What is an abandoned house?

An abandoned house is a residential property that the owner has vacated or deserted, often due to foreclosure. These derelict structures are left empty for long periods of time with no one legally residing in them or maintaining them. 

In the United States, there are estimated to be over 10 million vacant and abandoned homes, many resulting from the housing crisis and economic downturn of the late 2000s. Homes may become abandoned for a variety of reasons including job loss, inability to pay the mortgage, death of the owner, personal bankruptcy, property damage making the home uninhabitable, or the home being located in a declining neighborhood.

Regardless of the specific reason, abandoned homes are residential properties that remain unoccupied and often become run-down eyesores in a community when the owner stops caring for the home. They present risks of becoming hotspots of criminal activity, unsafe for entry, targets for vandalism and squatting, and costly for local governments to demolish or rehabilitate. Identifying an abandoned home usually involves signs of neglect like overgrown yards, buildup of trash and mail, and failure to maintain or secure the property.

Pros of Buying an Abandoned House

Purchasing an abandoned home can offer several advantages compared to buying a traditional home that's already occupied and well-maintained. Here are some of the biggest pros associated with buying an abandoned house:

Lower Purchase Price

One of the main draws of an abandoned home is that you can often buy it for much less than a comparable move-in ready house. Since it likely needs extensive repairs and has cosmetic issues like peeling paint or overgrown landscaping, an abandoned home will be discounted substantially compared to homes in better condition. This allows you to get into a home for much less money upfront.

Ability to Renovate/Customize

When you purchase an abandoned home, you'll essentially be getting a blank canvas to renovate and customize to your liking. You'll have the flexibility to knock down or build walls, upgrade fixtures, choose flooring, select appliances and make numerous other decisions to create your ideal home. It's a great opportunity to put your creative vision into action.

Investment Opportunity

In many cases, abandoned homes are purchased strictly as investments. After fixing up the home and turning it into an attractive and livable space, investors can resell it for a nice profit or rent it out. Purchasing an abandoned home for renovation and then selling or renting can yield good returns on your investment in the long run.

Reduce Urban Blight

Abandoned and dilapidated homes can reduce surrounding property values and contribute to urban blight. By purchasing an abandoned home and either renovating it to improve the neighborhood or demolishing it and building a new structure, you help reduce some of these problems and improve the area. This benefits the whole community.

Cons of Buying an Abandoned House

Purchasing an abandoned property can seem appealing, but there are several downsides to consider:

Major repairs are likely needed - Abandoned homes often have substantial damage from long-term neglect, such as leaky roofs, outdated electrical and plumbing systems, rotting floors/walls, mold issues, and more. Expect to invest a lot in repairs.

Legal issues may exist - There could be outstanding mortgages, liens, title problems, or back taxes on the property. You'll need to do thorough research to avoid inheriting legal headaches. 

Safety and health hazards - Abandoned houses may contain dangerous structural issues, asbestos, lead paint, mold spores, and more. Have professionals thoroughly inspect before purchasing.

Difficulty getting financing - Banks are usually reluctant to provide loans for distressed properties requiring extensive repairs. You'll likely need to pay cash or find alternative lender/investor financing.

Buying an abandoned property is risky. While profits can be large if successful, be prepared for high repair costs, legal complications, safety issues, and a lengthy rehab process. Proceed cautiously if considering this route.

Where to find abandoned houses 

There are several places you can look to find abandoned houses that are for sale:

Government Auctions

• Many county and city governments will auction off abandoned properties they have taken over due to unpaid taxes or other issues. These auctions are often advertised on government websites and in local newspapers. You can sometimes get an abandoned house for a very low price through a government auction.

Bank Sales

• Banks will often sell off abandoned houses they have foreclosed on for very reasonable prices just to get them off their books. Many banks list these properties on their own websites or you can find listings on real estate sites.

Directly from Owners

• Some abandoned houses are still owned by individuals who have neglected them. You may be able to find a good deal by reaching out to owners directly about purchasing their abandoned property. Drive around neighborhoods to spot vacant houses then do some research to find the owner.

Real Estate Sites

• Many online real estate sites like Zillow and Realtor.com have listings for abandoned and foreclosed properties. You can search for listings using filters like "distressed properties" or "fixer uppers" to find abandoned houses.

Evaluating the Condition

When you find an abandoned house you're interested in, a thorough inspection by professionals is essential before making any offer or starting work. Don't let the low price tag tempt you into skipping this crucial step. 

Hire inspectors. You'll need to bring in multiple inspectors to fully evaluate the property. Start with a general home inspector, then get more specialized assessments:

• Foundation - Cracks or failures in the foundation can lead to extremely costly repairs. A structural engineer can analyze issues.

• Roof - Roof damage like leaks or rot can create massive problems if left unaddressed. A roofer can inspect and estimate repair or full replacement costs.

• Electrical - Faulty and outdated wiring is common in abandoned homes. An electrician can uncover fire hazards and estimate rewiring costs. 

• Plumbing - Plumbers can check for leaks, corrosion, clogs, mold from leaks, and water damage. Replacing pipes can get very expensive.

• Environmental - Testing for lead, asbestos, mold and other environmental hazards is crucial. These can create major health risks and remediation costs if not properly addressed.

The inspection reports will help you understand the scope and costs of renovations needed to make the home livable. This informs how much you should offer for the abandoned property. Don't skimp on thorough inspections from qualified professionals.

Estimating Renovation Costs

One of the biggest challenges when buying an abandoned house is accurately estimating the costs for renovations and repairs. Many factors can affect the overall budget, so it's important to research and plan ahead to avoid going over budget later.

When estimating renovation costs, get detailed quotes for all major systems and repairs. This includes:

• Plumbing system - may need full replacement
• Electrical wiring - may need rewiring
• HVAC system - likely needs replacement 
• Roof - may need repairs or full replacement
• Structural/foundation - inspection for issues
• Exterior siding, paint, windows 
• Any load-bearing walls that need repair

The costs for these major components can really add up. You'll also need to budget for finishes like flooring, appliances, fixtures, and cosmetic upgrades. Allow for extra contingencies in your budget - estimates often come in low. A good rule of thumb is to add 10-20% over your total quote to allow for surprises or changes that come up during renovation.