I have noticed a vacant commercial lot here in Pittsburgh. The property itself is fenced off, looks to be overgrown, and has a fallen building on the property. Its actually what looks like about 4 walls of a bottom floor of a SFH-sized building. The building would need to be demolished of course.
The lot is on a street with only SFH and one block away from the business area of the neighborhood. Very near public transportation.
The owners are delinquent on taxes since 2012, though the total amount is less than $1000.
Anyway, I have never had experience with dealing with this sort of thing. Can money be made on something like this? How? What are the things to look for?
Any advice would be hugely appreciated.
Land investing is generally a smaller part of the portfolio.
The reason is you are not depreciating the land for taxes and have intensive carrying costs ( money going out but nothing going in ) until you sell off the site or develop it yourself.
A commercial piece of land could sell in 1 year or 10 years. It depends on the growth patterns and when the timing is right for that parcel.
Joel, thanks for that insight - it makes sense.
My original thought for a scenario like this would be to flip - clear up the property and sell it at a profit (in 1 to 10 years as you mention, while paying holding costs)
One other idea I had was to try and rent the space out to one or more of the several auto repair shops that are in an area that relies on street parking.
I know these cannot be the ONLY avenues to making a profit in this scenario (just like in the world of 'buildings') so I was hoping I could get more ideas/suggestions from some of the many savvy and creative investors on the board here.
Again, I haven't contacted the owners yet, let alone made an offer - I am just trying to see if there is an opportunity here to make some money, and more importantly learn.
The key is money to start.
If you have say 30k to invest for land and no other income coming in then a land play doesn't make sense. If you have 600k and 30k makes up 5% of your overall portfolio strategy then you can sit on the property for awhile before it produces.
I could buy many commercial land deals today but I choose to go after fractured projects already constructed on and defaulted from the last downturn. The all in costs pert sq ft are much cheaper and you have some income coming in while turning around. Land plays are fine when you can sit on them for awhile in your portfolio.
@Joel Owens Very good. Everything you are saying makes sense 100%.
I have sent letters to the addresses I could find for this property.
If the owners get in touch, I am going to see what they are looking for, and probably offer to pay off the taxes and take the property. The property tax is not much and I imagine liability insurance wont be as well so its not a huge problem to hold it for a while if needed.
The biggest cost would most likely be demolishing the rundown building (can be done by hand) and cleaning out the jungle that has developed on the property.
Its certainly one of those where its worth to put out a feeler and make an offer and see what happens, especially since I feel the neighborhood is on the "come-up".
Make sure to look up demo permits and costs. Also if the property is older there could be asbestos or other contaminants and then demo can be more expensive because of additional regulations required.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.