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Buying Country Acreage and Rural Properties, To Buy or Not To Buy

Almost anyone can become a rural property owner; if you are willing to set goals, establish what your purposes are, plan ahead and set targets that are all aligned toward the same result. And, if you can be patient instead of requiring instant gratification.There is no more $50-an-acre land; unless you count some of the inaccessible and unusable properties that are sometimes available in blocks of 10,000 acres or more; and even these properties are rare. But you can get rural properties more reasonably now than in the past IF you are willing to be creative in your expectations and in the ways you use and modify the property.If you are in a big hurry to find rural property, you will likely not be able to find what you are looking for. Rural properties have fewer buyers who want to purchase them, but there are plenty of dreamers who have not considered the realities. There are seldom bargains available because most folks who own rural properties know exactly who to call first when they want to sell. If the property really is a bargain it is gone with one of the first ten phone calls the seller makes. However, if you are willing to “think outside the box” of convention you may end up with what is a bargain property for you.Twenty and thirty years ago thousands of folks bought into the “live on a farm and make a fortune” dream of owning a chicken house, home and acreage in Sussex County Delaware — the chicken capital of the world — where there are several million chickens for every person who lives here. For a short while it was possible to take the “contract” from a chicken plant to the bank and with only that as collateral, get a loan for about 10 acres, a home and at least one chicken house. Many folks soon discovered that the so called contract had fine print and clauses that were all in favor of the chicken plant and none in favor of the chicken grower. Soon most chicken growers were working full time to help support the chicken business they had bought, along with it’s mortgage of $200,000 or more, sometimes much more.Now when I appraise a chicken farm with house and acreage I appraise the working chicken farm at zero — and that is really too high a value in some cases. There are lots of easier, better smelling and cleaner jobs you can purchase with $200,000 or so. If you want to make a living growing chickens you should prepare to spend at least a million dollars, you can finance it of course, and get several chicken houses built around your home on 15 to 20 acres, if you don’t mind the smell, and then the best bet is to lease the business to someone who is running 20 or thirty chicken houses at least.There are some sensible things you can do in contemplation of moving to and living in the country. First among those is to start by renting a small home in the area you want to live — and either move there or at least visit there often enough to get to know the area. If you already live close enough to drive to your dream area daily, start doing that and start frequenting the shops, churches and restaurants there. Stop at yard sales and to check into cars, trucks and equipment that is for sale in people’s front yards. Be honest, tell them you are planning to move into the area and want to learn about your neighbors and only stop to shop if you are really interested in what they have for sale and are willing to purchase it at your price. Rural folk have a built in truth-detector and it is usually accurate. Don’t try to BS them or your reputation will precede any other data about you.I suggest that you can subscribe to a good magazine on rural living, or two or three. One of the best to begin with is Backwoods Home Magazine; Start by visiting and reading EVERYTHING on line, then get a subscription, then purchase ALL of the back issues which are bound into soft cover books.If you yearn for the simple life of old fashioned living, in a log home for instance, and away from the downward pull of civilization, check out: www.homestead.orgIf you are able to take your income with you, to maintain your current income, and don’t need a job where you are going. Then I recommend you just rent a place first and start spending more and more time in a good area as you begin to test your transition resources. While renting get to know the people and see if you fit in with them. They are not planning to change to meet your parameters, I assure you. MOST of the folks who come from the city to the country start by trying to change the area they have moved to and the new neighbors, to be more like where they left. They should not have left or they should get on back there — and most of the neighbors will tell you so.If you move to an area as a renter and find the people to your liking and they find you to their liking, you have probably found the right area. However, in rural areas ten miles can make a huge difference in lifestyle and area ethnicity. Please don’t move to a resort town, like Rehoboth Beach where I work, and then without checking try to move into a place like Oak Orchard (the little rural waterfront town where I live) or you will experience some near terminal culture shock. I love where I live and the people who live here but hopefully not one of them thinks that I have some intention of changing the way they live here!Once you have zeroed in on an area and visited it many dozen times or better yet rented a place there and started living there for short stays; I suggest that you start joining various groups and organizations as a part-time member and let them know that you are not full time yet, but hope to be. They help. Don’t try to instruct them or help them do what they are already doing better; just try to help them on their own terms. You need to learn the rules of this new game, it’s their game and their community. At most you will be a welcome member of the community. You will never be the equal to those who have four or ten or thirty generations of family buried and established there. For instance in our area those who have only been here for sixty years are still not considered “from here” by those who have been here since the 1500s or soon after.Once you have looked at several dozen properties that interest you, and that may take a year or two or more; you will begin to appreciate different micro-cultures in the area. You will begin to notice differences in soils, roads, well water, septic system functionality and road access; not to mention the differences in governmental rules and enforcement of same. Each time you find the perfect property; put a contract on it “pending research and discovery” and during that time check the neighbors and professionals about the property. You should check the neighbors first, lots of them, they already know everything the professionals are going to charge you to tell you.Hopefully by the second or third property you put a contract and deposit on; you will have the one that is right for you. Remember, if