Realtor/Investor · Philadelphia, PA · Member since 2012 · 114 posts · 38 votes
I have been offered a free property ($1) in a very rough part of Philadelphia. The property is a boarded up shell. I'm trying to figure out what risks I run if I purchase this and sit on it for the foreseeable future.
Aside from yearly RE taxes and HI there shouldn't be any costs I believe?
You record your deed and the local sheriff meets you at the property and serves you as defendant in a toxic waste super site lawsuit. As you duck into the house, you startle a squatter who shoots you in the head. You don't die but are permanently paralyzed.
You did ask what's the worst that can happen. Care to rephrase your question?
@Richard Fields Thanks for the explanation. I completely misunderstood your first break down. The second makes perfect sense.
@Michael Olesky Hey Michael, your point about time better spent elsewhere is very true and something I seemingly forgot. Thanks for bringing my attention to it.
Best case scenario? Good question! I purchase with clear title and no violations or liens. My expenses run ~$500 for acquisition with an annual insurance premium of $255 + tax. Holding the property as-is, the area appreciates as the crime diffuses over the next 5-yrs and I sell it for $20-$30,000. Purely speculative based on a perspective similar to what @Matt Roberts alluded to.
It is speculative but I'm sure you could make the property cash flow if you made it liveable and held out for some decent tenants who won't trash the property. I don't know if 5 years is going to change things too much. I would estimate 10+ to see your equity increase significantly. Just my opinion of course.