Vacant house with underground storage tank beneath the driveway

[Melissa MacLean]

I'm considering my first attempt at wholesaling, but the situation is both convenient and unfortunate:

There happens to be a vacant house across the street and a few doors down from me, that I didn't realize was vacant until a recent flurry of activity on the neighborhood listserv. The owner is an elderly woman who lives a town over with her daughter, but they have people come out to periodically maintain the property, so it isn't a horrible eyesore or anything. The neighbor has complained several times to the town, however, and he told me that the owner pays a $300 fine to the city every month. It's been vacant for at least 5 years, so they've spent at least $18,000 in fines alone, not including taxes and homeowners insurance and lawn maintenance. The ARV on this house is about $175,000. It needs a LOT of work/complete gut - central air would need to be installed, needs a new roof, all new windows, new flooring, new kitchen, new baths, extensive drywall repair, etc etc. And it's a 2 bedroom, 1650 square feet, so would need to be reconfigured to be a 3 bedroom to get that ARV. It also smells kinda funky from right outside the door, like that old person musty smell seeps out. I was considering getting in touch with the owner's family and negotiating a deal that I could wholesale, because it's pretty prime for the picking. Unfortunately, there's an underground storage tank thats UNDER THE DRIVEWAY! I called a local UST removal company and they said it would cost around $25,000 to remove and reinstall the driveway, if there is any contamination, and only slightly less than that if there isn't. Should I just walk? Or do you think a rehabber would be interested in buying the contract from me, if I got a deal on the house? 70% of 175k is 122,500, if rehab costs were 90,000 without the storage tank then we are at 122,500-90000= 32,500, then minus the 25,000 for the tank gets us to $7,500. This seems ridiculous, doesn't it? does anyone buy houses for a couple thousand dollars that have ARV of 175k?

[Ibrahim Hughes]

Put the property under contract with the seller agreeing that they will have the UST removed before the closing. And any contamination, they will clean up. I definitely wouldn't buy it with the tank and without the sellers pulling it while the property is in their name. You won't be able to get an accurate assessment on how much contamination there is, if any, without first pulling the tank. But I wouldn't run from the deal. It could end up being a good one with the right terms and place.