You’re out working foreclosures and see an obviously vacant house. There is a sign in the window saying the home has been abandoned and winterized. You look through the window and confirm that it is vacant. Do you open the door with your “investor key” (a credit card) and go inside to look around?
Over the years, real estate investors have hotly debated this topic. Some investors would never go in the home, while others think nothing of slipping the lock so they can inspect the interior before bidding on the property.
I know investors who regularly go into vacant homes. The popular thought is that there’s nothing wrong with that. The investor is not there to steal or vandalize anything, he’s there to estimate the rehab cost so he can accurately determine his maximum purchase price. What can possibly be wrong with this?
There are a lot of funny stories told by seasoned investors about things they found in abandoned properties; things you can’t believe a homeowner would leave behind – like artificial limbs, stuffed (taxidermy) animals, porno magazines, etc. After hearing these stories, many new investors come away thinking that it’s OK to break into vacant homes. But I’m here to tell you – think again!
Stephen Blalock is a good friend of mine. He’s a process server and bail bondsman. Earlier this week, he told me a story that put goosebumps on my arms!
The day before, an experienced real estate investor was out working foreclosures. At an abandoned property that is due to go to auction in March, the investor used his “investor key” to gain entry to the back screened-in porch. He NEVER went in the house – just stood on the porch and looked through the back windows so he could better estimate the cost of the rehab.
It turns out that a neighbor was watching him and immediately called police. Before you can say, “Reach for the sky, Pilgrim!” a cop was on the scene. In no time at all, the investor was facedown on the hood of the police car, his hands handcuffed behind his back, and being read his Miranda rights.
How would YOU feel if this happened to YOU? Still want to break into a vacant property?
This investor was arrested at 5 p.m. He didn’t get booked until 10 p.m. – that’s five hours of sitting in jail with his bunch of new “friends.” I can hear the conversation now. “What are you in for, Frank?” Frank says, “I beat up a guy and stole his car.” Frank asks Bob, “What about you?” Bob says, “I killed a guy!” When the investor is asked, he says, “I was out looking at foreclosures.” You can bet the investor just became some thug’s new girlfriend!
The charge was burglary – even though the investor never went in the house, and there was nothing in the house to steal. His bond was set at $17,000. After hiring Stephen to bail him out, the investor finally made it home around 3 a.m. – but his life will never be the same!
I feel very sorry for this guy. He was just out doing what many investors do. Now he’s facing 10 years in jail – you heard right, 10 years!!!
It will take a year or more for this to go to trial. The legal fees will run $10,000 or more. At best, he’s facing years of probation and will be forced to pay a lot of fees and penalties. All this because the investor went on a back porch and looked through the window of an abandoned home.
As real estate investors, it’s critical that we don’t grow complacent. Just because you may have gone into hundreds of vacant homes without any negative consequences, it doesn’t mean that it’s OK – or legal!
Hope today’s column helps you to be a better, wiser real estate investor!