Vacant houses are usually the best deals. They are obviously a house that no one is living in and a house that someone would probably like to get rid of especially if they are making payments on it.
To make a deal you have to find the owner. Here are some tips (and a story)for finding the owner of a vacant house.
1. Check the tax records to see if the owner filed a new address. If so, send them a postcard or letter asking if they would like to sell their house.
2. If there is no new address for the owner, send a postcard to the existing address and write DO NOT FORWARD – ADDRESS CORRECTION REQUESTED on the front of the postcard. The post office will send the postcard back to you with a sticker on the front with the owner’s not address. Why would you want to do this? Once you get the owners new address, you may want to just knock on their door instead of waiting for mail to get delivered. Sometimes time is of the essence, especially in foreclosure situations, so you need to act quickly.
3. Look in the white pages for people with the same last name. Call everyone asking if they know how to reach Mr. or Mrs. _______ . Be careful here. They may think you are a debt collector. So, explain that you are interested in buying their house at such and such address.
4. Hire a skip tracer in your town. Give a local private investigator the name and last address for the owner and they can usually find them within 24 hours. The cost is $10 – $20 per search.
5. Leave a note on the front door for the owner to find. Sometimes the owner will come back to check on mail or get more things out of the house. Leave a bright yellow note taped to the front door that says I’m interested in buying your house, please call me at ### ####
6. My favorite and most effective method for finding owners of vacant houses is to talk to the neighbors on either side of the subject property and perhaps the neighbor across the street. Once again, explain that you are interested in buying the house. The neighbors almost always know how to get in touch with the owner.
Here’s a real story about how I found the owner of a vacant property.
I noticed on the foreclosure list there was a property with an $8,000 loan balance. I knew the house was worth $125,000 to $130,000. At first I thought this must be a 2nd. But I did a little research and found out it was a 1st position note.
In Texas, there is one Notice of Default, and then the house is sold on the courthouse steps 21 days later. So I had very little time to find the owner and try to make a deal.
I went to the house. I appeared to be lived in because I could see furniture in the house but the yard was very overgrown and the mail was piled up on the front porch.
So, I talked to the neighbors and found out the owner is a 90 year old lady who moved to a nursing home.
Next, I called every nursing home until I found here. But they told me the lady was in a coma so I could not talk to her. The nursing home did give me her daughter’s name and phone number.
When I called the daughter to tell her about the foreclosure, she thought I was a scam trying to steal the house. So I agreed to come over and show her the Notice of Default and get on the phone with the lender for proof.
The payments were less than $300 per month, PITI but the daughter had been using that money for drugs. The daughter really wanted to keep the house because she thought her Mom would get better and be able to move back in to the house. She was not ready to sell but had no money to cure the default.
So, I bought a right of first refusal option for $1,500 .. it was enough money to cure the default and make the next payment.
A few months later, the daughter called to ask if I still wanted to buy the house. Her Mom was still in a coma and the nursing home needed $20,000 for Mom to stay.
I bought the house and everything in it for $25,000. Included were complete furnishings from a 3 bedroom house, pots and pans, dishes, a piano, some Theodore Havilland china from 1890, a car with 40,000 miles that still smelled like new leather, lots of fishing equipment, ladders and tools, and much more.
I kept some of the things (it is always fun to see what you get with houses), then had an estate sale to get rid of the rest so I could get my contractors in to rehab the house.
A few months, and $25,000 in rehab costs, I sold the house for $130,000.
This was all possible because he neighbors told me the owner moved to a nursing home. If I had not talked to the neighbors, I may not have ever found the owner and the house would have been sold at foreclosure auction.
It was a great profit but looking back, I would have been much better off if I had just wholesaled the house for a quick $25,000 to $35,000 profit. Rehabs tie up a lot of money and always have hidden defects. This house had foundation problems and needed 20 piers.
Morale of the story… (1) when you find a vacant house opportunity, talk to the neighbors to find the owner…(2) fast cash from a wholesale deal is usually much better than the time, money and frustration of a rehab.
Best of Success… and Freedom
P.S. Another tip…. since this was such a great opportunity I wanted to discourage other investors from looking for the owner so I put a 8.5 x 11 bright yellow notice on the front door that said THIS HOUSE IS NOT FOR SALE!
P.P.S. Send your HOW TO questions to [email protected] so I can answer them in a future email/blog.