Home too dangerous to enter?

Question

Hi all,

Was browsing new listings this morning and saw a home on the market that looked really great....aside from the giant hole in the ceiling over the kitchen! Apparently the home is now lender-owned and has been deemed to dangerous to enter.

Have any of you ever dealt with a property like this? How did you assess the damage? Did you take a calculated risk based off of estimated ARV, comps, and past experience with damaged property?

Its very compact (3b/1 ba, 1054 sf), so even with some structural repair to be done, I cannot imagine a gut rehab to be extremely costly. FYI, this seems more attractive as a flip deal rather than a buy and hold.

Thanks!

Kathy Henley · Answer

@Karah Collins I have no experience buying a property on auction. I do have experience with the spending budget expanding to match unexpected conditions. I am trying to avoid that again. Take an experienced contractor with you on the walk-through.

Karah Collins · Answer

Hi @Kathy Henley. Thanks for your input. I definitely have steel toes and a hard hat from my day-job.

As I've further looked into the home, it appears that it is being auctioned until 6/19. Gave the listing agent a call to see if I could do a walkthrough, but he is out of office without access to email according to his automated message.

How would you all deal with such a tight time frame of less than a week to view the property being auctioned? Opening bids in the auction starting at 28k, so I think there is a lot of room to make a lot of money on it someday. From my estimations, it seems that even with structural damage/beams needing to be replaced, and new sheet rockwork, construction costs would not go above 20k to reinforce/repair.

I know that some people do buy site unseen, but this would be my first rental property. I wonder if it would be too much to buy an auction home that is selling as-is. Any horror stories about buying properties at auction and discovering liens on the property after the fact?

Just trying to suss this situation out with some more experienced opinions.

Kathy Henley · Answer

Make an appointment to enter and wear a hard hat @Karah Collins. Define 'extremely costly' by finding out some facts: what does it cost to put the property back together and does the market sale price make it worth your time and effort.  Add in your profit, holding costs, insurance, utilities during the holding period and see if the deal makes sense.  Since it is Lender owned, there is wiggle room. Show them your cost estimations to take it off their hands. Let you education begin!