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How exactly to Buy Land Bank Property

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Photo: Sabrina Janelle Gordon (Shutterstock)

If youve watched shows like HGTVs Bargain Block, or follow Cheap Old Houses or similar accounts on Instagram, youve likely pointed out that some older homesespecially ones that have a tendency to need a large amount of workare listed for nearly unbelievably low prices. These often (however, not always) are increasingly being sold by way of a local land bank.

For instance, the hosts of Bargain Block, which occurs in Detroit, routinely purchase and renovate land bank housessome which they acquired for less than $1,000 (at the very least based on the show). Just what exactly, exactly, is really a land bank, and how will you buy property in one? Heres will be the basics.

Exactly what is a land bank?

Land banks are local entities that acquire, hold, manage, and develop properties like vacant lots, abandoned buildings, or foreclosures. Though they are generally operated by local governments, some are independent nonprofits.

Land bank properties are usually ones your average for-profit developer isnt interested inusually because some mix of their location, structural condition, liens, and title defects means theyre unlikely to become a good (profitable) investment.

When land banks acquire these properties, they achieve this with the purpose of returning them to productive use, so that they create affordable housing (or other neighborhood assets, just like a community garden), increase neighborhood property values, and generate tax revenue.

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Where are land banks located?

Based on the Center for Community Progress (CCP), a national organization centered on land banking, you can find currently a lot more than 250 land banks and land banking programs through the entire USA.

Most are the consequence of the 17 states which have passed laws enabling land banking (NY, Michigan, Ohio, Georgia, Nebraska, Missouri, Tennessee, Alabama, Delaware, Virginia, West Virginia, Indiana, Pennsylvania, Kentucky, Connecticut, NJ, and Maryland). This interactive map from the CCP provides more info on land banks and their locations.

How exactly to seek out land bank property

Because land banks operate locally, their rules, policies, and purchasing procedures may differ. So, the very first thing you must do is look for a land bank in your town, or wherever youre thinking about buying property, and check out their website. Once youre there, you need to easily have the ability to find their available properties.

Invest the a glance at several different land bank sites, youll quickly learn that some are more user-friendly than others. Although some provide interactive maps, or detailed listing for houses with photos, info on the homes history, and estimates of just how much the required repairs will definitely cost, others simply give a photo and address of a residence with instructions to call the land bank to find out more.

How exactly to buy property from the land bank

Lets say youve found a land-bank-owned house youre thinking about purchasing. What next?

Check the small print first

Its not unusual for land bank houses ahead with certain stipulationsfor instance, that the home should be owner-occupied (at the very least for a particular time period), or that any restoration/renovations must happen inside a particular timeframe. Prior to going any further, make sure that it is possible to meet those qualifications.

Know very well what youre engaging in

Land bank houses are often sold as-ismeaning that everything you see is everything you get. Youre the main one in charge of making every necessary repairs and improvements.

Although some homes sold as-is are technically habitable (i.e. theres a roof, you wont fall through the ground, or probably are exposed to anything dangerous or hazardous), others will require work before you even consider relocating (or in some instances, seeing the complete house).

The homes may or might not include working electricity and plumbing, or perhaps a kitchen, however, many do. It certainly all hangs on the house. This isnt likely to make the homes sound off-puttingonly to clarify that you ought to be prepared to put time, money, and sweat equity into them.

Start to see the home

If youre seriously interested in a house or two, check the listing to discover how to view it on your own. Sometimes open houses are held, along with other times its a matter of contacting the land bank to set up a period to view it.

Make an application for the house

Although some land banks list houses for specific prices, others set the very least price and put the house up for auction. In any event, youll probably have to fill a credit card applicatoin to find the process started.

The info required on the original application varies, but as you make the right path through the procedure, youll be asked for a few kind of work plan (including a timeline, repairs youll make, wholl be carrying it out, what you intend to do with the home, etc.), along with proof funds not merely to help make the purchase, but additionally the repairs.

If the application is approvedand the rest worked outthe land bank will walk you through purchasing the home. As the land bank really wants to make sure the task you proposed actually gets done, your projects plan could become section of your purchase agreement.

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