Thought Leadership | Real Estate Investing | How To & Education | hyperlocal marketing
Leveraging vacant properties is quickly becoming one of the most popular strategies for real estate investors to find lucrative opportunities.
In fact, according to a recent report from the US Census Bureau, 15.5 Million of the 142 Million properties in the United States are classified as Vacant. With such a large volume of vacant properties, it’s no wonder savvy investors are investing in finding and connecting with vacant property owners.
Vacant properties (also known as an abandoned property) are exactly what they sound like: an unoccupied property. Even though nobody is living in or utilizing the property, it still has a registered owner who, in most cases, has not kept up with maintaining their property.
Building a strategy around vacant or abandoned properties, just like any other distressed properties, comes down to knowing what to look for and being able to build a list of potential opportunities that fit your real estate investing criteria.
In this article, we’re going to take a look at six of the most important questions to ask when building your vacant property list, including:
- Is it owner-occupied or non-owner-occupied?
- What kind of vacant property characteristics are you targeting?
- Are you marketing within the value you're willing to spend?
- How long has the vacant property been owned for?
- What other investment criteria are you targeting?
- Is the property occupied?
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1. Is it owner-occupied or non-owner-occupied?
When setting out to find vacant properties, the first, and arguably most important, thing to understand is if the vacant homes are owner-occupied or non-owner-occupied. Depending on the status, it will drastically change how you market to the property.
When determining the status of homes on your vacant property list, there are two sources you can use to find vacant houses: the County Assessor and the US Postal Service.
So, for example, you may run into a situation where the County Assessor will keep a property marked as owner-occupied because they mailed a tax bill to the address. However, the US Postal Service may classify the property differently if they cannot deliver any mail to the property.
In this example, if the property is owner-occupied and vacant, you have to take that tracking down that owner further because you can’t rely on the mailing address alone. So remember, when to find vacant houses, you may need to do more research.
In most cases, you’ll have to look to skip trace to find vacant property owners and their contact information. However, most investors won’t put in the time to do this, so you’re more likely to be one of the, or even the only investor, who’s reached out to them.
Additionally, you’ll want to determine whether or not the homes on your list have an Absentee Owner. Often, you’ll find that an investor owns a property that's currently vacant.
This happens for a few reasons. First, it may be one of their rental properties or one of their vacation homes, and, given it’s infrequently lived in, it could be marked as vacant. If it’s a rental property, maybe they're in between tenants, doing a renovation, or maybe they just evicted somebody.
However, timing may be important here. If they’re an absentee owner going through any of those situations, there’s a chance they may be rethinking ownership. Believe us- it’s more common than you may think! Dealing with a rental property is a ton of work, and evicting a tenant can be even worse.
In short, doing the work to determine if your list has properties that are owner-occupied or non-owner-occupied is crucial to determine and build your strategy around.
2. What kind of vacant property characteristics are you targeting?
As with any list you build as a real estate investor, you’ll need to determine the property criteria you’re looking to target.
So do you want a single-family property? Do you want a condo property? Make sure you review your strategy to develop a vacant properties list around your ideal number of beds, baths, and square footage.
It may sound straightforward, but applying property characteristic criteria to your search will ensure you're marketing to the vacant houses you want to invest in.
Some examples of property characteristics include:
- Number of bedrooms
- Number of bathrooms
- Square footage
- Year built
- Lot Size
- Sales price
By narrowing down your vacant properties search based on specific property criteria, you’ll be able to find vacant property leads fitting your investment strategy and generate personalized messaging in your outreach.
3. Are you marketing to the value you’re willing to spend?
Often, investors can get caught up in a property being marked as “vacant” and fail to look into other determining factors before adding it to marketing outreach. If you’re finalizing your list of properties, ensure to consider the estimated value.
When finding vacant properties, it can be tempting to include as many properties as possible to make your list as big as possible, but it’s just not realistic.
For example, if a real estate investor has a target budget of $1,000,000, but includes all vacant houses in a single list, they may risk reaching out to the owner of a $10,000,000 property.
We’re big proponents of marketing smarter, not harder, so if you’re wasting your budget on marketing property owners whose homes are far above your target budget, you may want to reconsider the list you’ve built. Again, this may sound simple, but it will save you big in the long run.
4. How long has the vacant property been owned for?
When building a vacant property search, ownership length is the next thing to consider. It’s a crucial detail that often can determine whether or not you market to a specific vacant property.
Let’s think about it this way. If someone bought a property two months ago and it’s been marked as vacant, it’s most likely because the new property owners haven’t moved in yet, or are renovating it.
With vacant properties, it’s critical to look beyond face value and do some digging to understand the circumstances better.
In general, targeting a vacant house list of homes owned for at least three years or longer is ideal. Why? Because, that way, you’re out of the “flip window”. The flip window is the time frame an investor will most likely undertake renovations on their newly acquired property.
Typically, most flips occur in less than 12 months, but’s common to see them as far out as 24 months as well. Therefore, setting your ownership length to no less than 36 months should keep you in the clear.
In fact, taking that a step further, one of the most popular vacant property lists investors like to use is non-owner-occupied vacant properties that have over 10 years of ownership. Often you’ll find landlords who have owned properties for a long time and are facing owning a vacant property that isn’t generating them any income. At this stage, they're likely looking to get out of owning the property and the burdens that come along with it.
5. What other investment criteria are you targeting?
While a major motivating factor, vacancy isn’t the only reason a property owner would look to sell. To find the most motivated sellers, consider adding additional investment criteria to your vacant property list.
By adding additional criteria, also known as List Stacking, you’ll be able to maximize your marketing efforts and connect with owners motivated to sell.
When List Stacking, you can experiment with various criteria to find the best combinations for your strategy. For example, layering in pre foreclosure in with vacancy is a powerful list that combines two motivated seller groups into one.
Additionally, stacking in properties with Liens or combining vacancies with an Underwater list can give you a wide range of potentially motivated sellers.
Whatever combinations work best for you to find vacant properties, the main goal is to use vacancy as a jumping-off point. In doing so you’ll position yourself much better to find better opportunities that close faster and for far below market value.
6. Is the property actually occupied?
While this seems like an obvious question to ask when buying vacant properties, determining if a property is actually occupied can take many forms, most of which don’t work.
Among the most seasoned real estate investors, there’s been a shift toward taking alternative approaches to determine occupancy in seemingly “vacant” properties.
The most common situation where conflicting information causes confusion is when the physical property has a tenant occupying it, but the mailing address of where the tax bill for the property is mailed to has been marked as “vacant”.
In this case, more questions than answers pop up. Chief among them: why would an investor not get their bill mailed to the property?
In this situation, being able to target the mailing address for where the property tax is being mailed is critical. This way, you can connect with the owner to figure out the situation. For example, have they recently moved out of state? Does the county not know the owner doesn’t live there anymore?
Whatever the case, since the owner still is responsible for taking care of the property, it may be more of a burden on them than anything else.
With PropertyRadar, you can see all of this data, giving you the insights you need to find the owner's contact information reach out to the vacant property owner wherever they may be.