Real Estate Agent · Hillsborough, NJ · Member since 2016 · 7 posts · 1 vote
We are thinking about buying an REO property through Hubzu which has been vacant since 8 years. It is a townhouse which was built in 1993. The bank told us that no inspections are allowed and we cannot go inside the property to view it. It is sold as-is. We looked at it from the outside, but couldn't tell much, there are tall weeds in the small back patio, and it has been winterized. There is a car on the driveway whose tires are practically stuck on the driveway, a neighbor told us it hasn't been moved in 8 years since the owner died. He also mentioned that the HOA changed the roof 6 yrs ago. What problems can we expect to encounter ? plumbing, electrical, mold, insects, appliances ? What would you advise ?
Bloomington, IN · Member since 2017 · 53 posts · 37 votes
9y
Can you contact the HOA or get their policy to figure out why they changed the roof? If they replaced it due to it being completely shot and ruining neighborhood appeal, then you may have serious issues. If they did it proactively to prevent that, then it may not be so bad.
A house near me has been abandoned a little less time than that and the roof has rotted through. Due to the water going into the attic the ceiling has fallen through etc. So if you look in a window all you see is moldy attic insulation covering the floor. Beautiful natural light though! It's probably a complete gut down to the studs and possibly even replacing a significant portion of those.
Investor · Denver, CO · Member since 2016 · 736 posts · 582 votes
9y
Plan on having the electrical completely brought up to code before you're allowed to have electricity on the house (if electric has been shut off for over a year, it needs to be re-certified). I would also plan on a new furnace and (if applicable) air conditioner.
As far as interior condition - I would not be surprised if copper pipes and electric wire have been stripped from the interior. You might also have issues with rusted out drain pipes.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
9y
I personally would not spend a lot of time on this, because I have no experience developing vacant land. If I did have that experience, I'd run numbers to see if it makes sense as a raw land purchase, and if so make a land value offer.
If the offer isn't accepted, I've lost nothing. Great, time to move on dot com.
If the offer is accepted, then anything I can salvage from the existing structure is added right into the net profit column of your P&L, since I assumed the stuff on the land was worth $0.00 when I ran numbers and wrote the offer.
That's probably a pretty conservative low-risk approach, but when the seller gets dodgy about the condition of the property, I feel that is warranted. The more dodgy, the more conservative.
Real Estate Agent · Hillsborough, NJ · Member since 2016 · 7 posts · 1 vote
9y
It is a townhouse, not a house. I don't think the copper pipes would have been stripped down. It looks like a decent neighborhood. And the feedback I got from other people living there is that the HOA is very proactive. I am just concerned on the condition of the interiors, with it being closed for some many years and the car in the driveway, what it would cost to dispose off. I saw the comps in the neighborhood and it goes for about $300-320K, what should be a good purchase price ?
Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
9y
purchase price for what end purpose? Your line of questioning has changed from what possibly could the condition of a townhouse that has been vacant for 8 years (dunno, you have to budget as if you have to rebuild from studs since you cant see inside and determine if that level of effort/cost is still worth your time) to what should be a good purchase price. It's like you are outsourcing your entire decision-making process to strangers on the internet:) We dont know your end goal or the neighborhood or HOA condition and financials. If I took a random stab for a flip that price would be would be 65% of ARV- cost of a full gut renovation to minimize risk and ensure there is some level of profit, but I am just a random investor and don't have to deal with a nightmare 8 year vacant property and the rehab headache that might follow.
Investor · Jeffersonville, IN · Member since 2014 · 1 post · 0 votes
9y
did hubzu say why they won't allow showings? they typically disallow showings if they think the asset may be occupied or if there is a health and safety concern.