My possible deal in Brooklyn

My wife and I found a huge house that’s boarded up, huge weeds in the yard and totally abandoned. We want to fix it up and live there and rent out the second floor.

We did some research and it seems the house has no mortgage but has around 100K in taxes/fines owed. The owner passed away so we did a skip trace and called someone listed as a potential heir.

The guy who answered said there’s family debate over what to do with the house - whoever it belonged to left it to multiple people in his will. Some people in the family want money for it and then there is other family politics at play. He also said it’s been boarded up for years now. He said he would just give it to us if it were up to him but he thinks the problem is the rest of the family.

My wife and I were thinking we would try to get in contact with the rest of the people who inherited the property to see if we could reason with them. The plan is to see if they’ll each agree to let us take it and we’ll pay off the taxes, fix it up, etc. In talking to them, we’ll point out the many problems and see if we can coerce them into giving it to us if we deal with the issues.

I’m thinking we should just go to a real estate or probate lawyer(I guess we’re trying to avoid spending tons of money on a lawyer) and ask him to track down the executor of the will so that we can go through the estate to get the official list of people that it was willed to. Does that sound like a decent plan? I assume a lawyer in the area will have some decent advice on this kind of situation.

My next problem is that I’m worried about the condition of the house.

The property is 4000 sq ft, located in Brooklyn. The comps are around 800K. 60% of 800K is 480K. So that should technically leave me 380K to fix up the property and 100K to get the liens released.

I’m assuming we’ll have to do a gut rehab. The doors have concrete over them so I can’t actually get in to examine the condition of the place. I’ve seen estimates for costs of gut rehabs that are anywhere between $100 and $300/sq ft. The lower end of that is doable - 400K. But the upper end is 1.2Mil. So I guess I’m just looking for guidance. Am I just getting carried away worrying about the cost? Would it be a good deal if I get the property by paying the 100K? Or is this going to be a super expensive rehab? Should I ask the owners if I can break in so I can actually see the condition? Is it even up to them? I assume it was some other entity, like the city, who boarded it up. And how the hell do you knock down a concrete slab anyway???

Thanks for everything guys(and gals)!

-mg

Concrete Slab?? That’s New York for you. The family members usually want money out of the house not just back taxes paid. They usually don’ t understand that the property is distressed and are looking for pretty close to market price for a wreck. You may be able to buy the tax lien in which they have 2 years to pay you back with costs and interest if they don’t you get to keep the house. You have a duty to maintain the house which means you have to fix it up plow the field and sell the corps and milk the cows and sell the milk. In our world that means you have to rent it out for income to make sure someone lives in it to keep it up. When they redeem the lien they also have to repay you for the rehab.

This place is the “Golden Lunch Ticket” for the heirs - in their minds. Most assuredly, they will have an unrealistic value in their mind because it was ‘Grandma’a place’ and it was wonderful (50 years ago when they were kids)…

Good luck. Getting hte heirs to agree will be like herding cats (http://www.youtube.com/watch?v=Pk7yqlTMvp8)

Keith

Are they going to sue me if I start renting out their house? And can I be sure that I’ll get my money back before they take back control of the house?

I saw on the city record that there was a “tax lien sale.” I’m not sure if that means someone already bought the tax lien or the bank was trying to sell it. Would I approach the bank in that case?

I have an excellent RE attorney very close to the brooklyn border who can assist you…He is very fairly priced…If you need his info PM me here and I would be happy to forward you his info…

Other than that I know nothing about the legalities of your situation…

Good point. These laws are local. In Texas renting the house out is like milking the cows. It is required to make sure the place stays in habitable condition.

keith,
The “Herding Cats” video was great, thanks!

Brooklyn buyer,
Donald Trump got his start by doing some really difficult deals, changed zoning, fought the city, etc. This sounds like a really difficult deal to me. For sure you will learn a lot if you pull it off.

You need to pay for that legal advice before you move any further on this.

Furnishedowner