Buying Red-Tagged Properties in Santa Cruz

By: Seb Frey

If you have ever driven by your dream Santa Cruz home, only to notice that it is vacant and there is a tag on the door, chances are you have driven by a home that has fallen subject to the city's strict building codes. People who renovate their homes outside of the boundaries of the city's building codes will have their homes red tagged. These homes may be available to you at a deep discount if you know how to buy red-tagged properties in Santa Cruz

Reasons for Red Tagging

Homes can be red tagged for a variety of reasons. One common reason is changing a portion of the home into an apartment to rent illegally. These homes are usually not available for sale, because all the homeowner has to do to make the property meet the building codes again is remove certain parts of the apartment, such as the kitchen or bathroom, to make it impossible for that part of the home to be rented again.

However, homes can also be red tagged because they are unsafe. For instance, if a home has serious structural damage, the city will red tag it and ask the owner to move until repairs can be made. The cost of these repairs will make it nearly impossible for most homeowners, and thus the homeowner will be forced to sell. Because of the circumstances, the owner will need to sell the home at a steep discount in order to find a buyer.

Red-Tagged Properties Bring Deep Discounts

Red-tagged properties are often intriguing to buyers because of the deep discounts they offer. Not only is the property discounted due to the cost of repairs, but it is also discounted further because financing is difficult to attain. The seller may have to discount the property enough so that a buyer could afford to pay cash for it. This can be a great way to get in to the highly popular Santa Cruz real estate market.

Buying Red-Tagged Properties

To buy a red-tagged property, you first need to find a realtor who has experience with these homes to help you find available properties and make offers on them. Then, you will need to find financing. This is the difficult part, because lenders view red-tagged properties as a high risk. If you cannot afford to make the necessary repairs, you will be forced to sell the property again shortly after buying it, and the lender will not make much money. You will probably have to choose a hard money lender and put a lot of money down on the property. These lenders will charge higher interest rates, but you can use the loan to get the property, make the repairs, and then refinance. The other option is to pay cash for the property if you can.

Keep in mind that some red-tagged properties may not be listed for sale, but they may be available. You can sometimes contact an owner of a red-tagged property with an offer and get a sale even before the property is offered for sale. Your realtor can help you make these offers.

Article Source: http://www.articlepro.co.uk/international

Seb Frey is a Capitola, California Real Estate Broker specializing in Santa Cruz Real Estate. He is fluent in Spanish and enjoys helping people find their piece of the American Dream in Santa Cruz. You can find Seb's blog at SantaCruzHomeBroker.com/blog.

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