the property is a bargain price, you have missed something in almost every case. What you need to do is figure out how it is a bargain for you; because you have an unusual use, ability, or way to change the property easily to suit your needs.Buy through a Realtor if at all possible. Sign a buyers agent agreement with your agent so that his allegiance is to you — otherwise, by law his allegiance is ONLY to the seller and by law, you are in an adversarial position to the seller and the Realtor. With a buyer’s agent agreement signed, your agent is now on your side, by law, and is an opponent of the seller and the seller’s agent. Ask your agent then to provide you with all the comparable sales data from the multi-listing service if there is one. If not hire an appraiser, once you have the property under contract, (make the contract contingent upon a satisfactory appraisal) and pay to have the price evaluated. If you have contracted for too high a price, renegotiate the contract; if you find you have a real bargain; you of course double check with your agent and the appraiser to find out why. It may be that the reason for it’s “reasonable” price the reason that keeps it from selling is not that important to you — and you do have a bargain.Possibly your employer or the consulting work or your self employment activities may allow you to telecommute. But if you can’t telecommute to maintain your current income; before buying in an area, find out if you have a marketable skill, one which is in demand in that particular region. This will give you some assurance that you will not become a financial fatality. Most of the folks who move to rural communities, without checking into how they will make money in the new location, have to sell their property at a loss within 5 years, due to lack of income.If you are retired, be certain that hospitals, doctors, stores, restaurants, etc. are suitable for you in the new location — or be very certain that you will be able to comfortably reside in the new area regardless.Some of us are not be able to save enough money for a cash purchase of our rural dream property before we reach retirement age. It is however likely that we can provide a small sum for a down payment, and we’re reasonably certain that we can market our skills locally to meet payments and put bread on the table (but please don’t just guess about this, check it out).Even if you find small acreage (10 to 50 acres) for $5,000 or less per acre that has good soil, good water available and a good prospect for an inexpensive, workable septic system — many banks and mortgage companies are not optimistic about financing raw land. BUT, seller financing is often a alternative and easily structured method of purchasing raw land. In fact it is not unusual to get twenty, thirty or even forty year financing at 10% or less interest — from the seller. Of course, in order to build on the property, you will normally have to pay off the seller’s mortgage with your home financing loan. Any of the money you have paid on the price of the land, down payment as well as principle payments during your ownership period, and any appreciation of the land value will be considered as part of your down payment on your home owners loan.Be careful to set your payments so that you can afford the land payments along with your current cost of housing. You can save thousands of dollars in interest by keeping your loan to as short a term as possible. Also, make sure that there is no prepayment penalty on your seller financing note.You can however often purchase an existing home on acreage for a lot less than the cost of acreage and building a similar home. You can also often rent out the property to cover part of your expense while you arrange your affairs for your eventual relocation to rural bliss. If you are interested in purchasing a 100 acre horse farm complete with buildings, fencing, paddocks, etc. you can often save nearly 50% of the reconstruction cost; but there is little market for renting such a property.If you find “more than five acres” with a home and buildings that need work but are structurally sound, you may save 30% to even 60% of the reconstruction cost. Be certain in this area, Sussex County Delaware, that you get more than five acres as five acres or less falls into a nonagricultural zoning classification that you may not wish to be involved with as you develop your rural lifestyle.Most people ask me for 20 to 30 acres, or more. But let’s take a look at reality here. A football field is three quarters of one acre. Thus 5.1 acres or more is a very roomy place to live acreage wise. If you want horses however think 15 acres or more. Each horse will need an average of 5 to 9 acres depending on how you decide to raise the horse; that acreage is in addition to the land that your home, driveway, out buildings, garden and other non-fenced areas take in. Many people are thinking of one, two, three or four horses for the family enjoyment; if so they need about 3 or more acres for the home and other human related improvements and should figure an additional average of seven acres for each horse or pony.If you have a dream of self-sufficiency; living off the power grid, being away from it all… this is virtually impossible in reality yet most prevalent when you are in the dream stage. Coming to terms with what you can realistically afford and what you can realistically live with before you buy can save you a lot of headaches later.Solar power is far more expensive than buying electricity from the power company, wind power is unreliable, water power is expensive and hard to arrange; now I expect to get a lot of argument on this from those who have read all about it but have no real experience — but I won’t get any valid argument from anyone who has done it (unless they are simultaneously trying to sell the idea to others).There are many good articles in Backwoods Home Magazine; but most of them leave out the initial expense, maintenance expense and almost always the expense of replacing worn components of these so called money saving off-the-grid systems. You can however design a passive solar home, one with most windows facing south west and few facing other directions. Most older farm houses are already designed like this, not all of them are well insulated however.Location: is paramount. We Realtors are wont to chant”location — location — location” like a mantra. It isimportant, just learn what it means as location hasdifferent parameters for different purposes. Location on a main road is imperative for commercial activity; location near pleasant living and good jobs is imperative for residential property; location regarding rural principles is a matter of sometimes life and death or at least a matter of doable and undoable for a rural home.I suggest that the proper location for rural living is NOT usually closest to the best beach, ski slope or lake but the more sensible location is near to a rural town where many or most of the locals are living on rural acreage. In our area everyone wants