Buying Investment PropertyWhat Are Zombie Properties & How to Find Them? by Mays Kuhail December 3, 2019November 18, 2019 by Mays Kuhail December 3, 2019November 18, 2019Halloween is over, but zombie properties are still in the market. Zombie properties are not new to the US real estate market, but they’ve become more prevalent in the last decade, especially during the 2007/2008 financial crisis. With this blog, learn more about these types of properties, the advantages of investing in them, possible risks, and how to find these real estate deals.What Are Zombie Properties?A zombie property (sometimes referred to as a zombie mortgage property) is a type of investment property that has been abandoned by its owner after a foreclosure process begins. At the same time, the lender (usually a bank) has not yet taken ownership of the property, nor have they sold it – leaving it as an abandoned property. The foreclosure process is not completed. Furthermore, zombie titles remain in the name of the original homeowner.So why does the bank not follow through with zombie foreclosures? There are quite a few reasons. First, the bank may think the property isn’t worth the trouble of the zombie foreclosure, that the process may be more costly than what the property will bring in returns of its sale. The bank may also not want to assume the costs of the zombie foreclosure or may be saving on taxes.Note: Don’t mistake zombie homes for shadow inventory. There’s a difference between the former and the latter. Shadow inventory refers to properties that have undergone the entire foreclosure process. Related: What Is Distressed Property and How to Find One? Advantages of Investing in Zombie PropertiesZombie properties are a good choice if you’re looking for cheap properties for sale. Zombie properties are usually sold for prices well below the market value, so they’re a great choice especially among investors who fix and flip.For one, you can turn things around for the property, whether you’re flipping or renovating to rent out. The one thing you have to be wary of when renovating is the costs. So before you decide to invest in a zombie property, weigh out the price of the property, the cost of renovations, and the potential return on investment (ROI).Risks of Investing in Zombie PropertiesOf course, there are some real estate risks associated with a zombie property. And you should know that often times, investing in zombie homes may bear more risk than your regular real estate investing.One of the main risks linked with abandoned properties is the deterioration of the property. These properties are usually left for months or years with no upkeep or maintenance. And because the real estate properties are abandoned, they may lose market value. This is usually reflected in the low buying price and low selling price of these properties. If you’re flipping the investment property, you need to make sure it’s going to be worth more than what you bought it, to achieve a profit.Not finding a buyer if you’re flipping and not finding a tenant if you’re renting it out is another major risk. Many investors and tenants alike may feel like they don’t want to buy or reside in a zombie property because of the negative association with these types of properties. This can be especially true in the case of zombie properties that have turned into spaces to do illegal activities.The above risks are all valid. However, savvy real estate investors can often find opportunities in challenges. But remember to always do your due diligence before investing in a zombie property.How to Find Zombie PropertiesWe’re not going to lie, this is quite complicated. Finding zombie properties can be more difficult than buying regular properties, but we’re here to break it down for you. You may be also asking “Do I buy zombie properties from the bank or the seller?” You’re going to have to do a lot of digging around, and you’re going to have to make a lot of phone calls. You can check in with:The lender, which is usually the bank. Lenders usually have a list of foreclosure properties. So even if they haven’t listed the property for sale, they would still have it in their database. So call your local bank or pay them a visit to inquire about zombie properties in your area.Property management companies. If there’s a property management company associated with the property, they may know something. Try to reach out to a local property management company, and see if they have anything in their records.Local authorities. Local authorities usually keep zombie properties on their radar.When thinking about how to buy zombie properties, the above “contacts” can be of benefit. This will largely depend on the city/state, and the lender and zombie title. Alternatively, you can try to:Drive or walk around. This is one of the most traditional ways to find real estate deals. You can easily spot a distressed property walking in any street or neighborhood. Once you have your eye on one, you can do any of the above steps.Use Mashboard’s property ownership database to gain access to name, email, address, and number of the owner of a zombie property. Schedule a demo to learn how to access property ownership data now. Book My DemoRelated: How to Find Out Who Owns a Property for Off Market DealsWhatever tactic you choose to go with, always consult with a real estate lawyer. The legalities of zombie properties can be a bit confusing, especially when it comes to titles and ownership.What’s the State of Zombie Houses in the Current Housing Market?Zombie homes exist in almost all cities and states. More recently, however, people have been pushing for laws and legislation against banks and lending parties who do not follow through with the foreclosure process, creating zombie properties instead of shadow inventory.Laws were passed in states such as New York that have allowed people to push banks on incomplete foreclosure processes which exasperate the phenomenon. So while they are real estate investment opportunities, one must not forget that their prevalence could cause public health issues, among other concerns.Final Thoughts on Zombie Real EstateIf you’re looking for cheap properties for sale, then zombie properties are definitely an option. They can be a profitable investment, but they’re also a challenging one. And because they’re less common than your traditional rental property, it’s more difficult to find and buy them.Related: Abandoned Houses: Should You Invest in One? How? To learn about your options for signing up for our services, click here. Start Your Investment Property Search! START FREE TRIAL Distressed Properties 0FacebookTwitterGoogle +PinterestLinkedin Mays KuhailMays is Content Writer with over two years of experience in the US real estate market analysis. She holds a BA in Business Administration and a minor in Marketing with a concentration in HRM. Mays has worked in digital and social media marketing, community development, and program management. Previous Post Should You Become a Luxury Real Estate Agent? Next Post How to Make Any Property a Positive Cash Flow Rental Related Posts Foreclosed Homes: A Good or Bad Investment? 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