So I'm flipping vacant land, and a prospective seller responded to my mailer about a property he has, but it turns out that it has what the county calls in their property records an "Unlivable House". I've found a picture of the outside of the structure, and it is definitely consistent with that term: old construction (of no historical significance), small home, that would probably be functionally obsolete by today's standards anyway, plus the windows and roof are compromised and the home's overgrown with vegetation. So, yeah, totally unlivable and not at all likely to be cost effective for someone to rehab. Given the state of the structure, the parcel is assessed with $0 Improvements value, which is how it ended up on my mailing list.
This county does not appear to have, or enforce at least, any process for condemning and demolishing homes like this, so I don't think there's a particular risk of that happening. But, the structure appears very likely to be far more liability than asset to anyone that I would flip the property to. If the land were truly vacant, without the unlivable house on it, I think I could resell it for maybe $6k. My concern is, the cost of demolition could eat up most or all of that value, I'm guessing. Also, it's my first time working in this particular county, but it does not at all appear to be a particularly hot market, so I'm concerned that any significant unattractive feature like this might make it that much harder to sell the property within 6 or even 12 months.
Does anyone have any experience with a situation like this, or recommendation on how to proceed? Would you just let this one pass by, or make an extremely low offer and take a chance on it?
@dl7573 I have dealt with similar situations in several different ways. (1) I contacted the local fire department, and asked them if they needed a house to practice on. They were delighted, and came with apprentice firefighters who set fire, extinguished, etc. until nothing was left but ashes. (2) I contacted a local guy with a bulldozer, who demolished the house, and burned what was left (with permission of the local fire department), all for $1,000. (3) In an area that did not permit burning of debris, I had the dozer man dig a pit and throw the debris into the pit, then cover it back with soil, and throw some Kentucky Bluegrass seeds on it, covered with hay. After a couple of months there was no trace of the pit, but of course you have to disclose the existence of the pit to the next owner.
Thanks @perloseth, I remembered hearing about donating the house to the fire dept for burning before and was reading about that a bit last night. I'm planning on call the local FD today. In your experience, did that approach cost you anything? Some of the articles I read online indicated that you might still need to pay for a demolition permit and/or asbestos testing, and that these alone could potentially add up to a couple thousand bucks.
I spoke with my prospective seller yesterday afternoon and he indicated that his dad built the house himself in the 1940s, and it didn't have any indoor plumbing or heating, so hopefully (?) asbestos wouldn't be a factor, I think.
@dl7573Now that I think about it, yes, I did have to submit a sample of the roofing shingles to a lab for asbestos testing, but did not have to have a demolition permit. I think as lot depends on the county and state you're in and how strict they are. The fire department did not charge me anything. I think I paid about $200 for the asbestos testing.
@perloseth, thank you so much for the info! I'm going to look into it in the town/county where this property is located. I wish there was more meat on the bone on this deal, but if I get it cheap enough, it might be worth it for the learning experience if nothing else. Plus, there's at least one semi-improved lot next door, so maybe I could flip it to the neighbor.
So another thought if its a cheap aquisition, is to owner finance it to someone. There are all kinds of people out there with bad credit desperate for a place to live and fix up.
Having been a house flipper myself let me tell you anything is repairable.
Last year I bought a flip house from a tired landlord, next door there was another lot with a really rough (and seemingly unlivable) house on it. He wanted to throw it in on the deal but I didnt want it. Before I got my flip done, he sold it to a guy on an owner finance and the guy moved in and was repairing the place.
On facebook there are constantly people on these owner finance land and farm forums looking for fixer upper houses.
You could even get an option contract on the property for 60 days and see what happens.
Thanks @jawollbrink, I've definitely thought about owner financing this property, and now that you mention it, it occurred to me that it's in a state with pretty favorable laws for the seller in owner-finance situations. I can sell it as a land contract with the deed held in escrow (not recorded), and cancel the contract very easily if the buyer defaults, so that might be the way to go in this case. While obviously disclosing that the currently uninhabitable house exists, I could just let the buyer figure out what they want to do with it, and let them do so at their cost. Just to put things in perspective, though, I learned from my seller that the house has never had indoor plumbing, and has been uninhabited for almost 25 years, so this one would certainly be an extreme "fixer-upper". :-)
There's one other idea that's been running through my mind and I wonder if you guys or others have any experience with it (@jawollbrink @perloseth ). When looking through comparable sales in the area I noticed that someone sold an individual lot nearby that has a mobile home on it, but the mobile home is owned by someone else and was not part of the sale. The listing for the sold land parcel mentioned that the owners of the mobile home were paying a few hundred dollars in lot rent, and that they would like to stay on the property after the sale. Honestly, if I would have found that listing while it was still available, I might have bought it -- something like $9k purchase price for the lot, with $345 in lot rent coming in every month, if I recall correctly. Anyway, this got me thinking, it might be pretty cool to own sort of a one-pad mobile home park in perpetuity, rather than owner-finance the land to a buyer and lose the income stream in a few years. I wondered if anyone else has done anything like this, and if so, what are some advantages, disadvantages and things to consider?
The property I'm looking at possibly buying already has an old electrical service, which I'm sure might need a little work, but it's not like I'd have to pay to bring in power from a half mile away. There's a hand pump well, that I would assume for budgetary purposes couldn't be used for indoor plumbing for a mobile home (although, I'd definitely check that out before drilling a new well). My understanding is there is no existing septic system at all (must be an old outhouse somewhere on the property), so I assume I'd have to pay for that, and that doing so might represent the largest expense of the whole acquisition and prep of the property.