ten to thirty acres near the beach; after finding out the price, they dream about 1 to 5 acres but seldom end up getting it and if they do the difficulty of finding it, using it for rural purposes and enjoying it when your neighbors complain about your rooster, tractor noise or fertilizer odors will often make this semi-rural location less than your dreams.If you’re not rigidly set on purchasing land in some popular or scenic wonderland, some good buys can still be found in the less “romantic” parts of the county, particularly on the edges of small farming communities. In Sussex County, I suggest the south west part of the county, west of Millsboro, nearer to Gumboro, Delmar, etc. for the best rural surroundings and lowest prices. There are few properties available in that area but even fewer buyers who have faced the reality of where rural living is better lived.If you are independently wealthy, that is a different matter. There are some lovely farms on the cliffs overlooking the Pacific near Carmel California; where the movie stars reside and if you can find a hundred acre farm you may be able to get it for a hundred million dollars or so, plus the value of improvements. That is about what you can expect to pay for acreage near Rehoboth also; and it’s a little easier to find. The farther you go away from the “ideal” locations the fewer people are looking to purchase it and the lower the price is. An interesting anecdote here; I had a couple come to me a few years ago looking to purchase a hundred acres or so on the oceanfront near Rehoboth, for horses; they could easily afford the price of a million an acre or so, but they ended up purchasing land twenty minutes inland after they did more reasonable research.Before you go out looking for property, sit down with paper and pencil and any partners or family that will be involved. You may find numerous surprises when you all start writing down importances, desires, and things not wanted. It is most important that you know what you must have, and what you can do without. Make a list of the features you feel an area MUST have in order for you to consider relocating there. This might include things like climate (and, thus, growing season), being within a certain radius of a population center (or maybe a certain distance AWAY from one), and availability of certain facilities or services. Being within 20 miles of an airport or hospital may not matter to one family, but could be of vital importance to another.The most important item on this list is consideration of the social and economic climate of the area, and how you will fit into it. Even if you’re independently wealthy, the economic circumstances of an area can affect how you will fit into it. Will a well-heeled but bored-with-society person be able to move into an economic Appalachia and truly find contentment? Perhaps, but first consider the “necessities” of the life you’ll be leaving. Do you need to regularly attend the symphony or visit a high-quality library? Is high quality clothing shopping or other shopping important to you?MAKING A REASONABLE INCOME AND LEARNING ABOUT RURAL IMPORTANCES: IS PROBABLY THE MOST IMPORTANT PART OF LEARNING TO LIVE IN THE STICKS.Those of us who aren’t independently wealthy need to consider some means of supporting ourselves in our new surroundings. “Living off the land” is certainly NOT all it’s cracked up to be, and isn’t even legal unless you become a vegetarian; year around hunting for meat is illegal everywhere. Even gardening or collecting wild edibles is not legal either, if you try to do it on public land.Before moving to the country… One of the important questions to ask (and find out for sure the answer) is; “Does the area have a large enough population base to give a person a good shot at finding a job? Another is; “Does it have a diversified economy? Many communities seem to have good employment opportunities, but on closer inspection they all turn out to be based on the same industry, such as recreation, chickens, fishing camps, skiing, ocean swimming and water sports, timber or mining or farming. If the bottom falls out of a single industry, or suddenly there is no snow or the water becomes polluted and is posted against use… as folks from many towns can attest has happened, the economy of the entire area falls apart — FAST… to fast to get out with your investment.If an area’s economy is primarily based on tourism, such as ours in the Rehoboth, Lewes, Dewey, Bethany, Fenwick area, there may be many jobs available in the service sector (motels, restaurants, etc.) But most of these jobs pay very low wages, and often these jobs are seasonal. Land prices tend to be inflated in many resort areas, and ours more so than most.I was surprised a few years ago to find that the most expensive areas of California were not all that expensive compared to Rehoboth and surrounding areas.Minimum wage income is not likely to enable a person to live comfortably in a resort community, much less enable a person to purchase property! An extreme example is the city of Aspen, Colorado. This beautiful ski resort community is an extremely expensive place to live. The local fast-food restaurants have trouble getting employees because there is no reasonably priced place for them to live. Some of these businesses actually have to provide housing in order to get employees! It is somewhat like that in Rehoboth area. As you may know, Grotto’s Pizza, our largest employer in the area, at one time provided space for many of their employees. Now, a lot of our resort help lives communally in “three bedrooms, sleeps twenty) type apartments and homes. Many more of our seasonally employed folks are imported from Ireland and elsewhere — and come to live in dormitory style, often sleeping in shifts.If you are a computer professional, you are very fortunate as the “Information Age” has created a class of professionals who can survive in depressed rural areas — the computer entrepreneur. With reasonably good dial-up ISP service, perhaps a cable modem (in Millsboro and some areas of southern Sussex County) a cell phone, computer, printer, modems and fax, people can now roam across the country and the world by phone and the Internet. Some folks, and this is a fast growing segment of our buyers, can either work at home for a distant company (perhaps commuting once a week or once a month or even in the case of one of my clients twice a week) or create a new business as a consultant, doing the same job for the same company they are currently employed by. With a business card and digital tools one can appear to have a large conventional business, albeit a laptop and other portable digital tools, and it can be quite profitable.Computer-based businesses are ideally suited for rural living. They are becoming increasingly more important as a means of breaking loose from the grind of commuting to work in big cities that are fast becoming too dangerous to live in. If you’re not yet into computers, you’ll have to consider whether you have a skill that’s marketable in the