If you have ever thought about turning stone to gold, you’d love investing in abandoned properties. Abandoned houses can be bought cheap, and once the rehabbing is done, they can be sold for much higher prices, providing high ROIs. So, if you are good at taking initiative and doing the difficult tasks yourself, you can surely make a fortune out of this difficult journey.
However, the challenge with abandoned properties starts from the beginning, i.e., finding the right property for your investment. Fret not, we’ve got you covered.
This step-by-step guide will tell how you can find good abandoned properties and how you can avoid making mistakes in abandoned house investment.
Where to Find Abandoned Properties?
- Check Online – Check out real estate auction websites and look for phrases such as “immediate possession” or “below market value.” Alternatively, you can simply log into Auction Flippers and get all the details about the best properties on sale. You can find every relevant piece of information about the property along with a detailed analysis of the property value and location.
- Search Local Tax Department – Local tax departments have listings of available abandoned properties that no one is living in or paying taxes on. Also, some cities such as Camden, New Jersey post timely inventories of deserted properties online.
- Building Inspection Department – In San Francisco, empty and abandoned properties are documented on the city’s building inspection department’s website. On these websites, you can find the property owner’s name on a vacant property, making your further search easier.
- Drive Around – If you have a particular neighborhood in mind where you want to invest in properties, you can drive around and locate properties that appear deserted. Some common signs of abandoned properties are uncut grass, a negligent appearance, and no signs of life.
- Real Estate Agents- The last way is to ask real estate agents in the area about abandoned properties in the neighborhood or homes that are about to become foreclosure on their territory.
Finding the Owner
Once you find a good unoccupied property, the next step is tracking the owner. Many times, the reason behind a property being abandoned is the death of the owner, divorce, failure of payment of mortgage or taxes, and so on. So, even if the place looks without the owners, the ownership of the house either goes to a person or to the bank/money lender.
So, here are some ways to track down the owner of the property:
- You can find the last owner of the property from the county tax department.
- When you find out the owner, you can also find out if the owner owes back taxes on the property. In such cases, you can ask the officials if the property is due for auction at a tax sale.
- You can also contact the owner, see if they want to sell the property. If yes, you could start discussing the property value, taxes, etc. with them. Offer them your deal before the property goes to the auction.
- If the property is going for an auction, the easiest way to get the property is by bidding on it.
Abandoned Home Considerations
Abandoned houses are likely to be found in dilapidated conditions, and you might have to spend a considerable sum on other renovation and repairs. So it is best if you consider a few aspects of the property before making a move. Here is a small list of things you must consider before buying an abandoned house:
- Abandoned properties might need extensive repairs and may even contain asbestos, ruined floor and ceiling tiles, paint, and other ruined areas.
- They may also have mold from water damage or termite damage or you will need to fully replace electrical, plumbing, and HVAC.
- Undetected Asbestos inhalation can even lead to mesothelioma- a rare type of lung cancer. Therefore, you must mitigate asbestos when you start other renovations.
- Get the inspection done by an expert before you plan to buy it. It will give you an exact idea of the extent of the damage and how much it will cost to repair.
- You must calculate all these repairing costs before finalizing the house or going for the auction.
Why Buy Abandoned Property?
Rehabbing abandoned properties can be difficult. Yet, there are tons of reasons why you should consider buying them and investing in them for better returns.
To begin with, abandoned homes are some of the cheapest real estate deals and can be purchased at well below market value. They are usually in a poor condition and the owners/lenders/banks want to get rid of them to get the unpaid sum back.
So, if you are really interested and skilled in selling homes, you can transform abandoned homes into high-ROI properties and make the most out of opportunities.
Things to Consider Before Buying an Abandoned home in Auction
- Purchasing a home at auction is often riskier than buying through the typical process. Before you start considering auctions, you must get comprehensive knowledge about how real estate auctions work.
- Start looking for auctions through local governments, real estate agents, and online sites such as Auction Flippers. Visit auctions to get familiar with the atmosphere and live action.
- Auctions and their rules are different from conventional property buying. Read and review all the auction rules about the property documents such as claims, liens, occupants, etc.
How Buying an abandoned House at Auction
- Thoroughly inspect the house. You should always consider getting this done by experts such as home contractors or real estate agents. They will help you in estimating the value of future expenditures that you cannot notice otherwise by yourself.
- Consider your budget before going for the auction. The bidding environment can get heated and you might make a bigger bid than the money you actually have. So create a budget, stick to it, and don’t cross your upper limit no matter how much you like the property.
- Plan the basic cost as well as the upcoming expenses such as repairs.
- Take the help of a real estate attorney to help you read, understand, and sign lots of paperwork.
- Get your budget finalized from a lender or a bank before you visit the actual auction. The operations of auctions are way faster than conventional buying, and you would need to pay the money within 30 days of the auction.