Cleveland Code Voilation Property on the Condemnation List

4 Replies

Hey Guys!

Need your Help!

So I found a Duplex property that is a steal of a deal at 5K. I could potentially make 10K to 15K assignment on this deal if all goes good. So I was doing my due dilligence on the property. It's located in CLEVELAND, OH 44120 AREA. I am living in Columbus, OH so the property looks beat up and covered with moss but its a classic rehab.

But there is a problem.....

It's has an "Open Violation of Condemnation" and about 19 different violation to fix. Now I am to figure out how to structure the deal as a wholesale deal. I never learned how to wholesale code violations, but I would like to figure it out so that it would go smoothly (which is like a unicorn in the industry haha).

What I have done so far:-

I found out about the Code Violations about the sellers property before even speaking with them about it.

Found out by the city that it was on the Condemnation List.

And saw that the owner didnt pay taxes since the Violations were recorded 2 years ago so there could be a potential lien on the property as well which is minor.

Overall I dont know what I need to do on my side of the wholesale transaction. I know I have to give my buyer full disclosure on all the encombrances of the property to the best of my knowledge.

Is my job done? And could I just open escrow and find a cash buyer to wholesale it to?

If anyone in the CLEVELAND AREA that could give me some insight, I would be very grateful.

@Sidney Watkins - $5k at face value seems like it is a good deal BUT you have to do the economics on it. What are the SOW and cost to fix the violations, what is the delinquent tax amount and what is the ARV on the property? The economics have to make sense first thing and more important than anything else. No one is going to buy a contract that puts them in the negative.

@Dan Sarao

Which is understandable. My property is in the 44120 area of Cleveland. Duplex Properties in that area are selling for around 140K - 200K and buyers are buying for around 38K - 55K. I am more concerned with the wholesaling aspect. After I uncover all I can do I let escrow do the rest? I just give the end buyer full disclosure?

Thanks

@Sidney Watkins I live here in Cleveland and I do know that most of the 44120 area code is made up of D class neighborhoods with a few good streets with longtime owner occupants who’ve maintained their properties pretty well. With that being said depending on the exact location of the property in question it might not even be a good deal. Some of the properties here you couldn’t give to me for free. Between violations, back taxes, and the overall damage to some of these properties, the stress and problems that come with a venture like that is for the very experienced investor because the margin is so tight one mistake and you’ll be losing money on these properties. This is not to deter you just to inform you. This is a neighborhood you have to see it’s very hard to evaluate remotely.

Originally posted by @Sidney Watkins :

@Dan Sarao

Which is understandable. My property is in the 44120 area of Cleveland. Duplex Properties in that area are selling for around 140K - 200K and buyers are buying for around 38K - 55K. I am more concerned with the wholesaling aspect. After I uncover all I can do I let escrow do the rest? I just give the end buyer full disclosure?

Thanks

44120 encompasses many neighborhoods and multiple cities. Is it in 44120 Shaker Heights (not to be confused with Buckeye Shaker either which is worse than Mt. Pleasant) or 44120 Mt. Pleasant?

Duplexes in 44120 Mt. Pleasant are not selling for that amount. If you are using Zillow they are most definitely pulling in Shaker comps, which makes it not accurate if you are in Mt. Pleasant.  If it’s Shaker maybe that price is accurate, but you have to deal with the shaker POS process, which is probably the most difficult in the area. From the $5k price tag I aM going to guess the property is not in Shaker Heights. 

To answer your question you can sell a condemned house, but the questions are whether it’s worth it economically given the extra hassles, especially if it’s in shaker heights due to the pos process and if it’s in the MT. pleasant area then it’s just not worth it unless the required fixes are easy and cheap and you price it right. You would really have to do as much research as possible before marketing it. I can’t see many cash buyers wanting to do the extra legwork unless they are making one hell of a return on it. 

 

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