area you’re interested in.Make sure the place you choose (a) has a use for that skill, and (b) isn’t saturated with unemployed people who have the same skill. One of my best friends is a fabulous carpenter, home builder, cabinet maker, and skilled in many other fields such as welding, auto mechanics, gunsmithing to some degree and perhaps a couple of dozen more marketable skills. He moved to a rural area of Virginia to his dream home on over a hundred acres and his income plummeted. He is back here now and I’m glad he is even though I don’t see him very often; it’s just pleasant to drive by his business and know he’s back in the neighborhood.Please, please, please… before you move to an new rural area; subscribe to the nearest newspaper for the area you are considering and read the economic and community sections as well as the help wanted ads. If there is a skimpy “help wanted” section in the local paper… beware. On the other hand, could this “depressing” state of affairs regarding employment news probably means that real estate is bargain priced in that area?OTHER THINGS TO CONSIDERWhat about your health and age? Do you now or do you expect to have frequent need for the type of medical services mostly found in large cities?Although they’re necessary, think seriously about staying at least 25 miles away from the nearest freeway system. These “conduits of crime” that cross the country not only carry law-abiding citizens but solitary criminals and gangs as well. The gangs and other thugs tend to use the corridor towns in proximity of the freeways as their “banks” and they excel in “withdrawals on the run.” One small town the writers lived in was only a few miles from a freeway exit. One night, two men left the freeway, robbed a motel and got back on the freeway a short time later. They were never caught. Imagine what these corridors may become as our cities and suburbs continue to deteriorate!WHEN YOU FIND AN AREA YOU LIKE . . .Once you’ve decided generally where you’d like to relocate, visit it several times, preferably at different times of the year. Learn which areas are desirable and which have problems. Check for flood plains, areas with access problems, water problems (not enough, too much or poor quality), noise problems (yes, even rural areas can have noisy spots), or other problems peculiar to a given area. Some rural “neighborhoods” have earned a bad reputation. Find out why before buying there. If the price seems too good to be true, maybe somebody’s trying to unload a problem.If you’re looking for undeveloped land on which to build your retreat, find out about the water tables: depth, quality, and reliability. Find out what it costs to drill a well to the necessary depth for that area. Water should be one of the most important considerations in any land purchase. In Sussex County we are fortunate that we have generally good water (no matter what the press and Pseudo-envoronmentalists say) and wells are relatively cheap to drill.Find out the proximity of utilities and costs to bring them in and hook them up, if they’re not already in place. In some areas, costs to hook up to the power lines grid are prohibitive. Some of those same areas may not be conducive to an inexpensive well or septic either. BUT that can be an advantage if you are able to think outside of the norm. For instance our Fowler’s Beach property is not conducive to running electric wires, getting good water from a shallow well or building and inexpensive sewer system. As a result you can get waterfront acreage for little money on a private beach and the cost of electric, water and sewer when added to the cost of the property is minuscule!Once you’ve narrowed your search to a few areas within your target community, look at several properties! Realtors such as ourselves, can be a big help, not only by showing you individual properties, but by telling you about the area in general. It’s not necessary to restrict yourself to one Realtor. But as soon as possible you should choose ONE to work with, get their allegiance and preferably sign a buyer’s agent agreement with them so that they are looking out for your best interests!!! If your Realtor is too pushy for you or isn’t showing you the type of properties that interest you, find another one; make sure you void the buyer’s agent agreement if you have one (in writing) and get a Realtor who will listen to what you want and provide you such.And don’t forget to watch the newspapers and check out properties in your price range and area of interest being offered for sale by owner. Sometimes the best deals can be had by working with owners; and if you have a buyer’s agent, the agent can make certain that you are well informed and protected even after you view the property with the seller.You will also need an attorney in Delaware to assist you with the closing on the property. It is important to know that all attorney’s CAN do real estate settlements but only a handful are worth using. Attorneys specialize and only three to five of them specialize in real estate — for the rest of them, real estate settlements are awkward and no matter what they say… they usually make errors and those errors can be horrid.When you do find a property you like, don’t let it blind you to its drawbacks. Whether or not you’re working with a Realtor, do your homework. Remember, unless your Realtor is a buyer’s agent, he or she is working for the seller. Most Realtors will be up front with you about all your questions, but they are also bound by contract to get the best possible price for their client, the seller. And, by law — when they are working for the seller there are numerous things they may NOT divulge to you even when they know about them.First, ask the seller or Realtor all the questions you can about the property. For an older dwelling, this might include questions about the age of the wiring and plumbing, type of foundation, and in some parts of the country, when it was last checked for insect problems. This is particularly important near the beaches and regarding wooded properties — where termites are prevalent.Then talk to the neighbors. In the rural sense, the “neighbors” are folks living within a five-or-so-mile radius of the property; sometimes even more, if the property is down a long road without intersections. Ask them about the area, its people, any problems with the area, and particularly if they know of any drawbacks with the property you are considering purchasing. If they seem reluctant to talk to you, this might be a red flag you shouldn’t ignore: maybe they’d like to buy the property but can’t afford it, or maybe they don’t like outsiders buying property in their area. If you run up against this in several conversations, you might have a hard time getting along with the neighbors. Buying — and holding onto — that chunk of land, with or without a home and buildings on it will take creative planning, patience, and caution on your part!IF YOU MUST HAVE A DEAL OR ELSE . . .Today’s expensive properties will be tomorrow’s bargains. Don’t be discouraged