Purchasing an investment property that is in receivership

[PatrickJ]

A friend is purchasing an investment property that is in receivership as is most of the other properties in the estate. The property has been severely damaged internally from the previous occupants who didn't take to kindly to being turfed out on the street. All plumbing, copper, light fittings or anything they perceived to be valuable was stolen. An area of serous social derivation. Most of the other properties are boarded up or vandalized etc. etc.

We went down to look at the house over the weekend as my mate was having the property surveyed. I could see by looking at the surveyors face that he couldn't believe what he was seeing. He informed my friend that the property was structurally sound but advised to run a million miles away from the purchase. My friend isn't listening and is going ahead anyway. He's a cash purchaser and feels the property is a bargain.

To cut a long story short my questions are as follows:

Why is my friends solicitor looking to draw the building surveyor deeper into the contractual investigations of the property i.e. mapping of the property etc. The man has already issued
the structural report so it feels like the solicitor is trying to tie him up in her conveyancing of the property??

There are serious judgements on the property so I am presuming they will be removed before he buys??

I think the purchasing of the property is financial suicide plus from what I've read the of the contacts something just seems off.

 

[44brendan]

We regularly employer receivers to take charge of properties and sell them on! Unfortunately in some cases the properties are in very poor condition, but normally we will fund the receiver in order to rectify basic defects and ensure that the properties are at least adequate from a builders finish perspective. There is no reason why your friend should not progress the purchase of the property is the price is attractive. He will need a full survey in order to establish exactly what needs to be done and an estimate of the costs of the works. Clean title is not an issue as the sale will not close without this being available.

 

[Dermot]

Has he checked out the rental prices in the town. Does he live far from the property. If he is not familiar with the town he needs to spend some time actively investigating the area. Is he putting up his own cash 100%.
Looks like it is in a run down estate and he may find it very difficult to find good tenants. It would appear to me that he could have a lot of void periods.
There are properties that are not worth purchasing even at a notional 20% return. Have you any figures or the general area of where it is situated.

 

[PatrickJ]

I believe this is one of those properties that he should run a mile from. I do not want to insult anyone that may live there but the property is situated in L/ford and the estate has been written about on many occasions in the press. It really does resembles a warzone. He is living in Dublin.

 

[Brendan Burgess]

The damage inside is not a good reason to run. If a house is damaged but it's in a good estate,then the price should reflect that. In fact, the condition of it would put most people off, so it could indeed be a bargain.

But if it's a good house, in a bad estate, then he should run.

Brendan

 

[Dermot]

Patrick J. If you want to pm me with an address for it I will give you an honest opinion . From your description I would have have absolutely no interest in that type of area but I can make a phone call and will pm you back.

 

[Madangan]

To cut a long story short my questions are as follows:

Why is my friends solicitor looking to draw the building surveyor deeper into the contractual investigations of the property i.e. mapping of the property etc. The man has already issued
the structural report so it feels like the solicitor is trying to tie him up in her conveyancing of the property??

There are serious judgements on the property so I am presuming they will be removed before he buys??

I think the purchasing of the property is financial suicide plus from what I've read the of the contacts something just seems off.

I dont reallyunderstand your question about the solicitor and the surveyor? But a solicitor is not an expert in maps. I would often recommend to a client to get someone who is, for example a surveyor, to confirm that the maps attached to the title deeds map the site on the ground. unite often maps and site boundaries do not match up.

 

[Bronte]

An area of serous social derivation.

Most of the other properties are boarded up or vandalized etc. etc.

but advised to run a million miles away from the purchase.

I think the purchasing of the property is financial suicide plus from what I've read the of the contacts something just seems off.

While it might seem like a bargain it could also be a property that will be impossible to off load in the future. What is the reason for buying a house in Longford when he lives in Dublin?

What seems 'off' to you in the contracts. It's not financial suicide as he is not borrowing for the purchase. All he can therefore lose is the money he puts into it.