Now that the foreclosure and bank owned market has mostly run its cycle, investors are again looking for values in the retail market. Possibly the best place to look is at the abandon house market. There many reasons why a house becomes abandoned. Two of the most common are landlords that grow elderly and simple don’t have the energy or money to maintain the house any longer and another is estate heirs that inherit a house but have no interest in dealing with it.
Dealing With Abandoned Houses
Whatever the reason a house becomes abandoned, it can typically be bought for pennies on the dollar. You will likely need to do all of the work to bring the deal to the closing table but the deep discount will make it worth your effort.
Finding the current owner of an abandon house can occasionally be a challenge. Most of the time you don’t need to look any further than the county tax office where the title is recorded and the tax records are public. However, I know one man that spent several unsuccessful hours trying to find the owner to no avail. He did eventually find the owner using a clever technique. He put up a large For Sale sign in front of the house with his contact information on it. Of course, he had no ability to sell the house but about a week later the true owner contacted him. A bit irrate it took a few minutes for the investor to calm the owner down to explain that he was interested in purchasing the house. The investor explained that in small print on the sign was a note asking if the owner was interested in selling the house. I call that creative investing.
Finding Abandoned Houses
Some people call this ‘driving for dollars’ but it is very time consuming. There are several easy to spot indicators that a house has been abandoned. Among the most noticeable are utility boxes that have a red tag locking out any tenant from using the utility. Obviously, a severely over grown yard is one of the easiest ways to spot an abandoned house from a car driving down the street. Another is vegetation growing up in cracks in the driveway, indicating the drive way isn’t being used.
But you’re a busy investor who’s time is better spent doing more important tasks than driving around all day looking for abandoned houses. This is the perfect opportunity to hire a birddog. Hire someone at a low cost to do the driving for you. Share with them the methods of spotting abandon houses. Arm them with a digital camera and send them to the neighborhoods you are interested in.
Tell that person the information that you want brought back. At a minimum, this will be a photo and the address. Once the information is gathered, have it entered into a spreadsheet. You may or may not want the birddog to do this for you. The birddog is trying to get into the investment business and you need to decide how much of your process you want to reveal. Personally, I believe in sharing value added information.
Once the information is organized, it’s time to start locating current owners. Typically, this is done through county tax records. Once you have the current owners’ names and mailing addresses, it’s time to send out letters inquiring if there is an interest in selling the house. No purchase price offer is included in the letter. You only want to know if there is interest in selling. Price and term negotiations will come later. In most cases, these letters can mostly be genetic but do customize each one by placing the owners name at the top. Offer multiple ways to contact you. If it’s an elderly owner they probably don’t do email.
Now wait for replies and contact each one that indicates an interest in selling.
Besides hiring a birddog to drive neighbors, you can consider offering a finder commission to people that frequent the neighborhood such as the mailperson. In these cases you probably only pay the commission when a deal does in fact close.
It’s that simple, one of the best investment markets available today are abandoned houses. You just need to find as many as you can. It’s not uncommon to buy these for 60 percent or less of the current market value.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.