So, I am learning a lot as I head down this rocky path of risky house buying. For one, after finding out I can't insure the place due to condition and the fact I am rehabbing it (WTF?)-not even some sort of investor's insurance, I have learned that insurance companies are not our friends (LOL). I am irritated because I have been paying home owners insurance for at least 18 years and have never made a claim. All that money and no one will take a risk on me now. Of course, we all know it's not "me", it's the neighborhood and the fact the house is older and in need of major work. It's the fact I paid only a few thousand for it. And, the bank is not helping by not letting me put a door on the damn house. I can't insure it until I put a door on it, I can't put a door on it until I close on it, and I take the risk if a breakin occurs after the closing and then good luck on insurance. Snake chasing it's tail.
(And, before I go any further: DO NOT INSURE WITH STATE FARM. Jerks and riddled with the disease of prejudice. Of course, if you are insuring with them, then I guess you have what they called an "above average home". After a very rude treatment by staff (Yes, State Farm Agency in Louisville-shall I mention names-you don't even know me or where I may end up). Personally, I have seen few 'above average homes' unless you are in a wealthy area. People try in the working class area, but 'above average"? I have no idea how that is defined because, at this point, my house is not even to average which means a much, much lower amount to insure. But you just go ahead and keep only insuring the East End. Good luck with tornadoes, fallen trees and flooding!)
All of this warrants the question of why some neighborhoods fall into disrepair and stay that way. You can't get insurance if you buy one of these rehab houses, you can't insurance if your house is less than "above average", you can't afford to put in items that banks and insurance corps call above average. If your house burns, you're on you own. So, who in their right mind would take a chance on a cash house. It takes a particular kind of crazy to do this and I am finding that I question my own piece of crazy (lots of sleepless nights in the past weeks).
Speaking of disrepair, many of these houses are snatched up by investors who can't insure them, hang on to them for whatever delusional visions of kingdoms they harbor, and walk away if the investment gets damaged. It is not the inhabitants of the community or bad tenants in most cases; it is the slumlords that end up owning blocks and blocks of boarded up houses. Case in point, the block I am buying the home on has a string of boarded up houses. I checked tax records and found the majority of them are owned by one couple. Apparently, they quit paying taxes and mortgages in 2010 and the bills have stacked up. I plan to go to the tax sale on July 18 to see about the house immediately next door (a cute brick Shotgun with no mortgage pending on it). They owe about a grand in back taxes, but I suspect someone already is paying the delinquent bills and will buy it outright on July 18. Kentucky is a Commonwealth state and has a strange lottery system of buying tax properties. I am still researching it and will post more on this later. I really wish more would embark on this adventure with me (and not just for the purpose of owning homes to rent or flip). We could even start a collective to help each other with the repairs and crime watch.
Sigh. Again with the pipe dreams...