How To Repair Drywall With Water Damage or Mildew

Here is the water damaged area of drywall in our basement.  Water had been leaking in from outside.  I fixed the leak and now was going to fix the damaged drywall. There is no need to replace all the drywall if the damage is only near the floor.  With this procedure you can make your repair to only a narrow section.
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The first step is to cut out a strip of drywall.  I chose to make the cut just below the outlet. Then I cleaned up the area with a cleaning solution.
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Several of the 2 by 2 studs were a bit compromised so I attached some 2 by 2's next to the compromised studs. I used a concrete screw that looked like a blue drywall screw.  All I had to do was drill the proper sized hole with a masonry bit and then screw in the stud.
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I placed plywood backing behind the horizontal edge and attached to the existing edge.  This provides a solid horizontal surface for the patch piece to attach onto. Without the backing, I think the horizontal joint would give way, even after being taped. In retrospect, I wish I would have added some horizontal studs along the floor.
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Attach the patch piece or pieces onto the studs and horizontal backing. Leave about 1/4" of space between the floor and the drywall so water will not be wicked up by the drywall in case of a spill or flooding.
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Tape and finish the joint.  Here is a picture of the finished wall.
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