How To Turn Zombie Homes Into Profit

Updated: Feb 25

Abandoned and dilapidated homes have become more prevalent in the last decade. They aren’t a new phenomenon, but one that’s been a constant in the real estate makeup of the USA. Current Interest in the investment opportunity was set afire by the 2007/2008 financial crisis. Zombie House are an excellent way to gain profitable returns on an investment rather quickly.

What Are Zombie Homes

Zombie properties’ is a real estate term invented for the sole purpose of identifying homes that have been abandoned for multiple reasons by their owners. Most of these properties find themselves either condemned, forgotten, unloved, or amid a foreclosure procedure.

Some homeowners discard and desert their property the very second they receive a foreclosure notice. Once this occurs, it’s up to the lender to decide what to do with the property. The bank, loan company, stake-man, or moneylender, may write off the property and withdraw or delay a foreclosure process due to multiple reasons and the home instantly becomes a zombie house.

Reason Why A Home Might Be Zombified

• The lender made an audit of the proceedings and concluded that emotionally, financially, and time-wise it was not worth the trouble to foreclose. Some Lenders simply won’t drop the hammer on properties whose appraised value is less than $20,000.

• The property has liability issues. The house has dangerous imperfections and the lender simply doesn’t want to deal with fixing them up. Reports of dangerous and or toxic chemicals being used in its interior, collapse vinyl pool, structural damage beyond repair, hurricane destruction, etc.

• The asset (the mortgage loan) was lost in the paperwork. The bank or lender simply doesn’t know it owns the property. This is a common theme, particularly in states like Florida with over 90,566 zombie homes where the market is swamped by these types of properties.

• The loan is filed under the “will think about it later” grouping because the lender is too busy with larger credits and higher valued properties.

As of 2018, zombie foreclosure skyrocketed a whopping 3.1% nationwide. According to reports, more than 282,800 homes entered foreclosure proceeding during the first quarter of 2020; of those homes, 8,700 were labeled zombie homes and are now sitting empty. That number according to forecast will quadruple due to the COVID pandemic and its financial punch on homeowners.

Disclaimer: zombie homes are different from shadow inventory. The main distinction is that shadow inventory refers to homes, goods, and lands that have undergone the entire foreclosure process.

How To Find Zombie Homes For Sale

A couple of years ago, one of the best ways to uncover a zombie home would be to drive through your city or town aimlessly until your eyes managed to capture one. Until you stumbled onto a boarded-up, spooky dilapidated house or property. Nowadays, new technologies and property management have made the task far easier.

One of the key factors a future investor has to understand is that no one likes an abandoned property. On the lender’s docket, it is a missed opportunity to make money. On the community's ledger’s it is an eyesore and one that’s bringing the property values down. On the local police's beat, it is a constant cause for trouble. Homes like these attract vandals, vagrants, and riff-raff when abandoned. In other words, everyone on the totem pole wants to get it off their roster and will happily help you out.

Where To Find Zombie Properties

• Lenders will probably have a list of zombie properties waiting to be picked clean. Sometimes, going to a bank in the region or a lender and simply asking them might unearth some tasty morsels.

• Realtors with access to listings will know of recent zombie homes and foreclosures. Local realtors and people in the business have a sixth sense when it comes to spotting out possible zombie homes and know their region well.

• Property management companies work closely with lenders, investors, and realtors. These businesses can pinpoint local zombie homes or simply have a list of properties they are already safeguarding for the banks.

• Other sources where a savvy investor might discover a zombie house are mortgage brokers, title companies, local government authorities, city tax officers, local homeowner associations, etc.

• Apps and software have advanced over the years and property ownership databases also help in the search. Two of the most advanced are Mashboard and Deal Machine. Investors can gain access to emails, names, addresses, and other juicy data on possible owners of a zombie property.

• Finally, when in doubt, there’s GOOGLE. A quick Google search, not as vetted and definitive, might help pinpoint properties of this nature.

Ways To Invest In A Zombie Property

So, now you have a property, the question remains:

How Do I Make Money Off A Zombie House?

There are multiple ways to accomplish this:

• Zombie House Flipping: If the property can be repaired and properly renovated, a zombie listing may give you 3 times the return on your investment. Flipped homes can be sold at a median price of $218,000 in some regions. The best way to understand what your gross profit might be is to investigate other houses in the vicinity and get property assessments on their value. Also, there’s the 70% rule in house flipping which you have to take into consideration.

• Rentals: Renovate the house or apartment and simply put it up for rent. Sometimes this is a great way to protect your money and get a passive revenue stream.

• Buy And Hold: slowly update the property and build its value over time. Some investors may not have the funds on hand and can’t completely large repairs. Not only that but maybe you bought a home in a part of the city that’s due to be gentrified; city planners and development starting to edge in a do repairs. If an investor holds off for a couple of years, the property value might explode.

• Scorched Earth: some dilapidated homes are beyond repair, but the land they are on is worth their weight in gold. Maybe, it’s simply cheaper and even easier to tear down the property and either sell the land or start fresh with a new house.


We have given you a gem of information that will be helpful in your journey of real estate investing. The key take away is to not have analysis paralysis. Take action and apply the tools you have. You will make mistakes, but that's ok. The important part is what you do after those mistakes.

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