Buying Investment Property Online? Watch Out!
Last year I got a call from a lady who wanted some help. She was from California and had been visiting one of the Internet online real estate auction sites. A word of caution here, although most of theses sites are legitimate, if you plan on actually bidding on these properties, which are often in another state, do some research before you buy. This very nice lady had purchased a large vacant lot, about an acre as I recall. She said that the prospectus described the property as being located next to the “Mall” in Ladonia, Texas. She had bid a few thousand dollars for the property and had won her bid. She asked if I could check it out and possibly list the property locally for sale. She was sure she would be in for huge profits, after all it was an acre lot next to the Mall! From the perspective of someone living in Southern California a few thousand dollars was dirt cheap.
Ladonia is a wonderful small Texas town about 80 miles northeast of Dallas. According to Google, Ladonia’s population in 2000 was 677, and it’s probably not more than a thousand today. I told the lady that I would be up that way in a few days showing some ranch land to an area cattleman and I would try to look at the property while I was there buy weed online in NY. Several days later I was ready to start in that direction, so I pulled the basic information on the property off the Ladonia tax roll, which showed the tax value, I think it was probably somewhere near what she had paid for the property, but don’t hold me to it, it has been a year ago. After driving around Ladonia, I finally found the lot. The property was an overgrown lot on the north side of town a few blocks from the local bait (fish) shop and convenience store, which is the closest thing to a Ladonia Mall. There was an old derelict mobile home on it, which I’m sure made it worth more in the tax evaluation because it was considered improved property. Comparable property for sale had not sold, even for less than a thousand (One Thousand) dollars. However, now that the property has a new owner, the city’s volunteer fire department will have someone to fine if the brush and weeds there are not maintained throughout the year. Also the old unlocked trailer is an open invitation to druggies.
(Yes, we have them in Texas, too!) After I returned to the office I phoned the lady with the unexpected news. This lady had become a victim and over paid for a real estate property in another state, she now owns it and is responsible for it. She had a frame of property value reference, based on her knowledge of her own market location, where real estate values had been escalating for years. I’m sure, even today, that a lot next to the Mall in most towns in Southern California was and would be worth a lot of money, but not in Ladonia, Texas (even if there was a Mall). It’s a lovely little Texas town, but it’s a far different location, and a totally different market. This story brings to mind all those old saying’s like “Don’t buy a pig in a poke” or “You can’t make a silk purse out of a sow’s ear.” Here is mine — “Don’t buy Real Estate without carefully checking it out first.” There are many real estate professionals who will be glad to help you research for free. Most are happy to help you research properties because they’re assuming, if you ever want to purchase or sell real estate, you will remember them as someone who helped you and will contact them again, and I hope you will. “One good turn deserves another.”
W. K. Winn is a Licensed Real Estate Broker with many years experience buying, selling, investing in, marketing and developing real estate properties. For more tips from W.K. on buying, selling or investing in real estate, go to [http://www.myrealestatetips.com/]