Is a Tear Down really a Tear Down?

[Elicia Fullwood]

What kind of buyer is attracted to a listing that swears the house on the lot is a tear down? Do investors pay attention to this or is this a quick way for realtors to get a sale? I literally heard this today from a contractor. "It's a tear down. Roof is coming down. Major foundation issues. House has water all in it. You don't want to touch it. I was looking at it for 2 other investors. It's a no go."  Are tear downs worth rehabbing? If not, how do investors make money from these kinds of properties?

[Tom S.]

@Elicia Fullwood  Yes, some tears down definitely are (foundation , fire damage, etc).  

It's about knowing the numbers.  If you can get it for the land value ($50k, for example) , and know that you can build for $100/SF for a 1500 SF house ($150k), You're all in for roughly $200k.  If the houses in the area are going for $300k, there's money to be made!