Empty Properties: Why You Should Sell Them
There are many reasons why a property may be vacant for any duration of time. We’ve all seen a house sitting empty around our own neighborhood. Short vacancies are common for just about any property and is not very problematic. For instance, tenant turnover in a rental property, an inherited house sitting while on the market, or a family moves out of town before their old house sells and/or closes are all reasons that a property is empty for a short period of time.
However, long vacancies are not good for the property itself or the owner for a number of reasons. These long-term vacancies can be properties that are: from an inheritance/estate/death, abandoned, bank-owned, a vacation property, in disrepair, not filled after tenant departure, and/or some other reason. Below are a list of items that discuss why holding onto an empty property is probably a bad idea.
Liability and Vandalism - First, you may be liable for anything that happens on your property. Using an LLC or other entity with the right insurance can reduce your liability but there is always a chance something may happen. In today’s litigious world, some people will sue for just about anything if they can. If a property is sitting vacant for a long period of time, why take the risk? Vandalism can also be an issue depending on the type and location of the property. Word gets around quickly when a property is vacant and it can be a magnet for shady characters for whatever reason. What’s even worse is that we have all heard horror stories of someone breaking into a property, hurting themselves, and then suing the owners.
Value - Any sort of real estate is going to endure wear and tear if not properly maintained. As months and years pass, the value will most likely drop if a property is just sitting (unless your market is experiencing high appreciation). Everything inside and outside of a property will get older and drop in value over time.
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Cost of Maintaining - Whether a property is being used or not, there is still a cost to owning it. This comes in the form of: utilities, taxes, interest if there is a mortgage, insurance, landscaping, damages, etc. This all can create negative cash flow that is slowly burning a hole in your pocket. It’s one thing if the property is producing income but it doesn’t make sense to pay these costs month after month if you have no plans for the property. You are probably better off selling it.
It’s An Eyesore - This is not always the case but sometimes people that own an empty property will let it go and not maintain it. It can become something that people in the community don’t like to see and it can decrease property values around it.
Equity - There may be equity in a property that is vacant. This equity could be converted to cash if the property is sold. Think about what that money could be doing instead of sitting stagnant in a property.
It’s Not Being Used - This is the biggest one for us. We don’t like seeing empty properties. An empty property could be a great place to live or work for the right person, family, or business but at the moment is not being used for anything. There are countless houses out there that will sit empty for years. This may be caused by someone passing away and no one taking care of it. After so many years, the county or city will have to deal with it. Either way, it is disheartening to see properties with so much potential not being used.
Those are just a few reasons to consider selling a vacant property. Obviously it can be on a case-by-case basis but owning an empty or vacant property for a long period of time may have more negatives than positives. Owners really have to look at the pros and cons to determine if it makes more sense to sell the property than go through the hassle of owning it. For any questions or comments on this subject, don’t hesitate to reach out to us!