Author Topic: Buy the Lot Next Door with a Vacant house?  (Read 10068 times)

birdman2003

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Buy the Lot Next Door with a Vacant house?
« on: March 21, 2014, 06:40:28 AM »
I bought my modest house in 2012 and at the time I didn't pay much attention to the dilapidated house next door.  Sure, the house had seen better days but the yard was kept up and there was no sign of vacancy.

After I moved in, the neighbors across the street came over and told me that the people who owned the house next door to me had abandoned it during the crash of 2007.  During the winter of 2010, the pipes froze and the basement filled up with water.  Water was pouring out of the basement windows into the yard.  A few months ago when I had my water meter upgraded, I asked the city employee if he knew anything about the vacant house.  He was the one who responded to the call to shut off the water.  He said the whole house was wrecked.

The lot is the same size as mine - 7,000 sq ft.  The city has the land assessed at $16k.

The house is an eyesore and needs to be razed.  The yard is accumulating debris.

My house will be a long term investment, and I'm not going to try and sell it anytime soon.

I've thought about trying to make contact with the property owner and see if they would be willing to sell it to me for $2 or $3k just to be rid of the hassle of paying property taxes, etc...

Can you help me think about other options or another way to obtain the property?
Has anybody bought the vacant lot next door to get rid of an eyesore or expand their property?

« Last Edit: March 21, 2014, 06:42:25 AM by birdman2003 »

cotterpin

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #1 on: March 21, 2014, 10:32:38 AM »
I'm not a real estate professional, or a lawyer, or any kind of expert on anything for that matter, but I have attended tax sales with a friend several times and have talked to tax assessor/collectors on occasion and might have a couple of ideas for you to check into.

If the property appears to be abandoned, go to your local tax office (be sure to check county and city if they are not collected by the same office).  Ask them if it is in arrears and whether or not any liens are currently on it.  You can usually do a check at the courthouse for title information including whether there is a mortgage on it, current ownership, etc.  If you need help, usually a clerk will help you if you let her know you're  researching because it is next door to you.  There is a downside of that, and that is that there are some people out there that if they know someone is interested in a piece of property, they will try to obtain title to it and then make a profit by selling it to you.  In our county, showing interest in a property immediately sets off a red flag to investors.

If the only thing owed on it is taxes, especially back taxes, you might be able to get the current owners to "quit claim" it to you for a nominal fee. That would allow them to rid the tax liability and transfer that to you.  Also check for any liens for mowing, whether it has been condemned,etc. Most taxing authorities are eager to get property back on the tax rolls and will not stand in your way. 

Two other things I can think of off the top of my head would be making sure it isn't tied up in probate. It is still doable, but more complicated. My sister bought a condemned house that way, but it had about 15 heirs she had to deal with and get signatures from separately. She paid a lawyer to do that since she lived out of town. It was pricey, but worth it because there wasn't really anything majorly wrong with the house, but it had been vacant so long the the city condemned it when the neighbors complained. It's very possible you could handle all of this yourself. The other thing is whether you would be able to have a clear title for title insurance if you sell.  One way around that is to keep both properties separate and sell them separately if you do decide to sell in the future.

Also, as far as demolition goes, you might be able to have someone come clear it for you in exchange for the materials.  There is a growing movement of people who are looking for salvage material to build with or resale.

Hope that made some sense, like I said I'm not a professional.  And it would totally depend on your state, area, etc.

Retireme32

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #2 on: March 21, 2014, 02:23:35 PM »
Birdman,

Buy, buy,buy!  If you do not buy, eventually it will be auctioned off and it will go for much higher than you are suggesting to the buyer now and you won't be able to control what they build in it's place.  So if you care at all about what gets built next to you - buy now! If you don't buy, consider it already bought and resolve yourself to that fact. So many times I've seen people upset about what got built next to them as if they had a right to it staying forested forever to which I said, "did you buy it?"  No? Then expect it to be built on.  You dont have to do anything with it but tear down the house and if you go and make agreements with the City or County you live in as soon as you buy it - they may allow you time to tear it down b/c you are working with them.  $2-3k for a single lot? That is rare in the part of the country I live in.  IF it doesn't hurt your FI plans in terms of savings, I say buy it! Good luck!

