Before you disregard the next condemned property you see, I suggest you reconsider. There is good money to be made investing in condemned properties.
First, most owners of condemned properties are under great stress from the local Condemnation Department to make improvements to the property. The infractions may include an overgrown yard, garbage collected on the property, cosmetic and structural damage, and property neglect (just not maintaining the house).
You can get a list of the condemned homes in your area by visiting the Condemnation Department. Most lists cost less than 10 dollars. The new list is normally printed every January. Using this list I like to send out “We Buy Condemned Homes” post cards. You can find a lot of motivated sellers this way.
More than 60% of the houses I have purchased in Tampa were condemned properties. I have yet to lose money on any of these deals. Why are they profitable? It's simple!
Condemned properties can be purchased cheaply. The owners have typically gotten themselves in a financial bind and can't afford to correct the violations. The further along the condemnation process has gone, the more desperate the seller will become.
Purchasing a condemned property is no different than buying any other property. However, before you agree to purchase the condemned property you need to visit the Condemnation Department to ask several questions. What violations does the property have? Are there liens attached to the title? If so, will they agree to a settlement? Oftentimes the city will settle for nickels on the dollar if they are confident you can correct the violations.
I can remember purchasing a condemned property which had multiple liens. In total, the liens exceeded $20,000. Before the city was willing to settle on a price I had to provide three things:
- A sales contract: They wanted to make sure I had the right to buy the house.
- Proof of funds: I had to provide them with bank statements. They wanted to make sure I had enough money to buy and rehab the house.
- A personal letter: Written by me, this letter assured the city I was aware of the violations imposed on the property and agreed to use a licensed and insured contractor to do the work.
Once I provided these items to the city, they agreed to settle the code enforcement liens for $425.00 if I assured them the house would be rehabbed by the deadline. The Condemnation Department will normally allow you 30 – 90 days to rehab the home. When the property receives its Certificate of Occupancy, the city will release the lien against the property.
Next time you ride past a house and notice an orange condemnation sign attached to the front door, I hope you don't view the property as a hopeless sight, but a hopeful gain!