- September 4, 2020
- Posted by: Editor
- Category: Uncategorized
Looking at the various cities and states in Nigeria, one thing that is common is the presence of abandoned houses scattered across. And they are becoming a more sought out option for investing in real estate today. You may ask questions like “Is this the right investment for me? Why invest in a vacant property, or are they abandoned for a reason? Where can you find these investment properties, and how do you buy them?
In this guide, we’ve laid out all you need to know about investing in vacant properties.
What is a Vacant Property?
A vacant property is a property that is vacant or abandoned. Vacant properties become so due to a variety of reasons, the more common ones being sudden death, absentee owners, or foreclosures. It can be identified as that property that has a broken window, unkempt lawn, scrapped off paint, etc.
Why Invest in a Vacant Property?
Vacant properties, though often overlooked by real estate investors, they have great investment potentials (if you find the right one). However, you can also invest in a vacant property to renovate and later rent out either long term or short term.
Investing in vacant properties is a good idea because they are typically sold below market price, and can thus provide a high ROI. So if you’re looking for property to invest in and make a profit off of, consider vacant properties.
Things to Consider When Buying a Vacant Property
1) Conducting analysis
You shouldn’t invest in any property that is not profitable. So before investing, make sure you conduct both investment property analysis as well as comparative market analysis.
Investment property analysis – This illustrates expected profitability and return from a specific investment property.
Comparative Market Analysis – This helps one know the value of the property based on similar properties in the area. A real estate comparable is one that has similar square footage, number of rooms, access to amenities, same school district, etc.
2) Inspection of property
Make sure to run an inspection of the vacant property. This helps in identifying 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.
3) Cost of Renovations
As mentioned, the majority of vacant properties require a serious volume of work and maintenance, and this comes at a cost. If the expected cost of renovation is higher than that of expected profits, do not invest in the property.
Sources of Vacant Property Listings
There are several sources to investigate when on the lookout for a vacant property up for sale. They include:
- Local authorities like police stations.
- Realtor inventory archives.
- The good old drive around.
- Banks: Banks most times don’t follow through with a foreclosed property, they may abandon it. They are likely to have the listing on record.
Finding Vacant Property Owners
Now that you’re done with your search, it’s time to look into owner of the home 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.
Buying Vacant Property
Buying vacant 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 to make sure the property is in a good enough condition for investment.
Ways to Finance your Real Estate Investment
- Home equity loan
- Traditional mortgage
- Renovation loan
Choosing a method for financing your investment on the purpose of the investment, as well as other factors such as your credit score and amount of savings. However, the choice should be made when planning for your investment.
In conclusion, vacant properties investment can be a profitable, yet risky investment. It is an unconventional form of real estate investing. It is important to do everything necessary to plan for a successful investment. With commitment to the research and planning of the investment, there is a big chance of minimizing the risks associated and maximizing the profits.