Rural

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #3 on: March 21, 2014, 05:12:06 PM »
We bought the forested land next to us (6 acres), and we're keeping an eye on the rundown trailer that seems to have just been abandoned on the other side. If the opportunity arises, we want to buy that.

Keep in mind the cost of tearing the place down, though. It'll cost us some, and we have heavy equipment of our own.  In general, I think it's a good idea if you can afford it, but it's important to remember that it costs more than the sale price. You don't want to sit, either, even if the authorities will let you. Too much risk of it becoming a meth lab or something similar.

Milspecstache

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #4 on: March 21, 2014, 09:35:31 PM »
My dad waited to buy a piece of property next to him.  Then someone put trailers on it to rent out.  After that someone else bought it to put a beer store/bar on it.  At that point he had had enough and tried to buy it.  That last individual did sell to him but at a bit of a markup from the originial sale price.

Good luck buying it!

birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #5 on: March 22, 2014, 05:02:36 AM »
Thanks guys.  I sent an email to my county assessor's office asking for their advice...

jawisco

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #6 on: March 22, 2014, 07:58:56 AM »
Don't send emails for this type of thing - get on the phone and start asking questions - tell the assessors the situation and that you would like to purchase the lot/house and see what they say.

You can probably find a website for your state that lists lien judgements to see if there is anything for the place.  Another option is to find a lawyer who does real estate and see if they have any ideas. 

CanuckExpat

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #7 on: March 23, 2014, 01:46:55 AM »
My house will be a long term investment, and I'm not going to try and sell it anytime soon.

I've thought about trying to make contact with the property owner and see if they would be willing to sell it to me for $2 or $3k just to be rid of the hassle of paying property taxes, etc...

Can you help me think about other options or another way to obtain the property?
Do you have ten years (assuming you are in Iowa) and feel like trying your hand at adverse possession:
http://en.wikipedia.org/wiki/Adverse_possession
https://coolice.legis.iowa.gov/Cool-ICE/default.asp?category=billinfo&service=IowaCode&ga=83&input=564

birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #8 on: March 31, 2014, 11:24:27 PM »
Update: I made contact with the county assessor's office.  The property was recently sold at a tax auction and the current title holder has until June to redeem the property or else a new deed will be issued to the tax auction winner.

I'm going to wait until June and see what happens.

Thanks again for your input.

arebelspy

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #9 on: April 01, 2014, 07:30:16 AM »
Update: I made contact with the county assessor's office.  The property was recently sold at a tax auction and the current title holder has until June to redeem the property or else a new deed will be issued to the tax auction winner.

I'm going to wait until June and see what happens.

Thanks again for your input.

...why on earth would you wait until June?!

That's a great situation!  You contact the owner, who may have no way to redeem the property themselves, and are just going to let it go (because they don't want to pay the property taxes). 

Exactly what you wanted here:
Quote
I've thought about trying to make contact with the property owner and see if they would be willing to sell it to me for $2 or $3k just to be rid of the hassle of paying property taxes, etc...

Now you can contact them, offer them 2-3k + the back taxes for them to use the back taxes to redeem the property and deed it over to you.  They get an extra 2-3k they didn't have before and were going to lose the land anyways, you get the property cheap.  Win-win.

Why would you let the person buying the land at the tax sale keep it?  They may develop it in ways you don't want.

This seems like the best possible scenario for you, and you're not going to jump on it?! 

:D
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cotterpin

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #10 on: April 01, 2014, 09:53:08 AM »
Update: I made contact with the county assessor's office.  The property was recently sold at a tax auction and the current title holder has until June to redeem the property or else a new deed will be issued to the tax auction winner.

I'm going to wait until June and see what happens.

Thanks again for your input.

...why on earth would you wait until June?!

That's a great situation!  You contact the owner, who may have no way to redeem the property themselves, and are just going to let it go (because they don't want to pay the property taxes). 

Exactly what you wanted here:
Quote
I've thought about trying to make contact with the property owner and see if they would be willing to sell it to me for $2 or $3k just to be rid of the hassle of paying property taxes, etc...

Now you can contact them, offer them 2-3k + the back taxes for them to use the back taxes to redeem the property and deed it over to you.  They get an extra 2-3k they didn't have before and were going to lose the land anyways, you get the property cheap.  Win-win.

Why would you let the person buying the land at the tax sale keep it?  They may develop it in ways you don't want.

This seems like the best possible scenario for you, and you're not going to jump on it?! 