by short term obstacles. Land prices seldom go down in the long run. Obviously, there are a lot more things to consider when buying rural land as opposed to buying a house in a city. One of them is the possible problems of buying in a “boom town” area when you don’t want to be part of the boom.It is important to consider whether your dream location will become less desirable as more people relocate there. For this reason it is not uncommon for people who move to a rural area to want to “close the gate” after they get there. They realize that if too many people move to the small community they have chosen, that it will eventually lose the qualities that drew them there in the first place. Unfortunately, people WILL find these wonderful places, no matter how hard some people try to keep them a secret. Some communities handle growth well, others don’t. Check to see what kind of planning and zoning is present in your chosen area. A community that looks ahead and plans for growth fares much better than communities that keep their heads in the sand, thinking “it can’t happen here.” Growth not only can happen, it will.But short of a natural disaster or a devastating man-made calamity, land won’t come down in value. Buy it, use it, live on it, improve it, and love it. Land is the best investment you’ll ever make, for yourself and posterity.Good luck in your search!Copyright © 2001

Grab Your Dream UK Home On The Cheap – Property Auctions

Did you know that every year thousands of UK properties are sold at significantly below market value? The majority of these properties are released through property auctions where regular savings of between 10% to 40% are available to market value. Even so, property auctions continue to be used only by the elite and for the astute buyer/investor this generates a fantastic opportunity to secure a dream home/good investment at bargain basement prices.For example, at a recent auction a studio flat was sold in London for a mere £9,000. In another, a 2 bed flat right on the south coast with a market value of upto £100,000 sold for just £14,000 at auction. And those are just a couple of examples of the bargains that people do find at property auctions. However it’s also important to know the potential issues and problems when dealing with auctions and to understand exactly where the best deals are available. If you’re interested in getting into the world of property auctions the below tips & tricks of the trade should be very helpful.TYPES OF PROPERTIES FOUND AT AUCTIONSUK Property Auctions Home ContactThe following is a guide to help anyone unlock the value available through UK Property Auctions. Thousands of homes are available at any given time with property auctions, most of which are sold at prices far below market value. However it’s important to know the potential issues and problems when dealing with auctions and to understand where the biggest bargains are available. Details of thousands of cheap, repossessed & auction properties are also available at Property Auction Bargains.Its perfectly reasonable to expect to pay between 15% to 40% less for a property at auction than you would for the same property through an estate agent. For example, at a recent auction a studio flat was sold in London for a mere £9,000. In another, a 2 bed flat right on the south coast with a market value of upto £100,000 sold for just £14,000 at auction. And those are just a couple of examples of the many bargains that people find at property auctions each and every week.TYPES OF PROPERTIES FOUND AT AUCTIONSRepossessions – Sadly for the previous owners, repossessions can often be picked up at bargain prices through auctions.Investment properties – Properties, which are valued due to the return on investment that they provide. Includes everything from individual office/shop investments to blocks of flats.Rundown properties – Auctions are great places to pickup properties that are unsaleable in their current state. The attraction here is if you can get such a property in a good location at a cheap price it’s perfectly possible to refurbish and resell on at handsome profits. Indeed there are individuals and organisations that make their living doing this. Unsaleable properties come under the following categories:Derelict or in derelict areas.Subject to severe disrepair.Subject to local authority notices.Subject to closing orders.Offered with ambiguous legal titles.Sold without access.Sold with major fencing, paving, drainage or other similar responsibilities.Sold subject to covenants or restrictions, which prevent normal use.Exceptional properties – Include ones that have historical meaning and plots which ‘get in the way’ of major development projects.TYPES OF AUCTIONLarge composite – Tend to have over 100 lots. Expect well over 300 people to attend and the venue to be held in a large hotel or conference centre. Large composite auctions are likely to be run by a single auction house. The type of property may be restricted to just one (e.g. vacant possession houses, factories, warehouses etc) or may be a mixture of different types.Medium composite – Have between 5 to 100 lots and will typically attract between 200 to 500 people, most likely in a hotel or conference centre. It’s similar to a large composite, only on a smaller scale.Small composite – Offer between 2 to 5 lots and will attract upto 5 bidders. The likely venue is likely to be somewhere like a pub, restaurant, church or small hotel. Small auctions will generally follow a theme – for example the properties involved may have been part of a bigger group (such as a portfolio of properties owned by one company) who believe the best returns will be obtained by offering the properties for sale individually.Single lot – usually for a property that is in great demand.IDENTIFYING AUCTIONSAuctions aren’t as easy to find as you might expect. Traditionally auctioneers get more than enough interest from in-the-know regulars so they don’t need to spend much money on costly advertising to the public. Here’s where the list of auction houses that comes with this guide becomes invaluable. There are details on each auction house including which area the auction house covers. Go through the list and identify ones, which cover the areas you are interested in. Then:Phone the auction house and ask them when their next auction is likely to be held. Ask them to put you on a mailing list, which details forthcoming auctions. Some may charge a small fee for this, others offer the service for free.Prepare a list of questions for each auction house you contact. These should include:Do you have a mailing list?How long do you keep people on your mailing lists and can you let me know if I am about to be removed?What type of properties do you auction?It may also be worth subscribing to certain pedigree property magazines. These include Property Auction News, Under The Hammer and Property Week. Local newsagents usually carry these.THE INFORMATION AN AUCTIONEER WILL PROVIDEObviously they will provide the details of the properties