Pros and cons of buying abandoned properties

The theme of “Make Money in Abandoned Properties”by Chantal Howell Carey and Bill Carey sounds unusual and enticing. But oncethe reader passes beyond the first few chapters about the characteristics ofabandoned properties, the reality sets in that the methods are virtually thesame as for buying foreclosure, fixer-upper and other distress properties.

“Owners abandon properties for three main reasons.These include financial reasons, death or divorce, and when the propertybecomes uninhabitable,” the authors explain. Sounds much like foreclosureproperty, doesn’t it?

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Especially valuable is the investment outlook of the Careystoward real estate. They say, “The truth be told, however, there is noreal estate market. There are only people to talk to. We say it this way:contacts create contracts. Contact with people creates opportunity for you as areal estate investor. To be a successful real estate investor, you must talk topeople.”

Later, they say, “There is no deal so good that youhave to jump on it or it will disappear?There is no scarcity of goodabandoned-property deals.” Although I don’t fully agree, understanding theattitude of the authors is worthwhile, as they explain their procedures forfinding and buying abandoned properties.

The many examples throughout the book make it especiallyvaluable from the viewpoint of knowing what to buy and what to avoid. Sometechniques for finding the owners of abandoned real estate are somewhat unique– such as filing an “abandonment of property lawsuit” (which isreally a quiet title lawsuit) — and seem outlandish, especially if the propertyowner counters with a malicious prosecution lawsuit.

Readers should be careful before applying some of thesuggested methods. To illustrate, in some states offering an abandoned propertyowner who is in mortgage default a lease with option to buy the property backcould be construed as a mortgage loan.

Although the Careys have written several superb real estatebooks, this is not one of them. Parts of this book are difficult or downrightimpossible to understand.

For example, in the chapter about quickly resellingproperties the authors say: “One of the major advantages of the quick-cashstrategy is you avoid income-tax problems. When you hold rental real estate, itis very easy to recapture depreciation when you sell the property. Currently,if you have recapture of depreciation you pay 25 percent in taxes. How easy isit to recapture depreciation? Just own rental real estate and takedepreciation.” I think I know what they meant, but the real meaning didn’tcome through.

Chapter topics include “What is Abandoned Property?””Why Do Property Owners Walk Away”; “Motivated AbandonedProperty Owners”; “How to Find Abandoned Property”; “How toLocate Owners Who Have Abandoned Their Property”; “How to Write aFoolproof Abandoned Property Offer”; “Counteroffers”;”Negotiating with the Abandoned Property Owner in Foreclosure”;”Buy the Abandoned Property First, Then Get a Buyer”; “Four Waysto Obtain Financing to Rehab or Hold Abandoned Property”; “CreativeFinancing of Abandoned Property”; “Assigning Your Abandoned PropertyDeals”; and “How to Find Motivated Partners.”

Much of this book has little to do with abandonedproperties. But it’s still good reading for real estate investors who arecreative and don’t mind working for profits. On my scale of one to 10, thisdisappointing new book rates an eight.

“Make Money in Abandoned Properties,” by ChantalHowell Carey and Bill Carey (John Wiley and Sons, Hoboken, NJ), 2006, $34.95;234 pages; Available in stock or by special order at local bookstores, publiclibraries, and www.Amazon.com.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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