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Zombies Attack Real Estate & Residential Rehab is the Cure

I know what you’re thinking...zombie apocalypse?! No need to worry, I'm just referring to the term now commonly used to describe vacant properties stuck in the foreclosure process. According to RealtyTrac’s Q1 2015 Zombie Foreclosure report, by the end of January, 142,462 homes were vacant and actively in the foreclosure process with the homeowners vacating the property prior to the bank repossessing the property. This figure represented 25% of all active foreclosures.

While the total number of zombie foreclosures decreased by 6 percent from a year ago, the 25% share was actually higher. These homes represent an increasing share of all foreclosures due to the tendency of these cases to be quite difficult and continue to stay in the pipeline...in a zombie-like state.

Incredibly, RealtyTrac found that it takes an average of 1,057 days - almost three years - to foreclose in New Jersey, 946 days in Florida, and 934 days in New York, waits that are only trumped by excessive delays in Hawaii.

Related: Why Newark, New Jersey is the Next Hotspot for Real Estate?

 

Zombies in Chicago

residential rehabAccording to a recent Chicago Tribune article, zombie foreclosures in Chicago are down 35 percent from last year, although the zombie plague continues. More than 39,000 residential properties were somewhere in the foreclosure process by the end of January 2015, with 8,400 of those cases being considered a zombie property - one that is stuck between the homeowner leaving the property and the lender repossessing it.  Thankfully, City officials have come together and developed a solution through initiatives such as the Large Lots Program to help buy back the land and sell it for next to nothing (outside the cost of property taxes).

Related Article: Real Estate Investing for $1?!

 

Residential Rehab Will Help Cure

In recent years, there have been concerns that lenders were choosing to walk away from the worst properties on their books, leaving them vacant and in a state of disrepair. This was most often the case if the mortgage servicer decided that the cost to proceed with the foreclosure process and maintaining the home would exceed the expected return.

This means these vacant properties are usually eyesores in the community and can become extremely damaging for the community and surrounding areas by lowering overall home values. While not all zombie properties are vacant, neither the borrower nor the servicer has clear control of the property, so neither takes the initiative to maintain it. Not only are these properties eyesores, they are hotbeds for squatters and vandals.

States such as Florida and Illinois have luckily taken steps through legislature to speed up the process, making the properties “fast track” through the system quicker. Local governments are working to leverage land banks to soak up the zombie foreclosures and either rehab them or demolish them for new construction in order to help growing communities. Essentially, they acquire the titles to vacant and abandoned properties to help eliminate barriers to redevelopment.

Related Webinar: Patch of Land Webinar #3: Fix and Flip Real Estate Investing

 

Overall, the number of zombie foreclosure is slowing down across the nation.  As more of these properties start coming on the market, residential rehab Developers in Chicago, and other areas that are impacted by zombie foreclosures, are able to take advantage of the opportunities to buy low. By fixing and flipping these distressed properties they are becoming part of the cure by adding value back into the neighborhoods and ultimately, raising housing prices and improving economic conditions in their local communities.

As Chicago continues to become a prime location for house flipping, more opportunities will come available. Patch of Land has fully funded 8 rehabs in the Chicagoland area and looks to do more in the future. If you're interested in learning more about how to get your next residential rehab project crowdfunded, Signup now and contact us at [email protected] If you're interested in real estate investing online and want to learn how to crowdfinance a residential rehab loan, Signup as an Investor with Patch of Land and start earning interest right away. Together we can cure the zombie apocalypse!

Have you purchase a zombie home before? If so, what was your experience like. Leave a comment and let us know your story.



If you want to learn more, take a look at some of the most commonly asked questions we receive about real estate crowdfunding on a daily basis and find out why so many people are crowdfunding real estate projects across the country with Patch of Land.
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