:D

Yes!! Act now, for several reasons. If the tax lien holder applies for the deed, he is in control.  If you go to the owner now and make arrangements, you could be in control.  I don't know the exact laws pertaining to Iowa tax liens, but I've read that they increase by 2% each month until they reach 24%. Did you find out what the total amount necessary to redeem it? You can factor that into your plan.

Sometimes investors will buy tax liens as an investment and if when doing their due diligence they see a reasonable looking house they will bid without actually wanting the house. They are after the % of return and their strategy is going after property that they think will be redeemed.  Here in my state, you can't easily look into the inside condition of a house so if a house has many issues, they may not know it.  The owners do, and possibly abandoned it when they couldn't keep up with the maintenance.  Since you are interested in the land, that won't be a problem for you.

Find out who holds the lien, if they are local or an investor from out of town. Also see if they are holding liens on other properties. This might be available online depending on your county. Sometimes investors come to sales and buy multiple liens but will not apply for the deed at the end of the redemption period. This could be a clue for you. 

Good Luck!!   

richschmidt

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #11 on: April 04, 2014, 11:24:36 AM »
I just encountered this thread... right when it's getting exciting!

I can't wait to read what happens next!  :)

birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #12 on: April 09, 2014, 01:23:30 PM »
I need to make contact with the owners this week.  Still trying to figure out what the most I would be willing to pay for the property.  If the back taxes are less than $4k I might offer $5k even.  It's honestly a small lot and I don't want to spend much. 

Will update after I make contact with the owners.

birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #13 on: April 11, 2014, 11:12:55 AM »
Cost to redeem would be $19k.  I don't have that sort of money ready to go for this purpose.  Worst case scenario, the investor who bought it at the tax sale auction 3 years ago for $2k would put up a shack and rent it out for almost nothing to tenants that would cause me headaches.  Best case, the current owner redeems the property and lets me take it off his hands for $4k.

arebelspy

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #14 on: April 11, 2014, 01:08:04 PM »
Cost to redeem would be $19k.  I don't have that sort of money ready to go for this purpose.  Worst case scenario, the investor who bought it at the tax sale auction 3 years ago for $2k would put up a shack and rent it out for almost nothing to tenants that would cause me headaches.  Best case, the current owner redeems the property and lets me take it off his hands for $4k.

Yeah, pretty sure the owner isn't going to redeem for 19k and then sell for 4k...  ;)
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
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birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #15 on: January 28, 2015, 10:37:37 AM »
Just wanted to provide an update:

In June, the tax lien holder (an out of town real estate LLC that appears to specialize in buying at tax sales) claimed the deed and started a renovation process.  They completely gutted the house, new roof, but they just painted over the moldy siding.

It sat vacant until December when they sold it to a sucker (my new neighbor) on contract for $140k.  The houses in my neighborhood are almost all under $100k, and I can't see why they would pay that much for a house (polished turd house) unless they had zero credit.

I snooped on the contract terms (thank you online recorder's office) and they paid $5k in December, with monthly P&I of $1k and an extra payment of $3k every January starting in 2016.  They will be paying until 2031...that's an 8% annual interest rate.

So far the neighbors seem to be okay, but man, I wish they hadn't claimed the deed....
« Last Edit: January 28, 2015, 10:40:46 AM by birdman2003 »

arebelspy

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #16 on: January 28, 2015, 10:41:57 AM »
Too bad.  Would have been nice if you got ahold of the owner, bought it for a few thousand, paid the back taxes of 19k, renovated, and then sold yourself for that amount.

How much rehab do you think it needed?  Gut + roof can be expensive, but it depends on the level of rehab and size of the house.  That's a potentially interesting spread for flips.

Thanks for the update.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

birdman2003

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Re: Buy the Lot Next Door with a Vacant house?
« Reply #17 on: January 28, 2015, 11:06:17 AM »
Yeah, at the time I just couldn't get $20k together without raiding my Roth.  Would have been nice though.

The roofing crew (limited english) went door to door asking to run an extension cord since the property had zero active utilities.
There was extensive water damage and mold inside the house because the pipes had frozen and burst several years ago.  The water was coming out the basement windows into their side yard.

The house is a 1.5 story 30' x 30' house but I have no clue on what they paid for new interior and roof. . .

I'm sure they will make a healthy profit on this one.