If you’re looking for a way to potentially find a great real estate deal, purchasing an abandoned property could be a solid option. According to the New York Times, the last 2020 census recorded 16 million vacant or abandoned homes. With so many houses available, there are a lot of potential opportunities for individuals looking to invest in abandoned properties.
What is Abandoned Property?
Abandoned property is a distressed property that has been foreclosed and no longer has residents living in the home. In foreclosure cases, homeowners either can no longer make mortgage payments or now owe more money than their real estate property is worth. Since previous owners no longer have the financial resources to maintain the home, mortgage lenders begin the foreclosure process to recover the home.
What is the Law on Abandoned Property?
According to Cornell Law School’s Legal Information Institute, the law on abandoned property falls under the adverse possession doctrine, which says that, as long as common laws are met, an individual may acquire the title of a piece of land previously owned by someone else.
The following are the six standard law requirements that must be met to acquire an abandoned property legally:
- Continuous possession of the property
- Hostile or acquirement of property takes from the rights of the previous owner
- Open possession that’s obvious to the public
- Authentic possession of the property
- Within the 7-year statute of limitation requirement
- Exclusive ownership of the property, or that the property is not shared
Benefits of Buying Abandoned Property
- Less competition from other real estate investors
- Prices for abandoned properties are typically cheaper
- Able to redesign a home to your personal preference
Potential Challenges with Buying Abandoned Property
- Abandoned properties can come with additional legal requirements, called liens. For example, in the case of abandoned properties, previous owners could have put their property as collateral for a debt. In these cases, the debt is still connected to the asset and, thus, the new asset owner.
- Repairs can be expensive and time-consuming.
How to Find Abandoned Property
It can be challenging at first to find abandoned properties. Here are a few steps to help you get started.
Skip Tracing
That’s why many individuals turn to skip tracing. Skip tracers will research and identify abandoned properties in the local area. You’ll then be provided a list of abandoned properties and potential owners.
Check-in with Real Estate Agents
One of the easiest ways to find an abandoned property is to connect with local real estate agents. Local agents should be able to provide insight into available abandoned properties. At the very least, they will be able to connect you with other agents or locals that have more information on abandoned property.
Analyze Real Estate Listings
Local real estate listings can help provide some clues on abandoned properties available in the area. However, look at listings in print and online for the best results.
Review Unpaid Taxes at Your Local Tax Office
Your local tax office can be an excellent resource for finding abandoned properties. But, first, you’ll want to analyze unpaid property taxes at the local tax office. These can signify that the owners are no longer living at the property and are in the middle of foreclosure.
Tips For Purchasing Abandoned Property
Outside of the essential steps for finding an abandoned property, there are also a few additional tips that can help you purchase an abandoned property.
Identify the Owner of the Abandoned Property
Once you’ve found an abandoned property, you’ll want to identify and reach out to the property owner. These could be the original owners of the house. In other cases, the mortgage lender could be the mortgage lender. But, again, it depends on the stage of the foreclosure process.
Understand the Condition of the Abandoned Home and Property
Before purchasing an abandoned property, you should try to understand the condition of the property. This can be challenging as sometimes the owners are reluctant to give potential buyers full access to the property. Even if you cannot assess the property physically, try obtaining as much information as possible from the property owners.
Establish Budget and Make an Offer
Establish a budget before making an offer on an abandoned property. A budget will give you a financial foundation throughout the negotiation process. A few keys for establishing a budget:
- Only put forth what you can afford
- Establish a plan for what you wish to do with the abandoned property
- Set a financial cap that you won’t exceed during the negotiation
- Be willing to walk away from negotiations
Investing in abandoned properties can be a great way to find a solid real estate investment deal. For the best experience possible, be sure to work alongside a real estate agent who has experience in purchasing abandoned properties. They’ll be able to assist you with networking, property assessment, and potential legal questions.
If you have any questions, contact us at Best Skip Tracer. We’d love to walk you through the abandoned property process and help out in any way we can.