What is abandonment?
Abandonment is a term used when a person purposefully renounces or gives up the rights on property/asset and never reclaims it back, according to Bankrate. Once an owner abandons a property, he/she cannot decide who the new owner will be. According to the real estate agent, the owner of the property cannot give up the right to a property as a way to benefit someone else.
Cornell Law School addresses that the abandonment will be confirmed by the court. Factors that will influence the decision on the abandonment will depend on the type of the property/asset, location, behavior of its owner(s), etc.
Should you buy an abandoned property?
Abandoned properties are usually in rough conditions due to the lack of care and maintenance. They will often have rain damages, moisture issues, and probably insect damages such as termites, rats, etc.
In addition, abandoned properties will most likely have structural problems. Imagine a property in a neighborhood where it was left alone for a very long time. What kind of problems will it have?
Maybe the roof will cave in, or beams will rot, and many more.
As an investor or homebuyer, you should expect these problems on abandoned properties.
Should you invest your money in abandoned properties?
Well, it depends. Even if you will pay less money to acquire abandoned properties, you will spend a ton on major repairs to bring the property back in good condition.
If you are investing on a tight budget, consider staying away from abandoned properties. This is because rehabs on these properties can push your budget out of limits and lead to losing money.
On the other hand, if your budget will allow you to tackle all repairs on the property, then buying these houses could yield a high return on investment. You should do your homework and work with a contractor before purchasing these properties. The contractor will help you estimate the degree of damage to the property and cost.
Why would anyone abandon a property?
There are many reasons people will abandon their properties. These reasons vary from one owner to another. For example, some people move from one state to another and leave their properties behind. With busy schedules and lack of maintenance, their properties end up at the mercy of nature.
Other issues such as divorce and lack on of interest in the property could lead to abandonment.
More learning resources
- Active Contingent: What is Active-Contingent?
- How to lower property tax? Save money in tax
- Active status: What is the active status?
- 8 Reasons you are struggling with money
- 74 Things to look for When buying a house
