A $50,000 townhouse in Philadelphia seems like a great deal. But like usual, when something appears too good to be true, it often is. While this property is priced well below the $279,000 median list price in Philly, it comes with a host of problems.
A closer look reveals that the house is not just a fixer upper, which might be a project you’d want to tackle. It also comes with an unwanted tenant that you may not be able to get rid of.
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Buyer beware of big issues
Cheaply-priced homes often need a lot of renovations, and this $50K Philly townhouse is no exception.
However, fixer uppers are common in real estate and some homes that need work may be worth buying. If you’re dealing with a house that has structural or cosmetic problems, you can get a contractor to do a thorough inspection and estimate repair costs — although unexpected costs can still arise.
This particular property has a much bigger issue. The listing states that a squatter occupies the home, that they can’t be disturbed and that the seller assumes no liability for them. Essentially, they will become the buyer’s problem.
The presence of a squatter should be enough to scare off even the most intrepid buyer because of the challenges associated with an unwanted dweller.
Once someone is established as a squatter, you can’t just have the sheriff remove them. You’ll have to file an ejectment complaint with the Court of Common Pleas, prove you’re the rightful owner of the home and get a judgment against the squatter. Then, you’ll need the sheriff to come and remove them if they don’t leave voluntarily.
If they don’t take their property with them, you’ll also need to follow legal guidelines for removal, which could include providing notice or even putting the items in storage.
This all takes time, and it costs money (over $300). The good news is that squatters can’t establish adverse possession or a legal claim to the property unless they’ve lived there for 21 years and fulfilled other requirements like turning on utilities and openly possessing the space. So, in most cases you’d likely have a clear title without the squatter having an ownership claim.
Still, coping with legal proceedings introduces major uncertainty — and while the squatter is there, you can’t inspect the home to estimate renovation costs. These two combined factors may make you want to run, not walk away from this “deal” of a home.
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There are better ways to invest in real estate
If you want to invest in real estate without having to take on squatters — or major remodels — there are plenty of easier ways to do it.
One option is to buy shares of a real estate investment trust, or REIT. REITs allow you to invest in property assets and mortgages without personally owning a property. It’s a good way to invest in real estate if you can’t afford a home or don’t want the responsibility of maintenance.
Other options include becoming a shareholder in a specific property or bundle of properties through a crowdfunding platform alongside a pool of other investors, or purchasing a real estate ETF that allows you to invest in multiple real estate-focused companies at once.
None of these options require anything more from you than money, and they all enable you to benefit from growth in the real estate market — without ever having to hire a contractor or go to court over a squatter.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.