Digging for Gold – Investing in Condemned Properties
To some people, broken windows, dilapidated roofs or collapsing porches mean trouble. People like Kenny Rushing, a Tampa, Florida-based real estate investor, see dollar signs.
“More than 60 percent of the houses I have bought in Tampa were condemned properties,” says Rushing. “I have yet to lose money on those.”
How Properties get Condemned
Local authorities condemn buildings for a variety of reasons. In some cases, the government wants to build something in its place and will condemn the property as part of an eminent domain proceeding. Or, it could be a construction, maintenance, or pest issue that makes the structure unusable for its original purpose. In some cases, the repair or maintenance needed is relatively straightforward, but the owner does not always have the resources or know-how to make the repairs or renovations.
In these cases, the owner is almost always a motivated seller. Selling the property may help the owner get at least something for the asset, as opposed to having to let the property sit fallow for months or years. Owners of such homes are frequently willing to sell at substantial discounts. That could mean opportunity for you, the investor.
Finding Condemned Properties
There are a couple of ways to find condemned properties. You can drive around neighborhoods, though it can be hard to tell if a property is condemned just by driving by. For example, some buildings are condemned for nothing more than a non-functioning fire alarm or sprinkler system. If the owner can’t make a repair, the structure could look fine from the outside.
You could also enlist your local intelligence network within your favorite neighborhoods. These are neighbors, real estate agents, contractors and other people who can tip you off about a possible purchase opportunity. This is a great way to go, because it gives you an advantage over other bidders for that particular property.
Finally, you could check your local government’s list of condemned properties, generally available through its website or by visiting City Hall. In some areas this is less advantageous because the same information is available to all real estate investors at the same time; you may have more bidders on any given property by relying entirely on public records. Nevertheless, opportunities still exist with any of these techniques.
Orson Klender, Licensed Associate Broker; Keller Williams Real Estate
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