The bulkreotrader is running a contest to give away 3 free houses. For those who do not win, there are ways, to get your own free property. I have had 2 owners in the past couple of months contact me to take the deed of their property for free. Both properties are near mine and both need work, but they are free nonetheless. One of them would require back tax and water to be paid. The other requires no payment...and... the owner will even cover the cost of the title insurance. (I have not taken advantage of either of these deals simply because I am in the middle of an extensive renovation of my own house and could not oversee these properties from out-of-town at the moment. It would just be a distraction.)
These deals are out there, mostly in depressed areas of the country. Some owners simply want the property out of there hands. They don't want the liability of owning it. They may have the Health Department or the Building Department in their town pressuring them to make repairs that they can't afford. It isn't difficult to acquire deals like this. Here's How:
Be Realistic - Your neighbor down the street in your quaint suburban neighborhood isn't going to deed his house to you for nothing. I don't care how much work it needs. Search depressed run down areas where folks don't realize the hidden value in the real estate.
Don't count on flipping - More times than not these types of free properties don't have much turnaround profit margin. The value lies in the rental. The real estate market of theses areas is very low and that's why they are free.
Abandoned - Look for properties that are boarded. That is a sure indication that they are vacant and may have been abandoned. Look for overgrown yards and busted windows. Check to see if the electric and gas meters are in place.
Utilities - Call the Electric and Gas Company. They will usually be able to tell when the last time the service was on. That is the best indication of how long the property has been vacant.
Public Record - This is a great tool for locating owners. Also, check the town's real estate assessment records to see where the tax bills are going.
Back Taxes/Water/ Liens - Generally, when you acquire a free property it has been abandoned by the previous owner, which means they are probably tax deliquent. There may also be an outstanding water bill. There may be other liens on the property such as mortgages. These types of liens and bills will carry over to a new owner. Be sure to check how much is owed before finalizing the deal.
Expect to Renovate - Almost 100% of the time free properties will need to renovation. Free properties are run down and most have been neglected for years and years, that's why they are free. Some of them may need extensive rehab, while others may need clean-up and fairly minor repairs.
Watch Hidden Costs - Upon examining the property it may not be obvious that all of the copper has been stolen or that the pipes had burst at one time. Also, dry rot may be hidden in the walls. The furnace and hot water heater may be fried (if they are there at all). The roof may leak and the house may need other repairs that aren't completely obvious at first glance.
Weigh the Cost to Value Ratio - Just because the property is free, doesn't automatically make it a good deal. Calculate the cost to renovate plus the cost to pay off liens, taxes and water, then decide if the property will still fall below the market value.
Examine Market Conditions - Is there a reason why this property has been abandoned. If the property is not saleable or rentable when it's complete. then it's useless, unless your plan is to sit on it and hope the market improves.
Be Wise, Not Foolish - Savvy investors know when to pass, and when to pounce.
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