Over the past 35 years, I have heard a ton of opinions about executing “as-is” deals, especially when the interior is unseen. Some have proven quite successful, resulting with a “Not nearly as bad as I thought”. Others have taken the, “If only we had known….” stance. Some real estate investors take a “The higher the risk, the bigger the reward” approach, while others won’t touch an investment opportunity without having all of the data they require. It’s about whatever works for the investor.
The story about the foreclosure property that went for auction in Connecticut (linked below) is a definite attention getter. It seems that a house was put up for auction after the owners failed to appear or respond to the demand which followed months of no payments. A new owner purchased the home at auction even though plants and vegetation on the property had grown to the point where entrances were blocked. After acquiring the property for approximately $300,000 below market value, the new owner took drastic measures to enter their new property, which was, understandably, thought to have been abandoned. It is safe to assume they were not expecting to find the long-time dead bodies of the previous owners on the premises!
None of us would ever want that experience. However, part of being a real estate investor or professional is the need and ability to take the emotion out of a property. Some buyers might have raced out of that house and taken a loss to never have to deal with it. However, those that take the emotion out of it would realize that the cost of a through cleaning and interior renovation was already expected. In this instance, knowing that being able to spend up to $200,000 on renovation and improvement while having a $100,000 potential profit in under one year would keep the appeal. Especially when the previous owner is unable to make any future claims.
As shocking as the find most likely was for the new owner, the lesson is that the price was right for the opportunity. Chances are the owner anticipated renovating the place no matter what and has the margin for doing so. Even with thorough research and planning, real estate teaches us to be ready to adapt to anything!
(Note: the photo on this page is not of the house in CT.)