If you’re a fan of HGTV’s Bargain Block, follow Instagram accounts like Cheap Old Houses, or have an interest in real estate, you may have come across the intriguing concept of land bank properties. These older homes, often in need of significant renovation, are frequently listed at unbelievably low prices. Shows like Bargain Block, set in Detroit, even feature hosts purchasing and revitalizing land bank houses for as little as $1,000, as showcased on the show. But what exactly is a land bank, and how can you buy property from one? This article will delve into the fundamentals of land banks and the process of purchasing properties from them.
What is a Land Bank?
Land banks are local entities tasked with acquiring, holding, managing, and developing properties, including vacant lots, abandoned buildings, or foreclosures. While they are often operated by local governments, some function as independent nonprofit organizations. Land bank properties typically fall into a category that for-profit developers find unattractive due to factors such as location, structural condition, liens, or title defects that make them unlikely to yield a profitable return on investment.
When land banks acquire these properties, their primary goal is to return them to productive use. This mission involves creating affordable housing or other community assets, such as community gardens, boosting neighborhood property values, and generating tax revenue. Essentially, land banks aim to revitalize neglected properties and improve the overall quality of neighborhoods.
Where Can You Find Land Banks?
As of now, there are more than 250 land banks and land banking programs across the United States, according to the Center for Community Progress (CCP), a national organization dedicated to land banking. The establishment of many of these land banks is a result of legislation passed in 17 states, which has enabled the practice of land banking. States that have enacted land banking laws include New York, Michigan, Ohio, Georgia, Nebraska, Missouri, Tennessee, Alabama, Delaware, Virginia, West Virginia, Indiana, Pennsylvania, Kentucky, Connecticut, New Jersey, and Maryland.
Finding a land bank and available properties will depend on your specific location or the area where you’re interested in purchasing property. Each land bank may have its own rules, policies, and buying procedures. Therefore, the first step is to identify a land bank in your vicinity or the desired location, then explore their website for information on available properties.
Searching for Land Bank Property
Once you’ve identified a land bank in your area, visiting their website is crucial to begin your property search. However, the user-friendliness of land bank websites can vary significantly. Some land banks offer interactive maps and comprehensive property listings, complete with photos, historical information about the home, and estimates of repair costs. In contrast, others may provide only a basic photo and address of the property, with instructions to contact the land bank for further details.
Purchasing Property from a Land Bank
Suppose you’ve found a land-bank-owned house that piques your interest. What should you do next? Here are the steps to consider:
Check the Fine Print: Before proceeding, carefully review the terms and conditions associated with the property. Land bank houses often come with specific stipulations, such as owner-occupancy requirements for a certain period or mandatory restoration and renovation within a specified timeframe. Ensure that you can meet these qualifications before proceeding.
Understand What You’re Getting Into: Land bank houses are typically sold “as-is,” which means that you’ll be responsible for all necessary repairs and improvements. While some of these homes may be technically habitable, others might require extensive work before you can consider moving in. The condition of each property varies, and you should expect to invest both time and money into renovations.
See the Home: If you’re genuinely interested in a property, check the listing to find out how you can view it in person. Some land banks may host open houses, while others may require you to contact them to schedule a visit.
Apply for the Home: The process of acquiring land bank properties can vary. Some land banks list houses at specific prices, while others set minimum prices and auction the properties. In either case, you will likely need to complete an application to initiate the process.
The initial application requirements may differ, but as you progress through the process, you may be asked to submit a work plan. This plan typically includes details like a timeline, proposed repairs, responsible parties for the work, and your intentions for the property. Additionally, you may need to provide proof of funds not only for the property purchase but also for the required repairs.
If your application is approved, and all other aspects align, the land bank will guide you through the property purchase process. Since land banks are keen on ensuring that the proposed work is completed, your work plan may become a part of your purchase agreement.
The world of land banks offers a unique opportunity to acquire affordable properties that require restoration and revitalization. These properties, often overlooked by for-profit developers, can become valuable assets with the right investment of time, effort, and resources. By understanding the process of purchasing land bank properties and carefully navigating the stipulations associated with each property, aspiring homeowners and investors can embark on a rewarding journey of property ownership and neighborhood revitalization. Land banks exemplify the potential for positive transformation within communities, making them an intriguing avenue for those seeking affordable real estate opportunities.