Can I let my vacant home just sit?

Question

Recently purchased a duplex that's in really bad condition for hopes of appreciation and gentrification of the area. This was a 10-20 year play. They are putting in a $2 billion government agency building in the area and it should be completed by 2025. The property is also is about 5-10 mins away from Downtown St. Louis which we believe is bound to become more popular. We got the property for $7,000 so we figured it was a pretty small investment but my question is, if we let it sit for the next 3-5 years without doing any rehab. Besides paying the taxes, what do we have to look after or will there be any costs? For example, we obviously won't be needing utility's and aren't planning on getting an insurance policy on the property. I am also assuming we are responsible for making sure the grass is cut and there isn't any trash on the property. The home is currently boarded up.

Kathy Henley · Answer

Security may be an issue @Bosko Mijatovic I managed one property that was boarded up. People and children often broke in and squatted. A neighbor alerted us and we boarded her up again. The nearby school thought it a nuisance because of the condition of the building and the children's willingness to be there. If you are going to knock down the structure, why not do it now?

JD Martin · Answer

I would say you have at least a moral obligation to the community to prevent an attractive nuisance at best and a serious degradation of the neighborhood at worst. If it's not worth rehabbing, then tear it down and at least keep the lot mowed. If it's worth rehabbing, then at least dry it in and bring the outside up to par. You'll be helping the neighborhood and yourself at the same time. Put good blinds on the windows and a few motion lights and have some kind of local security check on it once a quarter or so.

I think just to board it up, with no electricity, and let it sit there as a dump for 3-5 years while you wait to profit off of the appreciation is the kind of thing that gives absentee landlords a black eye. Put yourself in the community's shoes - how would you feel if this was next door to you?

John Teachout · Answer

We had a cheapo house that needed a complete rebuild. We left it sit for 4 years (mowed grass and picked up the inevitable trash) Now we're doing the rehab. During the dormant time, we only paid the taxes, no utilities. And the taxes were really cheap. (like $150 per year for city and county combined) For the last 6 months we've been paying utilities (water/sewer/electric/trash), and that runs about $60 per month.

Justin V. · Answer

@Bosko Mijatovic

What are your vacancy laws? We have some where I invest, but I’m not overly familiar with them yet. Something to ask about and read into.

How cheap could you get it livable and what would it rent out for? What makes you not want to make money in rent in addition to your appreciation. $$ off rent for l  lawn maintenance and painting never hurt. Having a paying tenant could definitely save you having to legally evict a squatter while they trash (so much bodily waste) the place oR cook meth in it. Know squatter rights for your area too.

I’d definitely keep insurance on it so you don’t end up losing your empire when someone breaks in and hurts themselves.

We’ve kept a watchful tenant at below market rent to keep an eye on our construction projects in the building and next door.

-Justin

Bosko Mijatovic · Answer

The taxes are pretty cheap, $200 a year and we are keeping the utilities off.

Justin V. · Answer

@Justin Voegele

Also properties can have a tough time sitting vacant. Winterized properties can get their foundations frozen and speed up wear/ crumble in the north.

An unchecked roof leak can destroy a building.

JD Martin · Answer

It really depends on the laws in that area. I have bought a property and put it in my pocket before; I had a SFH that I bought out of an estate sale that was such a great deal I couldn't pass it up, even though I was nowhere near ready to do a rehab on it. I secured it - turned the water off, left the electricity on so I could run basic heat in the winter, and it sat for almost 17 months before it was ready to move. 3-5 years is a long time of carrying costs, you should be pretty certain of your appreciation before doing something like that. At a minimum you're likely to end up with squatters.

Bosko Mijatovic · Answer

Not 100% sure if it needs to be torn down. We put this one on the backburner since we have another active flip going on but, in the case that we have to get rid of it for whatever reason we rather resell in the current condition vs spend the money for demo. I guess we should figure out how valuable the land is.

Courtney Jones · Answer

you might consider some type of insurance for the random, slip and fall bit.

Can I let my vacant home just sit?

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