Appraiser · South Pasadena, CA · Member since 2013 · 43 posts · 6 votes
Purchased a package of 5 REO properties cheap in May 2015 from a company in Florida when they came to LA to promote their deals. The 5 properties are all over the country. This is one of them (10816 Grandview Ave, Cleveland OH 44104). After the purchase, the company offered to sell the properties for me with me carrying seller financing to the buyers with 20-30% return. The experience so far has been horrible. Up until now only 2 properties are sold (the monthly payments are not always on time). Long story short, I asked the company to give back the property to sell myself. When I receive the documents and photos, to my horror, this property was condemned in February 2015. A local investor told me that the amount to repair it exceeds its repaired value. Hard lesson learnt: DO NOT BUY without your OWN due diligence.
I'm reaching out to my BP community, particularly the local investors on how to handle it moving forward. If you are interested please also let me know. Thanks.
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
10y
You just need to cut and run on this one. The house has a negative value. Your best bet is to sell at a loss to avoid further liability and tax burden. You will probably need to bring $3,000-$5,000 to the table to rid yourself of this thing.
Investor · PA · Member since 2013 · 1k+ posts · 602 votes
10y
The fact it's condemned will prevent you from leasing it but it shouldn't prevent you from holding a note on it or selling it. I would find out why it's condemned and see if maybe it is something easy. You could also try and get discounted work done by a local handyman and see if it's possible to turn it around at a low cost. From the outside, the property looks pretty nice. It's possible that they condemned it because the power or water are turned off or because a door or window are broken. If it's in a decent area then it shouldn't be too difficult to unload it. If it's in a bad area then you will want to find out who invests in these areas and market it to them. From the pictures I found of the interior, it looks like it just needs some scraping, painting and drywall in some areas.
Appraiser · South Pasadena, CA · Member since 2013 · 43 posts · 6 votes
10y
@Jassem A. Thank you for your advice. From the photos I received, it looks in a poor condition, a gut rehab. But if a local investor can make it work, it could be a good flip.
I would get some estimates from a few contractors that reside in that zipcode and see what they come back with. You could also see if any of those contractors might know someone that would want to buy the property on a deed contract. I would also advertise it for sale on Zillow or Hotpads for a lower price than surrounding properties. I see similar properties listed at $3,000-4,000.
@James Wise Thanks for your input. I'm willing to sell at a loss of my purchase money. Do you mean I need additional $3000 - $5000 to settle?
You will need to pay out of your pocket an additional $3,000-$5,000 to sell the property. The property has a value of less than zero. A property in that neighborhood in poor condition would cost more to fix then it would be worth, your situation is even worse as your house was condemned so now someone would have to bring the property up to CURRENT building codes, that is much different then having a 100 year old house that is grandfathered in (which again, already would cost more than it would be worth). At this point your best bet is to pay $3,000-$5,000 to sell.
Appraiser · South Pasadena, CA · Member since 2013 · 43 posts · 6 votes
10y
@Jassem A. I appreciate your advice. Please let me know if anyone in that zip code might be interested. I'll look into Zillow or Hotpads myself too. Thanks.
No problem. I don't invest out of state. Good luck. Talk to local title companies as well. There may be a way to donate the property and write it off on your taxes.