Purchasing a 'House from Hell': Is It Possible and Worth It?
When considering a house to buy, it's crucial to understand the variations in property markets and the challenges that come with certain listings. A 'house from hell,' as described in popular folklore, can indeed be an intriguing prospect, especially for experienced real estate investors. Here, we explore whether such properties are purchasable, the conditions involved, and whether they can be a worthwhile investment.
Can You Purchase a 'House from Hell'?
A financial institution typically won't lend money to purchase a severely distressed property, as these often require significant renovations or repairs. Instead, these properties are typically acquired using one's own cash, and the terms are often less restrictive than those imposed by banks, limited only by the local municipality regulations.
Moreover, you can certainly purchase any property you find suitable. However, staying away from a property 'from hell' is strongly recommended, especially if the neighborhood also has a reputation for being 'from hell.' Such properties are notorious for attracting squatters, often leading to severe, irreparable damage.
Real Estate Investment and 'House from Hell'
For real estate investors, purchasing a 'house from hell' can sometimes present an opportunity, especially if you are willing to invest time and money in renovations. In recent years, I've noticed a significant number of such properties where squatters have taken residence. These individuals often cause extensive damage, leaving bathrooms without running water, and even using the floor as a makeshift toilet when the squatting area becomes overwhelmed.
The damage can extend to plumbing and electrical work, with signs of unauthorized alterations to the structure. Squatters may even sell stolen materials, further exacerbating the property's problems. Additionally, malicious damage such as damaging doors and walls can be common, making these properties far from desirable.
Financing and Cash Flows
Finding a lender willing to provide a loan for such a property is virtually impossible, similar to the common practice of flipping, where all payments must be made in cash. Most regular individuals lack the financial reserves to purchase and then spend on renovations necessary to make the property livable.
It's important to recognize that while some may pursue these properties for investment purposes, the reality is that the majority of people and financial institutions see these properties as a risk. As comedian George Carlin once quipped, “The American Dream - because you have to be asleep to believe it” when it comes to the accessibility and affordability of purchasing a distressed property.
Living Conditions in a 'House from Hell'
The conditions in a 'house from hell' are often dire. With no quality construction standards, it is now quite common to find homes infested with black mold, no basic plumbing, and walls covered in a mess of waste. Interior walls can be riddled with holes, and the home may lack air conditioning or a water heater. In some extreme cases, even signs of paranormal activity, or ghosts, can be reported.
Given these conditions, it might be more prudent to consider living in a genuine hell than owning such a home. The maintenance and renovation costs would likely far outweigh the potential value of these properties, making them a poor investment choice for most.
Conclusion
The market for 'houses from hell' reflects broader trends in property quality and investment opportunities. While some view these properties as a low-cost investment, the reality is often grim. For the majority, such properties represent significant risks and challenges that are best avoided.
It's always advisable to carefully evaluate any prospective property. The term 'house from hell' serves as a cautionary tale of caution when considering such investments.