So... I bought a really, cheap property. Now, I have to secure it.

Real Estate Investor · TN · Member since 2010 · 294 posts · 160 votes

Andrew,

Who did you buy the property from? Were you able to get title insurance and did/will you be able to get a clean title? Did you pay a low enough price that if the house is not savable it will still be a good deal? I have rehabbed some really rough places over the years, but I have also ran into properties that would cost me more to rehab them then to tear them down and start over. With you never seeing the inside I'm hoping the land itself without the structure or the cost to tear it down and haul it away is still a good deal.

I also understand that it is quite possible that the property is in a condition that would allow you to rehab it for a nice profit, but at this point you don't have enough information to know. Can you go to the utility companies, show them that you own the property and "ask" if the power, water, gas are on and if so under what name? I wouldn't switch the utilities into my name if there is potentially a person living in the house that is going to run up my bills. Me personally, if I was told by the seller (whoever that is in this case) that the property is vacant I would go into the house and see what I just bought. Of course this could come with some risk.

If it turns out someone is living there you will likely have to evict them which could take some time and money. Is it possible they have a one year lease? An alarm or cameras may tell you if someone is going in and out of the property, but it won't tell you if they have a right to be there. I would ask my attorney what the best options are for moving forward.

I would also ask the neighbor to call me the next time they see a person at the house. I would then drive to the place and talk to them directly. Please keep me posted on this one I would love to know how it turns out.

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Andrew SyriosPro Member

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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

2y

That sounds like a pretty good plan, but I would make a few suggestions:

1) if you think it may have had squatters or the previous residents would come back, board up the windows too while you're doing the work.

2) If the property was occupied by the owners or tenants, you may need to file an abandonment notice and wait 10 days or so (check your local laws) before changing the locks. I don't think the sheriff will do anything without an eviction having been processed which it doesn't sound like is necessary here.

As for the cameras, I think Ring is probably your best bet. You could also use a Simplisafe alarm system. Both are pretty cheap.

On insurance, REI Guard (https://nreig.com/tag/reiguard/) should cover such properties.

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Peter MckernanBusiness Member

Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes

2y

Quote from @Andrew Heree:

Hello BiggerPockets Community,

This is my very first post here and I'm really excited to be a part of the community.

A few days ago, I bought a really cheap property in a semirural lower-middle class, but generally safe area. There are some nuances with title, but it's nothing that can't be cured.

The owner and their heirs have been deceased for decades. Yesterday, I posted my standard notice on the front door advising the occupants that the place has been sold, to call me, and that if I don't hear back, I may initiate an unlawful detainer or if the place is vacant that I may change the locks, along with a copy of the deed.

The property looks barely habitable (hot water heater is on the back porch (which looks like it's about to fall off its rotted post foundation), sheets of drywall and plywood out front, tons of beer cans and collection notices on the front door, and rotted siding/wood on one side of the house. Blue tarp on the roof, lots of trash in the front yard, and it's very apparent that the house has not been washed or painted in years. But... The power is on and there's a legit meter, and the neighbor told me that someone comes and goes. Yesterday, I noticed a bike in the front yard which was not there when I did my initial inspection.

I normally don't touch these kinds of properties (and try to avoid occupied properties in general), but it was so cheap I couldn't resist. It's not terribly far from me (about 20 miles), and it's a relatively newer property (built in 1990). It even comes with a giant metal shed and a carport.

I have no idea what's inside. IF it's not too terrible (under $15k - $20k), the plan is to rehab and keep it as a rental, and if it's a big project, I'll probably just sell it as-is. I can make a decent profit and someone else will get a killer deal on a rental.

Nobody has contacted me. The game plan is to go out there today and try to see if it's vacant. If it is, drill and replace the locks, post some no trespassing signs, and put up a few WiFi cameras connected to a mobile hotspot.

If there's somebody there, call the sheriff and try to ascertain who they are, if they have a lease, or permission to be there. If they are a vagrant, try to get the police to trespass them. If the sheriff won't help, then proceed with an unlawful detainer.

Does this seem like a good plan? Should I call the sheriff ahead of trying to drill the locks even if it seems vacant? I'm guessing as soon as I take possession, I should switch over the power and water.

Does anyone have any suggestions for additional methods of securing the place? Maybe a really cheap monitored alarm? I just ordered some more WiFi security cameras that are powered from light sockets.

Does anyone know if an insurance company that would write a policy in such a circumstance? I have a CGL policy, but it would be nice to have some protection if the occupants set it on fire.

My family thinks that I've totally lost my mind by buying this house, but they said the same thing when I bought my current home and I think there's potential. Thanks a ton for reading my post and sharing any thoughts or advice!

I would check the local laws of course, sounds like you know them fairly well.. But just brush up on them. I would use a Ring Camera or something to keep the security good on the place..

Sounds like you bought cash, yes there are insurance companies/brokers that will write a policy.. I would hit up a local flipper see who they use for vacate insurance policies. Or check a local meetup.

I would just be careful going over there taking off locks etc. These situations when you hear about them tend to turn out where someone is living at the house, and someone getting accosted. Take someone with you, or show up with law enforcement that day. Also good to be safe than sorry.

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Andrew Heree

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Member since 2024 · 2 posts · 0 votes

2y

I really appreciate all of the responses, thank you! I'll definitely be reaching out to NREIG for a quote. Boarding up the windows is also a great idea.

This particular property came from a foreclosure auction. No title insurance, but I did a title exam and did not find anything that would concern me.

If the house is a total teardown, I think I could breakeven on the land after demo and transactional costs, assuming demo can be done reasonably cheap.

Here is the latest on where things stand:

I went out there with a friend yesterday. The notice and deed I posted were removed, and it was apparent that someone was in the house as the TV or radio were on. Nobody would answer the door so I called the sheriff. In the ~hour it took for them to come out, several neighbors stopped by and confirmed that the house was occupied and had been for at least two years, and that he was probably inside and too scared to come out and talk with me.

Unfortunately but predictably, the Sheriff would not remove the occupant, though the deputies were very friendly and went as far as to reach out to the state attorneys office for guidance. One was picking my brain on how I got such a good deal (the purchase price was on the deed). Hopefully, he takes my advice to do his homework before trying to buy anything at the auction (literally every other week someone loses a buttload of money bidding on HOA foreclosures with clouds on title).

The power is on, but apparently is serviced by a different utility company than the one I had called. I don't know why, but I guess the street has multiple utility providers.

One of the neighbors asked for my phone number and told me that they would try reaching out to the family of the occupant to try and facilitate cash for keys or a rental agreement. He also offered to help with trash out and repairs if/when the eviction is finalized. Supposedly, the house isn't too terrible on the inside.

So that's where things stand. I've drafted the papers and pleadings for an unlawful detainer action and will file Monday morning if nobody reaches out.

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So... I bought a really, cheap property. Now, I have to secure it.

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