Where to find abandoned homes
Vacant buildings can be found in virtually every city, neighborhood, and market, although it's more common to find a large-scale vacancy in distressed cities, one in which the population has rapidly declined, like Detroit, or in certain neighborhoods, most commonly low socioeconomic areas.
Many investors will "drive for dollars,'' riding around neighborhoods and creating a list of abandoned buildings to research and market to. Others will simply purchase a list from a nationwide list provider.
However you chose to develop your list, the next step is to identify the homeowner. Getting in touch with the property owner is the most challenging but also the most crucial part of investing in boarded-up homes. Since the property is abandoned, it can be difficult to locate and identify the right owner or point of contact. However, with some online research, either through the property appraiser or public records, you can often determine who the owner is or identify why the property is vacant and in distress.
If the property is real estate owned (REO), which means it's owned by the lender, or the property is owned by the local government, you'll need to find the person in charge of selling properties on their behalf. This could be an auction service, a real estate agent, or a special department at the firm. If foreclosure is not complete, you may be able to purchase the property at a foreclosure sale, which is a public auction where you bid on the property online or live at the courthouse steps.
If the property is owned by an individual, you'll have to do some research as to how to reach them, then send a letter or postcard. Depending on the owner, you may or may not be able to access the interior of the property before buying the property, which could result in additional repair costs or issues. This means investors should have a large, well-buffered renovation budget and prepare for the worst in case of unexpected costs.
Pros and cons of investing in vacant houses
While investing in abandoned or boarded-up property can be a potentially lucrative investment, it isn't for everyone. Below are a few of the pros and cons of this method of real estate investing.