Hello BP! I hope everyone is celebrating the holidays with their family and friends!
I am currently interested in purchasing a city-owned property, but before I send the city a letter of interest I would like to see if anyone on BP has experience purchasing property from a city (Or government body) and what tips they may have. This should be a general discussion, but I do have some specific questions I'd like answered as well:
- Is there anything that I must include in my letter of interest? Anything extra that will make them more interested in selling the property to me?
- If there are other interested parties, what will the purchase process look like?
- Should I let them know that I own land bordering their land?
- The land has a building on it that the city was planning to tear down. Should I purchase the property at a discount and offer to demolish the building? How much is the cost to demolish a building? Do I need contractor bids or is there a general rule of thumb price?
I appreciate all of your answers. Keep in mind this is California. The only builders that I know on here are @Jay Hinrichs and @Karen Margrave (I am having a hard time quoting Karen's name)
@David Friedman I have found relationship are key to your success in this. Call and find out who the city property manager is. Do they have plans fo this if they are tearing down the building. Be open maybe they want to buy your ground. Just having a open conversation can be great, oh BTW do you have anything you may want off your books, I am an investor and would love to buy that. Best of Luck.
Most quasi government owned properties are disposed of in a bid process of some sort every state has a different method... There might be some back room deals..
City's can sell properties on a private basis, depends on how they got it, what they want is the property back on the tax roles. This sounds like you want a bigger yard, not much tax incentive there but it would get the place cleaned up which is also a concern.
Are you sure it's a tear down? You'd need a bid to know the costs of demo and removal if it is, or costs to renovate if it isn't.
City's often have economic development funds available for renovations, there are strings attached, so know the terms.
I wouldn't bother with a letter of intent, I'd call them and ask if they can sell it! If so, how much?
Check on taxes in arrears, owed, that is another office than the building regs folks. Run title and get a title policy, a city generally doesn't give a warranty deed, but a special warranty deed excepting out time they held it and other liens. Depends too on how they got the place.
Most likely, if you're going to tear it down, you're looking at a cash sale, you can finance it but they will be looking at it as a cash sale, so disclose financing issues in your offer.
I suspect too, that a city doesn't dicker much on price, some, but not much as it is public money, while they can sell for a dollar, or give it away, that is usually reserved for non-profit housing entities, not an individual owner-buyer.
Good luck :)
@Karen Margrave may have insight, but "letter of interest"? I'm not sure what method this city is using to dispose of their property. Doesn't sound like via a broker.
Wow thank you for the great responses guys. Very good insight. Sorry it took so long to respond. Driving from SoCal to Vegas.
I will try and create a relationship with the person who manages city-owned property. I may want to purchase more in the future.
@Bill Gulley The property is currently off-market. I would like to buy it before it becomes public.
@David Friedman We've never purchased any land from a City. However; when we were in Shasta County, CA, the City of Redding would list their surplus property online, and allow potential buyers to submit offers. Of course it wasn't a simple process, the offers all had to be in by a certain time, and then the City Council would accept one.
However; before a property could be sold, it had to be advertised to the public, allowing everyone an opportunity to bid. In order to be declared surplus, the City would submit the properties they had no need of, and have the City Council vote to make them surplus, allowing them to be sold.
Though we never bought any of the land, at one time we were looking at some, and actually drew a map showing highest and best use for the land and layout of the parcels (the property was also being rezoned) The City ended up using our map (we allowed them to) and they sold a few years later to another developer.
As mentioned, just call the building regulations department, they can point you in the right direction, I've been in acquisitions from the city and there are different aspects depending on how a property was acquired, auction, bid process and after that fails, they may dump it for whatever they can get in a private sale. Just give them a call and see what the status is. :)
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