How To Find & Buy Abandoned Property in Any Market
Abandoned property is a great opportunity for real estate investors if you can find the homeowner and make them an offer. Here’s how to do that.
In today’s market, with home prices climbing every month, being able to find (and buy) abandoned properties in any market can create new opportunities to grow your real estate investing business.
Unfortunately, though, these properties aren’t being advertised for sale.
With the right strategies, though, you can avoid wasting a ton of time trying to find these prime opportunities, and avoid missing out on some huge deals that you wouldn’t normally have access to.
In this guide, we’re going to show you how to find and buy abandoned properties in ANY market so you can start developing a competitive edge, get access to new deals that aren’t being publicly advertised, and add a new (incredibly valuable) skillset to your arsenal.
And, if you’re new to investing and want to make sure you get started the right way, take a minute to check out our guide on how to become a real estate investor.
To kick things off…
What is an Abandoned Property?
Now the term “abandoned property” isn’t to be confused with properties that are vacant or unoccupied.
The term “abandoned property” is actually defined by state and local ordinances. In most areas, a property is considered abandoned when it has sat unoccupied for at least 1 year and where the owners have forfeited their ownership rights.
To give you an example, if an owner has been evicted due to a foreclosure process, the property may sit unoccupied and unsold for a year -- where local ordinance would deem it “abandoned”.
This isn’t to be confused with properties that are vacant, though. Most often, those properties are still owned by someone with an active interest in the property, they’re just sitting unoccupied.
It also doesn’t mean condemned properties, or properties that have been deemed unfit for human occupation by local governments.
How To FIND an Abandoned Property in Any Market
Before you can buy an abandoned property, you need to understand how to actually find them.
Thankfully, though, this isn’t rocket science -- if you know what you’re looking for.
The bad news, however, is that you’re not alone in your search.
Since abandoned properties are PRIME opportunities for investors, you’ll need to realize that the “simple and easy” ways to find these properties are typically saturated with other investors using the same approach.
When you’re looking for these properties, it’s important to move quickly since they go quickly, too.
1: Build Your List
The first step in moving quickly is getting organized.
You’ll want to use a CRM to begin creating your list and getting it organized to help save yourself a ton of time later on. One of the best CRMs available for finding abandoned properties is REISift.
Inside REISift, you can use Siftline to keep your leads organized on a board so you can immediately see who’s closest to the goalline.
You can also look up owner records and sort your data with advanced filters to know who may be motivated to sell. You can see which properties are vacant and narrow down your list for other factors that may help determine whether or not the property is abandoned, too.
Once you have a good CRM in place (and are actively using it), everything else in this guide becomes significantly easier to do.
2: Real Estate Data Software
You’ll also want to pull data using real estate data software like Propstream or PropertyRadar.
Then, you can plug that data into REIsift to start sorting it, filtering through the list to look for signs that a property has been abandoned.
These are going to be signs of long-term vacancies after a foreclosure or bankruptcy, or properties with unpaid property taxes.
3: Driving For Dollars
Jumping in the car and driving through your local neighborhoods is another great way to find abandoned properties before any other investors.
This strategy relies on the numbers, though -- meaning you’ll want to repeat this process as often as possible, keeping an eye out for signs of distress.
When you see those signs, things like failing roofing systems, broken windows, unkempt lawns, fences in disrepair, etc, you’ll want to collect as much data as possible on them so you can start tracking down who you need to make an offer to.
That’s another area real estate software like REISift and Propstream can help.
Here’s a good video that breaks this strategy down in more detail:
4: Cold Calling (+Skip Tracing)
Cold calling is a strategy that a lot of investors hate using because it takes… effort.
But that can become a competitive advantage for you if you’re simply willing to pick up the phone and start calling people to figure out who you can make an offer to on an abandoned property.
When you’ve located the properties, you skip trace them to find a point of contact. Then you jump on the phone and get as many details as possible about the property -- like if it’s able to be sold.
Skip tracing can be used to identify who owns an abandoned property (as well as other properties like it) so you know who to make your offer to.
Then, when you have their information, you can plug it into a cold calling software to help amplify your efforts and keep from having a phone stuck to your ear all day.
5: Government Sites
Since local and state laws and ordinances are what actually deem a property “abandoned”, you can use government data sites to help track down those abandoned properties.
Visiting your local county clerk’s office (or website) and looking for terms like “immediate possession”, tax liens and other lien issues which all point to potential problems that would indicate abandonment.
