Abandoned properties can be an outstanding investment strategy. If you are looking for an opportunity to make money in real estate, small, abandoned houses can be a great start for you, but how to find abandoned properties for sale? These kinds of properties are excellent for house flipping or implementing your rental property investment strategy. They can bring immense profits via small investments. Therefore, we highly recommend that you start investing in such abandoned properties.
This guide will tell you everything about what are the pros and cons of abandoned properties and how you can find and buy such properties. So without further delay, let’s dive into what is abandoned property in the first place.
What is an Abandoned Property?
In the simplest words, the abandoned property is one that is not being utilized and is left by the owners. Houses with broken windows or unmaintained backyard are the abandoned properties. There can be numerous reasons behind properties being deserted such as:
- Owners might have been expelled by the mortgage lender and the place hasn’t found new landlords yet.
- Owners might live elsewhere and wouldn’t want to lease the house.
- A death, divorce, or any other catastrophe in the family.
There are two other terms related to the arena of abandoned properties for sale, i.e., distressed property and off-market properties. Let’s understand them in brief
Distressed Properties – These kinds of hones are usually in a bad condition because of financial issues or negligence. Usually, single-family homes or row houses are found in this category as these houses need more maintenance and don’t have anyone to support them.
Off Market Properties – As the name itself suggests, these properties are on sale but their listing is not public and is not advertised enough. Owners often keep their home selling process away from their neighbors or they look for specific types of buyers and don’t want much attention from the market.
Abandoned Houses: Pros and Cons
Abandoned houses for sale always come with the expenses and responsibility of repairs. You might have to replace the windows, the electrical or plumbing system, repair leaks, or deal with any other damage. Also, there might be ruined furniture or outdated appliances.
However, abandoned properties have their share of pros as well. Firstly, there is less competition with such properties. This is because most buyers are not interested in investing in repairs. Plus, these kinds of houses delay the process of moving, and buyers who have to shift soon won’t even look at them.
Similarly, sellers are willing to sell the property soon as they want to get rid of them. So, there is a high chance that if you find a property worth buying, you will get it easier than a regular one.
The next and most important benefit is that abandoned properties are sold below the market values. So, you can get one without paying the full price. Not to forget- if you renovate the property, its value can be increased substantially. Therefore, for real estate investors, abandoned properties are definitely a golden opportunity to get a higher return on investment.
As these kinds of houses are available at lower prices, you don’t even need much capital to start your real estate journey. You can get them easily and sell or rent them after investing a sum in their reconditioning. You can also use your creativity or expertise in remodeling the house to increase the value to the maximum. For instance, you can add bathrooms, bedrooms, or modernize the overall look of the house. The better you refurbish, the higher it will drive the value of the property.
How to Find Abandoned Houses for Sale
Here are some ways to find abandoned properties for sale:
- Drive and Find: The first straightforward way to find “good” abandoned properties is by driving around the neighborhood. If you want to buy some property in your city, then this approach is definitely the best one for you.
- Bank Listings: The next way to find abandoned houses is via banks. Banks keep one record of properties for sale after foreclosure. You can use this method to find properties in or outside your city for rental or selling purposes.
- Find Online: In the internet age you can easily find the right properties for you. You can visit abandoned properties for auction websites that sell or inform buyers about abandoned properties. Through these platforms, you can also analyze the overall investment using smart metrics and reach your final decision.
Analyzing an Abandoned Property: Things to Notice
Once you are sure about buying an abandoned property and have shortlisted a few, the next step is to analyze the properties to make sure they are worth the investment. Here are a few things to consider before you buy the property:
1) Repair Expenses – As mentioned already, abandoned properties come with the repair expenditures that may vary from a few damaged floors to complete installation of the electric system. These costs must be added along with the fundamental cost of the property to analyze your overall investment.
2) Neighborhood: If you want to evaluate the rental income of a property, inspecting the neighborhood is necessary. So, thoroughly examine the neighborhood. If, for instance, you want to rent the place on Airbnb, you must check average rates of neighborhood properties. It will help you decide the cash return of the property.
3) Investment Analysis – And finally, complete all the calculations and analyze how much profit you can potentially you can make out of your investment.
Abandoned houses can be a great and profitable investment option for those looking for a property for themselves. If you are looking for an income property, these kinds of properties can be inexpensive, easily purchased, and provide you with desired profits in the form of rental properties. They may even drive the prices of the neighborhoods up.
Once you have figured out the best property for yourself, you can purchase it via the traditional method that involves real estate agents or with the help of auctions. Auctions are a more profitable option and can help you get the right property way faster and easier than the traditional methods. So, we would recommend considering auctions to deal with such properties.