going under the hammer at their auctions. These tend to be more detailed than the snippets given by estate agents (there are laws such as the Property Misdescriptions Act 1991 which make it illegal for auctioneers to give false information about a property). On the whole, for any given lot they will provide:LocationConstruction detailsTenure (e.g. freehold)Accommodation details (e.g. 3 bedrooms etc)Notes (e.g. refurbishment required)Viewing detailsSolicitor detailsAuctioneers usually publish a catalogue with the lot details – this is a book detailing the various properties available at auction. These will usually be available a month or less prior to the auction date.IDENTIFYING REPOSSESSIONSSome banks/building societies can be sheepish about revealing that they are selling repossessed properties so you need to be alert in the auction for clues. Auction adverts may reveal that a bank may be the seller of a number of properties, or the auction catalogue may state a phrase such as ‘on instruction of a liquidator’ or something similar – this should tell you that the property being sold is a repossession. If you are unsure, ask the auctioneer directly if the lot being offered is a repossession.FINDING PROPERTY AUCTIONS NEAR YOUThere are several thousands of properties available for auction at any given time all over the UK. It’s important to understand how auctions work before purchasing a property from one. To find out where you can get hold of a list of UK property auction venues and websites of auction properties for sale take a look at my resource box below. I wish you every success in finding your dream bargain home at auction

How to Buy Multifamily Property For Maximum Income and Wealth

Any rental income property that has more than one family unit is considered multifamily property. The smallest multifamily property being a duplex (two units) and then up from there to larger rental complexes easily consisting of hundreds of apartments.The advantage of purchasing multifamily properties, not unlike all income-producing properties, is that it provides real estate investors with the ability to support debt from the income the property produces.Understood in real estate investing circles as “using other people’s money”, this idea is crucial to buying multifamily properties profitably and therefore must always be kept in mind because the success or failure of the investment depends on the income the property generates to meet debt service and other obligations required to keep the property.Enough said. Let’s look at three elements that contribute to this principal, and discuss why they are crucial to buying multifamily property profitably.Obtain sound financingThe key to buying any income property is for you to establish a sound financing package on the property. You want to obtain a loan that doesn’t place excessive burdens on the property, or yourself. Moreover, because lenders evaluate rental property based on income stream and generally structure a loan based on the property’s financial strength as well as the investor’s, bear in mind the significant role the principal of using other people’s money plays in financing the investment.When applying for a loan on a multifamily property, present lenders with clear and concise cash flow reports because you are more apt to obtain a favorable financing package when the property is represented fairly to the lender and the income and operating expenses are shown to be accurate.Conduct a rental market surveyWhat tenants are willing to pay to occupy a unit in the apartment is the cornerstone of the investment. Therefore, it’s incumbent upon real estate investors to understand local rental market trends for vacancies and rental rates when buying multifamily property. Rental market trends are easy for investors to recognize, just watch the newspaper or drive around the community noting all rental properties that have vacancies. If you see few for rent ads or signs, or surmise that rents are increasing, it probably signals a shortage of rental units, and a favorable opportunity for you. On the other hand, when lots of rental signs start appearing and rents drop, it could spell trouble.The ideal situation to own multifamily property, of course, is when vacancy rates decrease. Property owners can be more selective about the type of tenant they rent to and establish a positive direction for the complex, perhaps even increasing rents. On the other hand, when tenants become scarce, owners might have to become less selective about tenants and perhaps lower the rents just to fill the units.Be sure to conduct a rental market survey when purchasing multifamily investment property and carefully gauge the rents and vacancy rates.Consider economic conversionThere might be money to be made in cases where the former property owners have let the property run down and rents had to be decreased to keep the units filled. If these rental properties are in a good area of town or in an area that is returning to a former higher quality, then the remodeling of a rundown apartment complex can be a profitable venture. Just be careful to ascertain the cost for remodeling and what impact it will have on rental income. Pure window dressing for the sake of appearances only, unless it has a positive influence on occupancy levels or rents, is typically avoided by prudent real estate investors. So get a qualified contractor to give you a bid on remodeling. Otherwise, what you surmised as surface issues when you were buying the multifamily property could in fact be a costly can of worms.In other words, look for an opportunity to upgrade the building and raise rents because it can contribute to a profit, just be sure that you know exactly what you’re getting into.The pros and cons of buying multifamily propertyThe most obvious advantage of buying any income-producing property is real estate investors can grow wealthy in the long run. Simply by holding onto the property and letting other peoples money payoff the debt is what drives people into real estate investing, even if there is no immediate cash flow. Moreover, multifamily properties serve a basic need, which limits the downside risk in that they provide shelters to those who cannot afford or who do not choose to buy real estate.The downside to owning rental income property mostly concerns the management problems associated in dealing with tenants. Apartments can be management intensive, and often the reason why investors who purchase rental property hire the services of a professional property management company to deal with the day-to-day issues of running the property. So you at least have the option to minimize this disadvantage.The bottom line is straightforward. Multifamily property provides investors the opportunity to build wealth. But it’s not unlike the investment you would make in any other investment property, whether land or commercial real estate, it simply requires you to do it correctly, with a careful eye on the elements discussed here. Here’s to your real estate investing success.

