Buying Abandoned Properties: What You Need To Know
Residents of Harmony can receive a cash rebate of up to $12,000 for building a new property in town.
9 cities and towns where you can get a home for free — or buy one at a massive discount
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- Many cities and towns have taken to giving away abandoned homes for free, or selling them at minimal prices.
- Some local governments even offer stipends or discounts to encourage buyers to renovate old properties.
- While the offerings may seem like a steal, rehabilitating a home can be quite costly.
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The US housing market entered the new year on dismal footing. In January, the nation’s home sales reached a three-year low.
Even in the midst of a housing slowdown, there are still plenty of ways to find cheap real estate, both within and outside the US. You just have to know where to look.
In areas where homes are old or unoccupied, governments occasionally offer subsidies to finance a renovation. In other cases, homeowners are willing to list their properties at little to no cost.
We’ve rounded up the locations where you can find a home for free or at a major discount.
The list includes small towns like Tulsa, Oklahoma, as well as major urban areas like Baltimore, Maryland, and Tokyo, Japan. Take a look.
Homeowners in Tokyo are listing their abandoned properties for free.
Tokyo has been building like crazy, but the city still struggles to get rid of its unoccupied and deserted homes. The Japan Times recently reported that more than one in 10 homes in Tokyo are empty.
Part of this has to do with the shrinking size of Japan’s population, which means fewer buyers. It’s also considered bad luck in Japan to purchase a home that has witnessed a murder, suicide, or “lonely death” (one that occurred in isolation).
For this reason, many properties are being given away for free on online databases called “akiya banks,” a reference to the Japanese word for “empty home.” Others are being sold for as little as $4.
St. Louis, Missouri, is selling more than 500 homes for $1 apiece.
A dollar won’t buy a cup of coffee in most cities, but it will get you a home in St. Louis, Missouri. The city recently launched a program that allows residents to purchase vacant properties for a dollar, provided they have a plan to fix it up.
Buyer can choose from more than 500 single-family homes that are less than 1,500 square feet. They’ll have 120 days to bring the exterior up to city code and 18 months to renovate the entire property.
They’ll also have to commit to occupying the home for at least three years — a policy that prevents people from flipping the properties.
New Haven, Connecticut, is giving away up to $42,500 in housing discounts to first-time homebuyers.
First-time homebuyers in New Haven are eligible to receive up to $10,000 to cover the closing costs or the down payments on their homes. The subsidy comes in the form of an interest-free loan, which is fully forgiven after five years.
City employees, teachers, police officers, firefighters, and members of the military receive an additional $2,500 off.
On top of that, the city is giving away $30,000 to those who renovate their homes using energy-saving upgrades.
Tulsa, Oklahoma, offers remote workers a 33% discount on a fully furnished apartment for three months.
The Tulsa Remote program is offering a small group of digital nomads — people with the freedom to work from anywhere — up to $10,000 to move to the city.
While the stipend doesn’t go directly toward housing, the program offers a 33% discount on fully furnished apartments in the Brady Arts District, with utilities thrown in for free.
Workers are expected to live in Tulsa for a full year, but the apartment discount expires at the end of three months. At that time, they’ll have to cover their own rent, which is still among the cheapest in the nation.
Buffalo, New York, is selling unwanted property for $1.
In Buffalo, a city-owned property without an interested buyer that doesn’t serve the public is eligible for the Urban Homestead Program. The program sells properties for just $1, plus closing costs, but there are a few additional requirements.
Buyers must stay in the home for at least three years and fix any building code violations within 18 months.
While the deal may seem inexpensive up front, renovating an abandoned home can be pricey.
There’s also a limited supply: In 2015, the city’s Division of Real Estate told CNN that only a handful of homes were still available through the program.
Buyers in Baltimore could be eligible for housing incentives of either $5,000 or $10,000.
The Baltimore Homeownership Incentive Program offers a number of discounts for local residents, including $5,000 for first-time homebuyers who earn at or below 80% of the area’s median income and a $5,000 incentive for city employees.
Twice a year, the city selects 30 people to receive $5,000 in housing incentives. For those who want to live near work, the city will also match an employer’s housing contributions for up to $2,500.
The program’s biggest subsidy comes in the form of $10,000 for residents who purchase a vacant home.
The small town of Harmony, Minnesota, is handing out cash rebates of up to $12,000.
Residents of Harmony can receive a cash rebate of up to $12,000 for building a new property in town.
Though Harmony already bills itself as the “Biggest Little Town in Southern Minnesota,” it’s making a concerted effort to grow its population, which hovers around 1,000 people.
People of all ages and income levels are invited to apply for the rebate, but applications are accepted on a first come, first serve basis.
Gary, Indiana, is selling a select number of homes for just $1.
In August, the city of Gary, Indiana, announced the sale of eight homes through its Dollar Home Program. Their website now lists twelve properties that, despite their ramshackle appearance, seem primed for renovation.
