcement raided the place, leaving only the dregs of their harvest and the damage to clean up.

Still, the Kostelnys had strange visitors for weeks after they moved in, knocking on the door and peering in the window, presumably looking for their supplier.


Here is their link to more of their stories about pot houses, but below is one of the most frequently watched videos in the history of Bubbleinfo TV – High on the Hill (over 24,000 views):

author avatar
Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, which began in September, 2005. Stick around!

Pin It on Pinterest