Buying Investment Property The Ultimate Guide to Investing in Vacant Property by Mays Kuhail August 20, 2020August 19, 2020 by Mays Kuhail August 20, 2020August 19, 2020 Abandoned properties exist in most cities and states in the nation. And as they slowly become a more sought out option for real estate investing, many investors find themselves asking “Is this the right investment for me?” Should you invest in a vacant property, or are they abandoned for a reason? Where do you find these investment properties, and how do you buy them? We’ve laid out the ultimate guide in the following article, so read through to learn all you need to know about investing in vacant properties. What Are Vacant Properties? A vacant property is, as the name suggests, a property that is vacant or abandoned. Vacant properties become so due to a variety of reasons, the more common ones being sudden death, inattentive absentee owners, or unfinished foreclosures. How do you identify an abandoned property? Usually, vacant properties will have common physical signs of wear and tear – a broken window, uncollected mail, scrapped off paint, unkempt lawn, etc. Should I Invest in an Abandoned Property? Vacant properties are oftentimes overlooked by real estate investors, but they can have great investment potential (if you find the right one). It’s a niche investment that is more common among fix and flip investors. However, you can also invest in a vacant property to renovate and later rent out either long term or as an Airbnb investment property. Vacant properties are a good idea because they are typically sold below market price, and can thus provide a high return on investment (ROI). So if you’re looking for cheap properties to invest in and make a profit off of, definitely consider vacant properties. Related: What Are Zombie Properties and How to Find Them? A Few Things to Keep in Mind When Buying Vacant Property 1) Conducting analysis is key in this process If you’re not making a profit, you shouldn’t be investing in the property. That’s Real Estate 101. So before jumping into the investment, make sure you conduct both investment property analysis as well as comparative market analysis. Investment property analysis – this will illustrate expected profitability and return from a specific investment property. You can use Mashvisor’s investment property calculator for information on cash on cash return, expected rental income, cash flow, cap rate, among other useful metrics. Start Analyzing Investment Properties Comparative market analysis (CMA) – conduct CMA to learn the value of the property based on similar properties (real estate comparables/comps) in the area. A real estate comp is one that has similar square footage, number of rooms, access to amenities, same school district, etc. Related: The Ultimate Guide to Real Estate Property Analysis 2) Renovations come at a cost As aforementioned, the majority of vacant properties require a serious volume of work and maintenance, and this comes at a cost. If your expected renovation cost is higher than that of expected profits, do not invest in the property. Moreover, before investing in vacant property, make sure to run a vacant property inspection. This will help you identify any red flags, or major flaws in the property if there are any. If this is your first real estate investment, consider consulting with vacant property specialists to help you through the process. How to Find Vacant Property Listings There are several resources to investigate when searching for a vacant property for sale. Here’s where you’ll need to look: Banks: When banks don’t follow through with a foreclosed property, they may abandon it. Still, they are likely to have the vacant property listing on record. Local authorities: Look into your local police station. Often times, they have records of abandoned properties, also known as “sketchy” spots in the area. If there’s an abandoned property in the neighborhood, the nearest police station will know about it. Realtor inventory archives: This is another place to look when searching for vacant properties. Local inventory archives are a good place to dig into. The good old drive around: This one’s a more traditional, and more time-consuming endeavor, but it can achieve the needed results. Drive around a certain area, look for the tell-tale signs, and speak with the neighbors or local postal workers. How to Find Vacant Property Owners Now that you’re done with your vacant property search, it’s time to look into homeowner data to find out who owns the vacant property. Just as you did to find the investment property, you can also consult with local banks and authorities. If there’s data on the property, there should be data on its owners. When addressing a lender or local authorities, make sure you introduce yourself as a real estate investor and disclose why you’re looking into this data. Additionally, you can leave a letter at the property with your contact information, expressing interest in investing. Yes, this can be a futile effort, but it’s better to try all of your options nonetheless. Another way of how to find out who owns a house is to take advantage of Mashboard’s property ownership database. You’ll be able to access information on the address, name, and contact information (phone numbers and emails) for owners of abandoned property. Either enter the property address or scan the neighborhood for a list of property owners in the area. Sign up now to access this homeowner data and get 15% off. How to Buy Vacant Property Buying abandoned properties is quite similar to buying your average investment property for sale. Once you have found the property and the owner, contact them, and express your interest in buying the property. You’ll need to run a thorough inspection and speak with the owner to make sure the property is in a good enough condition for investment. Having done that, you’ll need to look into ways to finance your real estate investment. Your options are the following: Traditional mortgage FHA Loan Renovation or a fix and flip loan Home equity loan Determining a financing method will depend on your purpose of investment, as well as other factors such as your credit score, and amount of savings. When planning for your investment, first sort out your finances to better select a financing strategy. Related: 7 Easy Methods for Investment Property Financing The Bottom Line Investing in vacant properties can be a profitable, yet risky investment. It is surely a less conventional form of real estate investing, but if you’re here, it means you’re looking for just that – a challenge. Our final advice? Make sure you do your due diligence to plan for a successful investment. If you’re willing to invest the time to research and plan, there are ways to minimize the risk that comes with this investment and to turn it into profit. Have you ever invested in a vacant or abandoned property? Tell us your tips below! Start Your Investment Property Search! START FREE TRIAL CMAFinancingHome InspectionInvestment Property AnalysisProperty SearchRenovations 0 FacebookTwitterGoogle +PinterestLinkedin Mays Kuhail Mays is a Content Writer and freelance creative writer with multiple years of experience in US real estate market analysis. Mays has background in communication, content development, and digital marketing. She holds a BA in Business Administration and Marketing. Previous Post How to Sell Your Fix and Flip Property Quickly Next Post Should You Join a Real Estate Investment Club? 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