To purchase the $1 homes, applicants must agree to rehabilitate the property within one year of its purchase and stay there for at least five years. There’s also a minimum income requirement of $38,750.
A village in Italy is selling hundreds of abandoned properties for $1.25 each.
The Italian fishing village of Ollolai has witnessed a drastic population decline. Over the past half-century, the number of residents in the town has fallen from 2,250 to just 1,300.
The government has to now taken to selling hundreds of abandoned homes to attract new residents. In exchange for a $1.25 price tag, owners must agree to renovate their properties within three years.
Renovations are expected to cost up to $25,000, but it could be a small price to pay to keep the village from disappearing.
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Buying Abandoned Properties: What You Need To Know
Abandoned properties can be a pot of gold for some home buyers, especially those who love the thrill and challenge of renovating them. But the sense of satisfaction from buying and renovating this type of home versus the work and money put into it should be carefully considered.
Here’s what you must know about buying abandoned buildings or properties to determine if it’s right for you.
What Is Abandoned Property?
You may have come across abandoned properties before and didn’t realize it. In most states, abandoned property is real estate that includes any house or building that’s been unoccupied for at least 1 year. However, it also includes any property that the owners forfeited their rights to and that remains unoccupied.
For example, if homeowners lose their house in foreclosure and are evicted, the property may sit for over a year unsold and unoccupied, becoming abandoned. Properties can also be abandoned when the owner dies, and no one takes over the property to maintain and/or sell it.
Abandoned properties are often confused with vacant and condemned properties. Vacant properties still belong to the owner, but no one lives there, and condemned properties are considered unfit for living by the local governments.
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How To Buy Abandoned Property
Before buying abandoned property, learning everything you can about it is important. This includes contacting the property owners, conducting a home inspection and weighing the property’s pros and cons. Then, if you’re ready to purchase it, making an offer and obtaining financing is the final step in buying a house.
It might feel overwhelming or even scary to find abandoned real estate to buy, but the process isn’t much different than looking for any other property.
1. Find Available Abandoned Real Estate
To find available abandoned real estate, you’ll use many of the same methods to buy regular property. For example, you could work with a real estate agent or do the research yourself. You’ll need to scour the area you want to buy a house and look for abandoned homes or other vacant properties. You may recognize them from their rundown appearance, or you may be lucky enough to find foreclosure or auction listings in the local paper.
2. Contact The Property Owner
Sometimes, abandoned properties are still owned by the original property owner, but they haven’t done anything with the property. So the key to buying abandoned property is to get in touch with the property owners to determine your next steps.
This will take some legwork on your part, so prepare yourself. You can start by asking the county clerk for the tax records. This will provide you with the property owners’ names. You can then try to locate their contact information online.
If the property owners aren’t listed, you can visit the property and leave a note or business card in the mailbox or on the door. You might not be the only buyer interested, so always follow up if you can. Also, since the property is abandoned, the owners may not come around often, so it could be a while before you hear anything.
Finally, you can ask the county clerk if the home will go to tax auction soon. If there are unpaid back taxes, chances are it will, making it much easier for you to buy an abandoned property. Just make sure you know the required terms, including the cost and how much money you need upfront to win the auction.
3. Conduct A Home Inspection
If the property isn’t part of a real estate auction, you may be able to pay for a professional home inspection before purchasing it. This step is important because the home’s condition can alter your plans if it needs more work than you can afford.
If you’re buying the home at auction and the bank or county isn’t allowing inspections, consider bringing a professional inspector with you to the auction so they can give you a feel for what they think of the property, even from the outside.
If you can inspect the property, figure out what home maintenance and repairs are necessary to make the home livable. Depending on the type of financing you get, you may have to do the work before you close on the property, and it can affect your finances, so pay close attention to the report.
4. Weigh The Pros And Cons
Even though abandoned properties may cost less, they may not be worth it in the end. Therefore, it’s important to weigh the property’s pros and cons, considering the home’s condition, the work it needs and the cost.
If you have to put too much work into the home to make it livable or to increase its value, it might not be worth it. So first, look at the property values of other homes around it to determine if you’d be investing more than the home might be worth when you’re done.
5. Purchase The Abandoned Property
You’ll likely need financing when you decide to purchase an abandoned property. Before you commit to buying the property, determine your timeline. For example, if you’re buying an abandoned home from an auction, you may need the financing upfront to close quickly. But, if you’re buying it from the owners directly, you may have more time to work out financing details.
Since the home is already abandoned, the current homeowners likely aren’t in a big hurry to close the sale.
It’s best to get preapproved for a mortgage before looking at abandoned homes so you know how much you can spend and what the lender requires. After you’re preapproved and find a home, the lender will order the appraisal and title work on the property to ensure it’s worth enough money (or will be after your renovations) and there aren’t any liens, such as back taxes on it.
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