Many condemned properties are passed over by investors and potential homeowners. They are afraid there are costly liens against the property and that the dwelling is too damaged for rehabbing or flipping.
Understanding the property’s financial situation will help you achieve your goals. Here are five things you need to know before buying condemned real estate.
1. Contact the local building department
You will need to find out what violations have been placed against the condemned real estate. They may contain such things as a leaky roof, overgrown grass or the lawn is riddled with trash. Most of the time, you can obtain a print out. If they will not let you know what the violations are, ask to see them through the Freedom of Information Act. This will allow you to gain the access.
2. Contact the Treasurer’s or Assessor’s office
Find out if back taxes are owed. Ask for a print out for your records. These eventually will have to be paid and most likely by you. Localities give homeowners a certain period of time to pay their delinquent taxes. After it is up, they can sell the condemned property to recoup the back taxes owed. A quick purchase may be necessary so that the lien can be taken care of.
3. Have a title search done by a reputable attorney or a title company
The cost is usually inexpensive. It will tell you what liens are against the condemned property such as loans, judgments and tax liens. If mortgages are on the property, it is important to find out if any substitute trustees are on file at circuit court. If there are, this usually means that the owner is behind on his or her payments and the property is facing foreclosure in the near future.
4. Talk with the owner
Most likely he or she has had a financial setback. At the same time, the building department is demanding that the repairs be made immediately. They do not want urban blight to develop in their locality. The homeowner does not have the money. In this circumstance, the purchase price of the home can drop dramatically. This can make it financially feasible to buy, outweighing significantly the debt that has to be paid along with the cost of the rehab or flipping.
5. Lower incurred debt
After the purchase agreement has been signed, talk with the building department. They might be willing to accept a lower payment of the debt owed. After all, the locality desires and needs urban renewal.
Condemned real estate is often a great investment. Many times it can make a profit to an investor or provide a fabulous home at a fraction of the going price for similar homes. Some time spent on research can save money in the future.