Foreclosures – How Code Enforcement Tackles the Problem of Abandoned and Vacant Properties

Code Enforcement Departments for Counties and Municipalities across the United States have been grappling with the increased workload issues created by the rising number of vacant and abandoned properties due to the continuous pursuit of foreclosures by mortgagees (banks, lenders, and lien-holders)., confirmed that the “national foreclosure rate in January 2010 was one foreclosure filing for every 466 U.S. households; the most severe problems continue in the West and in Florida. Unemployment, economic hardship, negative equity, and credit availability are driving the foreclosures.” If a property owner was in default with their mortgage payments and could not satisfy the outstanding debt or bring the mortgage and any outstanding penalties current during the pre-foreclosure stage, they were surely going to be faced with having to leave their home. In some cases, property owners that were upside down in their mortgage or through financial hardship found themselves in a position where expenses were just too overwhelming may have chosen to just walk away from their homes, no matter how difficult it was for them and their families. In a time when most jurisdictions, especially, small local governments are also dealing with the difficulties created by financial dilemmas and hardships that are reducing the workforce and resources, the rising foreclosures have taken its toll on code enforcement departments that are tasked with trying to keep neighborhoods and communities from becoming blighted, unsafe, and depreciated in value.The problems that were created by sitting vacant residential properties, such as vandalism, unsafe open structures, stagnant swimming pools, just to name a few, created immense expense as communities where tasked with securing and abating these problems without the assistance from any property owners or residents. Often, the property owners who were responsible for maintaining their homes during this difficult time felt it unfair that they were still required to provide for regular upkeep of their properties or face code enforcement penalties while the abandoned foreclosed homes next door were neglected and left to bring down the value of their homes and detract from their neighborhoods. According to the latest report from RealtyTrac, a company that monitors the trends of foreclosures across each state, “Florida posted the nation’s second highest state foreclosure rate in November 2009 with one in every 165 housing units receiving a foreclosure filing during the month. Florida took the No. 2 spot from California, which posted the nation’s third highest foreclosure rate.” It became common for community members and leaders around the State of Florida to feel that the mortgagees were slow to take responsibility for these assets and started to put pressure on county and local governments to address these properties, without using their tax dollars to do so.Foreclosure Procedure in the State of FloridaThere are a few different types of foreclosure procedures in the United States. According to, “One common type of foreclosure is the ‘deed in lieu of foreclosure’ arrangement. Often called ‘strict foreclosure,’ the bank claims the title and possession of the property back to satisfy the debt. The other most common type is the proceeding known simply as ‘foreclosure’ or ‘judicial foreclosure.’ Here the property is exposed to auction by a county or court official. The winning bidder receives a deed to the property. Banks and other lenders usually bid on the property in the amount of the owed debt, and if no other buyers step forth they will receive the title to the property. Other states employ yet another type of foreclosure, called ‘non-judicial’ or ‘statutory’ foreclosure. In this case, when a borrower fails to make payments, the lender may be issued a notice of default and intent to sell. If the borrower does not solve the default with payments or other means, the property will be sold at public auction.” In the State of Florida, foreclosures are handled as judicial procedures that are processed through the court system. This process can take a bit of time, 5 months or more, beginning with the lender advising a mortgagor that they are in default and subsequently recording a notice of Lis Pendens. The homeowner will be served notice of complaint, which basically provides notice of intent to foreclose and contains the total debt. The property owner gets to have an opportunity to appear in court to answer the complaint, however, if the court rules against the property owner, a judgment of foreclosure will be issued. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff’s sale. Usually, if the property owners remain inside the home, they would be considered as trespassing. If the property is sold by judicial sale, Certificate of Title will be issued to the new property owner or returned to mortgagee.Challenges for code complianceCode enforcement officers typically have to address code violations on occupied properties where the residents are either unaware of the code requirements, neglectful, financially distressed, or possibly violating code requirements intentionally, however, in the case of abandoned or vacant homes, these residents have either walked away or have been required to vacate the properties leaving the property maintenance and violations for another responsible party who have control over the properties which in most cases are the holders of the mortgage notes. This becomes a difficult task as property owners were often required to vacate the premises before the property was either sold or taken back by the mortgagee through completion of the foreclosure process leaving the ownership records unchanged. Code enforcement officers were now faced with dealing with code violations on vacant properties where tracking down the responsible parties for these properties was extremely difficult. Even when a mortgagee’s name was located from researching foreclosure filing papers, there would only be large corporate bank or financial institution name and an address that would not lead you directly to someone who was responsible for the property and would get lost in the maze. With strapped resources and increasing demands from community members, local governments started to adopt various vacant property registration programs that required mortgagees to become more involved with these foreclosure properties either from the time the property owners was going into default or when a property became vacant and abandoned. Although some registration programs may only consists of providing information such as responsible party name and contact information, some programs have required significant steps be taken for a vacant, abandoned property including providing electronic security systems.Sample Registration Program, Broward County FloridaLocal governments have had to take steps to bolster local communities against the negative effects of vacant and abandoned properties and obtain voluntary compliance with