When most people decide to invest in real estate, they buy and rent out, in order of expense: a condo, a house, a small multi-unit building, or an apartment building. They don’t buy their own town.
But they could.
They’re called ghost towns — which once thrived and now have few if any residents or businesses left. Without tax revenue, these towns ended up at auctions or sitting on a real estate agent’s desk, and anyone with enough cash to spare (or borrow) can own one.
Like Johnsonville, Connecticut, a 64-acre sprawl complete with a church, general store, and quaint houses that looks strikingly like the set of Gilmore Girls. It sold for $1.9 million in October.
Or maybe Woodside, Utah strikes your fancy — it’s a desert town with a railroad that brings to mind images of Wild West shoot-outs, and it’s still for sale. Geyser included.
Buy one of these and you could declare yourself sheriff, mayor, or even king. There’s no one around to mind.
But what does it take to own a ghost town? Just the financial backing and a dose of imagination, according to associate broker Mike Metzger. And he should know: His 16-year career in real estate has included thousands of acres of land, thousands of residential homes, hundreds of commercial properties, and one ghost town — the aforementioned Woodside.
If the idea of writing your own charter, creating a tourist destination, or owning a piece of history all to yourself is appealing, here’s what you need to know and how much you’ll need to spend…
1. Make sure you’re the man (or woman) for the job
At first blush, a ghost town may not seem like the right fit for most people. You may not think you have the right tools or experience for the job. But in Metzger’s experience, ghost towns aren’t that exclusive.
“Many people have liked the idea of owning a town — of being the sheriff, the judge and the executioner,” he says.
Really, what you need to decide is if your vision of the perfect town (or tourist destination) works for the property. In the case of Woodside, Metzger has spent a lot of time wondering who would be the perfect fit.
“I think there are several ideal owners. First is a buyer with an imagination to make it into a tourist destination. Another is a movie production company who can use and lease the area as a set for movies. And one final one — a Western history enthusiast who would enjoy the history of the town,” he says.
2. Be prepared to pay for it all
If you’re considering a ghost town, get ready to buy the whole thing. “Most owners are not looking to sell piece by piece. They are looking for a bulk sale to use those funds to re-invest, [because] selling one by one does not allow for that,” Metzger says. As a result, the entire town is typically sold as a single parcel lot.
3. Have a realistic mindset
Ghost towns don’t have much in common with your average newly-built residential neighborhood. If you’re planning on buying, plan on committing to the project.
According to Metzger, many buildings inside a ghost town aren’t habitable and they’ll be assessed as salvage buildings, which is a double-edged sword. If you plan on moving in right away, you’ll probably spend more than a few nights in a sleeping bag, but you’ll also have an entire town’s worth of residential and commercial properties to remodel in any way you can imagine.
4. Find spots off the grid
Finding a ghost town isn’t as easy as finding residential homes, as most properties won’t come up immediately on Zillow. But don’t let the lack of an app to stop you — just bring the pros. Metzger says any real estate broker should be able to track down any available properties, whether they’re up for sale through another agency or headed for auction.
5. Plan ahead for financing
If you’re planning on getting a loan to purchase a ghost town, don’t wait until you’re ready to buy. Buying an entire town isn’t like financing a typical home.
“The most likely financing would be either private financing or commercial loan. Financing a ghost town is difficult because they are a risk for the lender, because there are few buyers for such unique properties and valuations are difficult due the scarcity of comparable properties,” Metzger says.
6. Don’t count on a deal
Ghost towns are often owned by a private owner, and that can mean you may or may not get a deal.
“Just like most pieces of real estate, value is based a lot on emotion, supply, demand and the motivation of the parties involved,” Metzger says. Meaning, if the seller is wanting to make a quick deal on the property, you might get away with a low-ball offer, but if the seller is emotionally attached to the place, getting a deal might be difficult.
Besides, Metzger says, “ghosts are hard to value.”
7. Be ready to investigate
On the surface, buying a ghost town isn’t much different from buying any property. Your real estate agent will show you the property, you’ll submit an offer to the seller, the seller may submit a counter offer and so on, but there are a few more things you’ll need to handle if you want to avoid a money pit.
Metzger says to expect “surveying the land, mineral right research, the process for renewing the town charter, infrastructure condition and not just a home inspection, but a town inspection.” Thankfully, you won’t have to do it all yourself — your real estate agent will be able to help you, or at least refer you to someone who can.
All in all, buying a ghost town might take a little more work than buying your average McMansion, and your family might think you’re a little crazy, but that might be a small price to pay for a surefire spot as mayor.
Article last modified on March 15, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Buying A Ghost Town - AMP.
Article last modified on March 15, 2017. Published by Debt.com, LLC .