Best way to go about buying an abandoned property

[Dylan DeWitt]

Hello, I've been wanting to get into real estate investing and I think I have found a house that would allow me to start. It is a neighbor of my grandparents. There was a lady and her niece living there, 100+ and 70+ years old, and when the older lady passed away, everything went down hill with the house and younger lady. My grandfather is very friendly with all of his neighbors and got to know her and tried to help her as much as possible, within reason. So now, a few years later, after one of the druggies she had living in the house burned down the house next door, trying to steal electricity because theirs was turned off, the house is abandoned.

So I've done a little bit of research. The mortgage was taken out in 1998 through the USDA for roughly 134k, and I believe it has not been payed off, so maybe around $60-70k left? The house is in pretty poor condition, they have sheets for garage doors, apparently they ripped out the copper heaters for the metal recycling, dogs doing their business inside on the floor, dead rat in the garage, etc. I looked up on a parcel access for my county and shows that the one 70 or so year old lady is still the primary owner. I believe she is in a nursing home, or some type of shelter.

So there is a little background...

I am looking for some input on how to go about buying the property. I have gathered from my grandfather that the lady is a little out there, so I feel like if I just said can I buy your house, she will just blow it off. Is there a way I can go through the USDA, where the loan is from? Shouldn't the house be going into foreclosure if it is abandoned, and wouldn't that mean the bank would want to get rid of it? Maybe try to get in touch with a relative to the lady to try and help out?

Just looking for any input, knowledge, ideas, strategies, anyone can provide me. Looking to learn! Thank you very much!

[Davido Davido]

Hello @Dylan DeWitt, Jon Crosby gave fine advice above.   This reply proposes adverse possession as a potential alternative to buying the home.   It is my experience, https://www.biggerpockets.com/... that more often than not situations like this continue to deteriorate without a sale and to the detriment of everyone involved, -including to the detriment of the property owner, of potential buyers, the county and the entire neighborhood. 

Your post describes an elderly property owner who is no longer living at her property and who is in the care of others (diminished capacity).  Very often such an owner is unwilling to sell in part or whole because they are mentally/emotionally unable to adjust to changes in their routine, in their bodies and in their mental acuity.  Such property owners are equally unable to care for the property.  So the property deteriorates to the detriment of all.  

I would work out a deal with the property owner if at all possible.  If she is reluctant to sell, I would propose renting it out for her, with all rents over expenses going to her.   You can lawfully rent out, but not sell Real Estate, with just a verbal agreement from the owner.  Take a phone, and get her permission to record what she agrees to.  Your subsequent written agreement with whoever you rent to should specify that the renter will be interacting with you, a neighbor of the owner, and that you are acting on her behalf without pay (In most states you need a property management license to take money for renting).   

There is no need for you to put any of your money into the property in order to rent it.  Advertise it on Social Media (Facebook Market Place, NextDoor.com, Craigslist.com etc) that the home is available "as is" at a reduced rate, for someone willing and able to clean up and repair the property.  Make sure the want to be renter that you accept has their own vehicle (preferably a truck), and their own work tools.  Be aware that this approach requires continual management from you.   Be creative.  You can apply all the rent from the first month or the first six to pay for materials the new renter needs to make repairs.   The renter, thereby provides the labor, and pays for the materials from the rent.   You can ensure that part of the rent pays the mortgage and the taxes.   Even if for a number of months there is no cash left after paying expenses, the owner benefits by having her property continually improved and maintained, instead of deteriorating.  And the neighborhood will be cleaned up instead of drawing in vagrants.

Overtime, the owner will either develop  a relationship of trust with you in which you can arrange a purchase, or at least help her prepare a will.  Unfortunately, it is just as likely that the owner will pass on having done nothing to direct the disposition of her property.   At that point, you can cause the property to go through probate, or you can continue to rent the property with the intent to adverse possess it.

"Adverse possession is a legal concept that allows a trespasser – sometimes a stranger but more often a neighbor – to gain legal title over the land of a property owner. The concept developed in early Britain. More recently, though, the law’s function is to achieve a fair result when one owner has neglected or forgotten about a piece of property while another has been using or caring for it for so long that to make him or her leave would create hardship. The policy goal behind adverse possession statutes, in New York and elsewhere, is to ensure that land is owned by those who cultivate it and use it most productively, rather than by those who ignore it."

 There is always a way to accomplish your goal.   In fact, there is always another way.   And there is always a better way.   Pick a way, and get it done.