First time posting in this section.
There is a Fannie Mae HomePath Property home (foreclosed) that my business partner and I are interested in making an offer on. We will use hard money for the loan (the interest and points are fine for us), but I'm concerned about a few things:
1. The back of the home has a hole in the wall and one of the structural beams has been impacted - it appears as if it has suffered some light damage, although nothing major. The township says that before the home was bank owned it wasn't condemned.
2. It has an open sewer permit and the township requires the septic to be 'closed or abandoned' since it is now hooked up to a public sewer line.
My question is: since the township can condemn a home after it becomes owner-owned, is it worth investing in? The structural beam concerns me although my contractor claims that it can be fixed and shouldn't be an issue. If we buy it to rehab and flip and the township condemns it we're out of luck. How horrible does a house have to be before it can be condemned?
@Timothy J. - Depends on the town. In my experience most towns place the label on there to be able to take control should the house become truly abandoned. I would stop down at town hall and talk to the department placing the condemned designation on the property and see what you have to do to get it removed. See if you can do it BEFORE you close. Usually all that's required is a letter from you (and possibly your attorney) notarized promising that you will make certain repairs within a certain time frame.
The back wall repair doesn't seem like a big deal either from what you're telling us. But if you're really concerned make the purchase contingent on an inspection by a structural engineer. Unlikely to happen with a Homepath property however. If it isn't possible then bring one in after your offer is accepted but before attorney review is over.
You said "The township says that before the home was bank owned it wasn't condemned."
I am a little confused. Is the home condemned now?
If not just get a renovation plan together with your construction team and go to the Building Dept. in the town the house is in and tell the building/code official of your desire to renovate the home to a safe and livable condition and obtain the building permit applications to start the project once you close.
Fannie Mae for me has allowed 7 day inspections although they have never renegotiated a price. I have to decide after the inspection if i want to buy at the price i originally offered fannie mae and they accepted or I walk.
As far as the open sewer permit application again get a abandonment permit application for the septic and get a price from a reliable firm.
If you have the proper applications filled out by qualified persons their should be very little to be worried about. Just make sure the property is not in a location that is needed for things like flood control and such where condemnation for eminent domain is possible (EX: flood zone projects)
@Ana Nomys brings up a good point. If you obtain a temp. CO (If required in your town) and permits, that is basically the town's way of saying that the property isn't condemned and won't be as long as you make the property habitable and bring it up to code.
Right, the home is not currently condemend. Would we obtain this temp CO immediately after the offer but before attorney review?
This is something I could call the township about immediately after the offer is accepted but before papers are signed since we can always back out of the deal if nothing is signed.
Thanks for your help.
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