property maintenance and building code violations. For example, in Broward County Florida, Building Code Inspectors and Code Compliance Officers respond to numerous complaints and concerns regarding single-family homes, condominiums, townhouses and duplexes that are being vandalized, in severe states of blight, lack of maintenance, security, hazardous conditions, and other health and safety issues that these properties present. Requiring mortgagees and absentee owners of vacant and abandoned properties to correct such violations presents significant challenges to the Code Enforcement process. Additionally, when these properties are abandoned and vacant for extended periods of time, there may be unexpected problems for purchasers of these properties such as property maintenance issues, outstanding building permits, and code enforcement liens and/or assessments. In response to recent events in the housing market which have led to a drastic rise in the number of foreclosed homes located within the unincorporated areas of Broward County, the Abandoned/Vacant Real Property Registration and Certification ordinance was created to protect unincorporated residential neighborhoods from becoming blighted through the lack of adequate maintenance and security of abandoned and vacant properties. The program is intended to address those properties that are vacant and abandoned that have come under the control of a mortgagee or beneficiary as a result of the default of the borrower and/or the foreclosure process. The program also applies to properties that were obtained under a deed in lieu of foreclosure. The program requires mortgage lenders to inspect defaulted properties to confirm that they are occupied. If a property is found to be vacant, the program requires that the lender exercise the abandonment clause within their mortgage contract, register the property with the County and immediately begin to secure and maintain the property to program standards.The ordinance also requires that a local property management company be contracted to perform bi-weekly inspections to verify compliance with the requirements of the ordinance, if the owner of the property is a corporation, partnership, and/or out of area mortgagee/owner. The property must also be posted with the name and 24-hour contact number for the property manager who can respond to problems or concerns. The inspections and certification portion of this program offers added protection for buyers of foreclosed residential properties in the unincorporated areas of Broward County by requiring all title holders of these properties which are acquired through a Certificate of Title (Foreclosures and Judgments), in accordance with Chapter 45, Florida Statutes or under a deed in lieu of foreclosure/sale to obtain a Certificate of Foreclosure Inspection prior to offering the property for sale, transfer, or other alienation. This requirement allows for the performance of a cursory visual inspection of the property and an inspection report by a code enforcement officer to provide a disclosure of any non-compliance with property maintenance codes, outstanding County liens and/or special assessments encumbering the property and to also identify any outstanding building permits.Steps taken to address problems with foreclosuresAs the federal, state, and local governments look for ways to assist distressed homeowner’s in keeping their homes or to assist purchaser’s and investors to acquire foreclosed homes to get them repaired, maintained and occupied, the banks have also focused on addressing the concerns of local governments in regards to the problems associated with vacant and abandoned properties. Mortgagees may utilize their own staff or obtain the services of companies such as asset managers or mortgage servicers to handle numerous functions and responsibilities related to foreclosed properties from pre-foreclosure thru property preservation ultimately to sale or transfer to a new owner. The companies employ a variety of staff to handle such broad areas such as property management, real estate and title services and have started to place a greater emphasis on property preservation and code compliance. These companies employed by the banks that utilize their services have recently focused their attention on the ordinance requirements for properties under their management, at the same time, promoting a partnership with local jurisdiction code enforcement staff to help alleviate the problems with vacant and abandoned properties and create a better method of communication when problems are not being addressed with property maintenance issues. According to information provided on the website for The Mortgage Bankers Association, this organization promotes the utilization of the MERS ® Mortgage Electronic Registration System database to obtain a list of property preservation contacts to assist local jurisdictions in their efforts, especially in the case of securing open and unguarded, vacant properties.ConclusionProperties that continue to be abandoned, neglected, and unsecured for extended period of times, which may include years, work against the mortgagees, as these conditions continue to force property values continue to decline, costs for repairs to increase due to vandalism and deterioration and liability for the mortgagees remain as squatters and children get access inside unsecured residences. In order for code enforcement to be truly proactive, it must take steps to prevent problems not address them after the fact. Even though most jurisdictions charge a fee for registering these properties, the fees are usually intended to offset the operating costs for the program which includes all administrative work involved, as well as the increased field investigations work that these vacant and abandoned properties require. The proactive nature of these programs to seek out the responsible property preservation and servicers work to reduce the costs for the mortgagees as well as the local jurisdiction. Fines and liens that are placed on these properties due to daily running penalties and costs for abatement work such as performing board-ups, stagnant pool abatement, lot mowing, and junk, trash removal may reach in the hundreds and even thousands. Because many of these properties remain in the name of the previous owner until the property is transferred and the new owner is properly recorded in the county records, most jurisdictions are only required to cite the owner shown on their tax assessor’s records or deeds in order to address violations. The property registration programs have accomplished numerous goals which include increased responsibility and accountability by the mortgagees in regards to these assets, adherence to local property maintenance and safety building codes, and increased attention towards making these properties viable again for ownership and heightened steps toward re-occupancy. The more properties remain occupied and less are bank owned or abandoned, the less for the need for these types of vacant property ordinances and registration programs.