One of the best ways of making money is by investing in abandoned buildings and real estate. It is fast becoming a trend in real estate to invest in abandoned buildings and then repairing them and selling for high profits. However, it is seen as a cheaper alternative than buying normal property and then selling it, as it requires lesser capital. This is a brief guide to making money out of the abandoned property.
What is an abandoned property?
To start, we need to figure out what qualifies as abandoned property. An abandoned property or building is a building that is not in use and sits empty. There are many ways of recognizing abandoned properties like unkempt yards or broken doors and windows.
Two important terms you will come across when looking for abandoned properties are:
1) Distressed property
Poorly conditioned property because of financial reasons or neglect.
2) Off-market property
Property is for sale, but the listing is not advertised or public.
What to consider before investing in an abandoned property?
You have to consider a few things before you invest in an abandoned property:
1) Prepare to spend
While the biggest perk of buying abandoned property is lesser initial capital, you still have to prepare yourself to spend money on the repairing costs. These can vary and at times, be a lot. You might have to replace the electrical system or the plumbing or fix a few leaks and water-related damage in the walls. Remember, smart spending on fixes and repairs can end up being a good investment.
2) Prepare to wait
Yes, repairs can take time. Some fixes and repairs are done only in the summer, so you might have to wait before you can get your profitable return by selling the property. Do not rush it, and remember, if you play your cards right, you can make a big profit!
3) Prepare to put in the effort
Remember, you will have to put in a lot of effort to give a good look to the abandoned property you have invested in. So, be prepared and make sure you do your best!
Why invest in an abandoned property?
There are a lot of reasons for investing in abandoned property:
1) Lesser competition
If you are buying abandoned property, it means that you will not have as much competition in buying as you did in normal real estate. This is because homeowners are not prepared to wait before moving in, and others are not prepared to invest effort and money in repairs. The seller is also keen to get rid of the abandoned property, so it means you have very little competition.
2) Prices below market value
The prices of abandoned properties are far below the market value. If you do your homework right, you can find a real gem that is worth far more than its going price. Again, with the seller being keen on getting rid, you can get a bargain.
3) Renovation costs are lesser than the profit
Few people are convinced that abandoned property is a good investment. However, if you have the mindset of a hard-worker and do not mind spending on a renovation, you could also be rewarded for your patience, as the price of your renovated home will be a lot more than the houses in the same neighborhood.
4) Abandoned properties make good rentals
Buying abandoned properties and renovating them with disposable income over time, makes a lot of sense. You might not be willing to invest big altogether. If you address the main concerns of the abandoned property, you can start renting it out as well. You can use that rent and invest it in renovation and then sell it whenever you feel like it!
How to find abandoned houses for sale?
These are some ways through which you find abandoned houses for sale:
1) Driving for dollars
You can drive around neighborhoods or specific geographic areas and identify abandoned houses that are for sale. This is a useful approach if you are looking to invest in a neighborhood close to where you live.
2) Bank Listings
This works if you are looking for an abandoned property outside of where you live. Banks keep online listings of properties for sale after foreclosure.
3) Mashvisor Property Marketplace
Mashvisor’s Property Marketplace has a directory on off-market, foreclosed, or even auction listings. You can analyze the property and decide if it is a good investment using the key metrics available. This helps you finalize your buying decision.