6: Direct Mail
When you’ve uncovered the owners of these properties, you can add direct mail marketing on top of your cold calling efforts to get in touch with them quicker.
Because, remember, speed is the name of the game with abandoned properties -- you’ll need to move fast if you want to get them before other investors get a chance to.
When you’re starting with the right list, the right message, and follow up in the right way, direct mail marketing campaigns can be one of the most effective marketing strategies you’ll ever use.
Here’s a great video that breaks down a winning direct mail strategy:
7: List Stacking
The data that you start with is critical to successfully finding any type of property as an investor -- especially abandoned properties.
To make sure your data is as accurate as possible, use a CRM like REIsift. But to make sure it’s as effective as possible, you’ll want to use a strategy called “List Stacking”.
List stacking is done by taking your data and filtering it down using specific criteria, like vacant properties with absentee owners, or vacant properties with tax liens, or vacant properties in foreclosure, for instance.
Stacking your data like this helps you uncover properties with higher seller motivation levels, making it easier for you to get a deal done.
If you want to learn more about this strategy, check out our guide on list stacking.
How To BUY an Abandoned Property in Any Market
Once you’ve found the properties and gotten accurate information you’ve plugged into REISift, the next step is getting offers made so you can buy them.
1: Find Funding
One option for getting funding is using private money -- it’s fast and you don’t have to worry about getting preapproved by the bank so you can quickly move on abandoned properties you find.
Private money is money borrowed from an individual (or group of individuals). Interest rates on these loans tend to range from 8% to 12% so the lenders can beat their stock market returns.
Another option is getting preapproved for a traditional bank loan. If you have good credit (or collateral) and want to have your funding lined up before you start searching, this is a great option to use.
Interest rates with bank loans tend to be lower, ranging from 4% to 6%, which leaves more room for profit.
If both of those options aren’t available, though, you can also use hard money. It’s a form of lending that comes from private lenders who specialize in loaning money for investment properties.
The interest rates can be significantly higher (upwards of 20% in some cases) but the money can be moved fast so you’re able to quickly get deals done.
It’s a good idea to seek out funding before you start looking for the properties, especially if you’re going the traditional bank route.
Check out our guide on creative financing for investors for even more funding ideas.
2: Inspect The Property
After you’ve gotten funding, you need to have the property inspected before you move forward on it.
Since abandoned properties tend to hold more risks than other types of properties, you need to know exactly what you’re getting into and what it’s going to cost to repair.
If you’re dealing with an auction scenario you may not have the option to have it inspected. In those cases, you’ll want to bring a professional inspector with you so they can point out potential issues.
If you’re able to inspect the property before making a bid or offer on it, have your inspector be as detailed as possible. One missed repair could mean you fail to make a profit as expenses quickly outgrow your budget.
3: Weigh Up The Pros & Cons
Buying abandoned properties comes with one major caveat: these properties sat unoccupied and were typically abandoned for a reason.
That means that even though they’re cheap to buy, they may not actually be worth buying.
It’s important you weigh the pros and cons of the property, the current condition of the property, the costs involved with bringing it back up to market value, and how long it will take you to complete that goal.
For instance, if you find out that you have to put in too much work (or that work costs too much) to bring the home back up to a livable condition or increase its value, it’s worth finding other deals.
We’ve put together a great guide you can read on purchasing distressed properties.
4: Be Persistent
When it comes to finding and buying abandoned properties, consistency and persistence are key.
You may find a bunch of properties that just don’t make sense from a financial perspective.
Or you may find properties that are already being purchased by other investors.
But by staying consistent and persistent you WILL find a property you can buy and invest in.
To stay consistent and persistent so you can find properties to invest in, you’ll need to make sure you’re using a CRM like REISift so you can track your data, where you’ve made deals, where you need to follow-up, and which properties are under renovation -- and where those projects are at every day.
REISift makes it easy for you to pull data, verify ownership, track your marketing campaigns, and (ultimately) saves you time and money by being more organized than your competition.
If you want to give it a test run to see how effective it can be for your real estate investing business, you can start your free trial today by clicking here now.
Learning how to find and buy abandoned properties in any market can be a great way to grow your real estate investing business.
As long as you understand the risks involved (and the added costs for bringing them back up to market value), adding abandoned properties to your searches is easy to do when you follow the tips in this guide.