Appraisers and real estate agents have tried to figure some way to add in
certain intangibles as they affect the value of investment property. This is
especially important if you’re considering purchasing investment property. Just
consider some real scenarios.
A police officer arrived at his home in a rather small Midwestern town to
discover his wife shot to death in the living room and his daughter dead in the
back yard. Eventually, crews were called in to clean the scene, but one must
consider what this has done to the value of the property, especially if the
buyer is considering the purchase as investment property. In the smaller
community, the local people know the history of the house and it may very well
be difficult to sell - making less likely to be lucrative investment property.
If you’ve chosen investment property in areas that aren’t growing
economically, you’re probably hoping to draw a buyer from someone in the area
who is ready to purchase instead of renting or to move into a better home – your
investment property. If you purchase a home as investment property with a
history like the one described, you may very well be eliminating all the locals
from the pool of potential buyers.
In the case of this property, the entire backyard was eventually dug up and
hauled away because the smell of blood became so prevalent in warmer weather.
This is a physical condition that will negatively impact the potential for a
sale, and makes the property worth less as investment property.
Even if you choose to rent the investment property, you may not keep renters
for long periods of time. You may be spending all your time cleaning from one
renter’s move out and searching for new renters for your investment property. If
you sell the investment property, you may be caught up in litigation if the new
owners face the smell of blood or other physical detriments from the acts in the
house, or you may even face litigation for selling the house without divulging
the negative history. Sound like a gray area? That’s because it is, but it could
still tie you and your assets – including your investment property - up in court
while the issue is settled.
It can be argued that an action that occurred in the investment property
shouldn’t be an issue once the physical evidence has been cleared away, as long
as there are no lasting signs (such as the blood in the yard). There’s certainly
no way for an appraiser or real estate agent to completely gauge the effect on
the investment property.
This sort of negative impact isn’t limited to the scene of a crime. The same
could be true of investment property that’s generally know to be the home of a
drug dealer, criminal or anyone who is considered a notorious figure.
