How Can I Acquire Neighboring Properties from Slumlord

Question

I own a single family rental that does very well and I live in my other SFH in the same town.

Right next door to my house there are 2 properties, both 6 unit 4 bed 2 bath apartments. According to public record and info from tenants, the owners purchased both properties in 2021 as a contract for deed. Purchase price $850,000 ($550,000 down payment, $300,000 contract for deed with seller).

The new owner has since failed to pay utility bills in one of the two building, causing it be condemned. It is now a spot for vagrants to break in to. The owner has been letting an undocumented family live there and try to fix it up at the cost of the family and charging them rent. Probably under the table or something. Very heartbreaking.

In the second building there are 2 units rented out. According to the current tenant, there are repairs here and there that need to be made but the owner just wont do it. He also doesn't do any any lawn maintenance, or maintenance in general.

Also, searching the properties on the county tax auditor site shows that the property taxes on both properties haven't been paid since 2020 by the previous owner. Shows close to $90,000 delinquent. I'm surprised the properties haven't been seized yet.

These properties are just going down the drain and bringing the neighborhood with it. The city is about to build a new park right next door and I fear that these properties will somehow ruin that too.

I am looking for advice. I would like to acquire these properties somehow and fix them up as someone who actually cares about this community, but I'm not sure if it's possible. I might settle for helping someone else acquire them as well or figure out a way for the previous owner to reacquire them. Just as long as the owner is someone who will actually take care of them.

I think a perfect world would be convincing the owner to sell me the properties by assuming the existing mortgage and maybe giving him a little something extra. Not sure that he deserves something extra but if that's what it takes. Also, a loan to pay off the delinquent property taxes and make needed repairs.

All advice on what to do is appreciated.

Chris Seveney · Answer

@Cole Barthel

Speak to the holder of the contract for deed and see if it can be assigned to you. The other is to buy the property from them which the title company will need to get current title holder to sign off on deed once they are paid off

Jay Hinrichs · Answer

exactly buy the debt foreclosure out the derelict owner.. thats the play..  its upside down otherwise.@James Hamling  James is in your market he maybe able to assist.

James Hamling · Answer

Being in Rice, There is a very high likelihood I know who the owner is on this that sold the C4D. It's a small pond in Rice, very small.

Odd's are the one who sold the C4D is unaware to this situation, to some degree be it 100% or 50% (not aware of full extent). And, like I said it's a really small investor pond out there, so fair chance it's viewed more as a hassle to do anything enforcement to try and resell it.

BUT.... if a person is an ready interested buyer, ok, that changes things, that resolves that issue for enforcement.

First I'd start with finding who the seller of C4D is. And like said, odd's are I know them, so from there I'd reach out and ask what the deal is, why there turning a blind eye. And again, odd's are it's about the hassle of it all. So than I'd ask what our options are, how we make things happen.

It would probably best work just pressing a end of current C4D with entering the new "rubber stamped" C4D with yourself. Because like you said, place has been degraded since this person bought C4D so that price is no longer fair to someone entering now, right.

It may require court action on current holder but really that isn't any big deal. Not if who owns it is who I think it is. This is a "good ole boys" market, it's all about who ya know.

$850k is a bonkers price for there, so no surprise this outcome.

And before people assume Rice is some toilet of the universe, which ok, parts may somewhat qualify for that statement, lol, there is also big $ in Rice. It's very much like the south in that way, you can get $70k dump, $50k dump, $300k decent and $1.7m wow..... I know one person who is a big-wig sales gal for silicon valley and her primary residence is in Rice.

In general, rather stagnant town though. A satellite to St Cloud, low median incomes, little to no growth, limited employment, just not a lot happening there. But, if one has enough time, development is eventual. And vs replacement cost..... heck, where else can you acquire properties for significantly below replacement cost? As much as 50% discount from replacement cost, so there is that "spring" built into values, just a matter of time until that factor pulls prices up, question is how long.

And as you know Cole, most inventory out there is various forms of dumps, that's just the truth. Outdated, not pretty, some just ugly and others real dumps. My opinion is be different, offer something NICE. Doesn't need to be plush but clean, neat, orderly and visually appealing. I believe there is opportunity out there for offering premium inventory. To gain premium tenants.

Sec8 is for most part a waste of time unless in Sherburne, that's $$$$. Stearns, Benton, it's a joke what they pay. But I'm willing to bet that what current C4D holder is trying for, so his $ is a joke too.

That is a decent pitch for getting the property, looking to make it nice and get premo-tenants. A key factor to a C4D seller is how there asset is being protected, so they have assurances that value remains regardless of your performance.

Rene Hosman · Answer

Wowza! That's a lot of money to let something fall into disrepair! Please let us know if anything happens with it - my first thought, of course, is if seller financing is an option since they clearly have no business operating it maybe they would be comfortable just taking a monthly payment with no additional work on their end. In a similar but smaller scale situation I had my real estate attorney reach out to the law firm listed as the LLC's representative (this was for a single unit not whole buildings) and it turned out the owner was letting their kid live there and didn't have interest in selling for that reason but I felt it was worth the try

I hope to hear more updates from you @Cole Barthel !!

Cole Barthel · Answer

@Rene Hosman

Without yet talking to the buyer, it would appear so.

Cole Barthel · Answer

The homeless man sleeping on my bleeding hearts 4 days ago was really the final straw. I'll be going to the county recorders office tomorrow morning to check for any extra public information.

Jeff S. · Answer

@Cole Barthel it doesn't really sound right that someone would put such a large down and then let it go. Must be more to this story. Seems phony somehow.

Scott Mac · Answer

It might be a divorce court situation, or a probate.

Scott Mac · Answer

It also might be wise to speak with your escrow company about how they intend to handle the LLC in its closed down condition with the state due to non-payment.

Good Luck!

Rene Hosman · Answer

A very personal question so no need to answer this but is this something you can financially take on on your own or be able to secure bank financing for? Or would you need to speak with potential investors/partners/ etc etc because that might change what the next step would be in my opinion

How Can I Acquire Neighboring Properties from Slumlord

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