- December 29, 2022
- Share
Purchasing an abandoned house can be a fulfilling experience, but it’s essential to prepare for the challenges that come with this type of purchase. Following these steps can increase your chances of success and help you transform an abandoned house into your dream home or cash-flowing investment property.
Search for Abandoned Houses in Your Area
To start your search for an abandoned house, look for properties for sale in your area. You can use online resources like Zillow or Redfin, but many abandoned houses may not be listed online. If you can’t find any houses for sale online, try driving around your area and looking for abandoned houses or join a local real estate investment group. You can find these groups on sites like Facebook and BiggerPockets. You can also check your citie’s citation records for properties who have been fined for tall grass or junk in the yard. With some persistence and luck, you’ll be able to find a few houses in your area.
Research the House and Owner
Once you find a vacant house in your area, research to ensure there are no liens or legal issues. Check the county assessor’s office or use online resources like Zillow to find out the house’s history and ownership. Researching the house and owner protects you from future issues.
Determine the Value
To avoid overpaying for an abandoned house, determine its actual value. Just because a house is abandoned doesn’t mean it’s a good deal. Determine the house’s worth by hiring a professional appraiser ($400-$600) or using online tools like Zillow’s Zestimate. While Zestimates are rarely accurate, it will help you get a ballpark figure by comparing properties in the area. This will help you make an informed decision about whether the house is worth the investment.
Consider Renovation Costs
Before making an offer on an abandoned house, it’s vital to consider renovation costs. These can include basic repairs, such as new flooring or drywall, or major renovations, like a new roof or electrical updates. By considering the costs beforehand, you can better prepare for the investment needed to bring the house up to your standards. If you have no experience with material costs, check out The Book on Estimating Rehab Costs or offer to pay a contractor for a couple hours of their time.
Make an Offer
Determine the value and renovation costs, then make an offer. The owner may accept a lower offer if they are motivated to sell. If the owner lists with an agent, they will likely have to pay for repairs themselves beforehand. Use this as a negotiation tactic. Suggest that the owner take the expected repair costs off of the purchase price, as long as you buy the home as-is.
Securing Financing
You’ll need financing if you don’t have the cash to buy an abandoned house. It may be harder to get a loan for this type of property, as lenders may be hesitant due to the house’s condition. You may need a larger down payment or a higher interest rate to compensate for the risk. Don’t be discouraged if you have to work harder for financing – it may be worth it. Search your local real estate groups for a reputable mortgage broker or hard money lender and see what options they have for you.
Get the Abandoned House Inspected
It’s crucial to get a thorough inspection before closing to identify potential issues. Then, you can use any problems the inspector discovers to negotiate a lower price or have the seller cover necessary repairs. An inspection also ensures you clearly understand the property’s condition before making a final decision. Don’t skip this step – it could save you money and headaches later on.
Close on the Property
After securing financing and completing the inspection, it’s time to close! The closing process involves signing the necessary paperwork and paying the purchase price. Use a reputable closing company or a real estate attorney during this step. Review all documents before signing to ensure everything is in order. Once the paperwork is signed and the purchase price is paid, you’ll officially be the new owner. Congratulations!