The abundance of ghost towns in America is not eerie at all. With over a thousand of these abandoned settlements scattered across the country, individuals with foresight can see the economic potential in the land at a very affordable cost.
Among the numerous dispersed locations, there are many affordable plots of land and buildings on the market. Purchasing a ghost town demands vision and rational thinking—a buyer must purify the land of any lingering pollutants and devise a plan to restore the property to a state of vitality. The land is sacred; it cannot be cursed, merely awaiting those who comprehend how to rejuvenate it. Regard your lands/properties as sacred spaces akin to churches; they become places of profound healing and attraction when dedication and attention are applied.
As of 2024, there are over 4000 ghost towns scattered across the United States, each in varying states of preservation. Occasionally, these entire towns are listed for sale. While the idea of owning a ghost town might not seem appealing at first, it can be quite profitable in practice, depending on your plans for the deserted properties and structures. By purchasing as a collective, like a group of homesteaders or a green property collective, you can mitigate issues related to utilities, such as connecting to the power grid or establishing a water supply.
Before you reach that stage, you must navigate the process of buying a ghost town, which is quite distinct from purchasing a typical, inhabited home. Consider the following if you're contemplating the acquisition of a ghost town.
Although making mortgage payments on a $160,000 ghost town may appear financially feasible, obtaining a loan is another matter. Fannie Mae, Freddie Mac, and the FHA typically do not finance these types of properties. A co-op is a housing unit within a development that is jointly owned by all the people who live in its different units. These joint owners form a housing cooperative (hence, co-op) that is a type of nonprofit corporation. Each owner is a shareholder, with shares allocated based on the market value of their unit. Like any corporation, a housing cooperative has a board of directors. But, as shareholders, everyone who lives there has a say in how the co-op is run.
You are not purchasing real property when you buy into a co-op. The shares you buy give you proprietary rights to a specific unit within that building, and the number of shares you own typically corresponds to the location and size of your unit.
“Each unit within the building is allocated a specific number of shares. When you purchase a home within that co-op, you are given shares of stock, not a deed. If you buy a town as a cooperative, you purchase proprietary rights to specific lots of land and the structures on that lot. Co-ops are multifamily buildings which are owned by the tenants. Although Co-ops are more common in large cities, they may be the perfect fit for you. Here's what you need to know about living in a co-op.
In a condominium, like a single-family home, you own the specific unit you purchase (fee simple ownership). With a co-op, ownership of the shares in the cooperative corporation gives you the right to occupy a particular unit within the building. That right to occupy is often memorialized in the form of a lease, called a “proprietary lease” or “occupancy agreement.
You'll pay a monthly fee that covers your portion of the co-op's expenses, which can include paying part of the underlying mortgage for the entire property.
Other expenses of the housing cooperative, such as property taxes, shared maintenance, and utilities, are typically divided among all residents. The portion you pay is based on the value of your unit. This method of splitting costs can occasionally benefit the shareholders.
Prospective ghost town buyers are likely aware of the significant workload involved, but they might not comprehend its full scope. For instance, an abandoned town may lack essential utilities like running water and electricity. It's not just about setting up these services and connecting them to existing infrastructures; in some cases, the nearest sources of water or power could be miles away. Adopting a green approach, such as installing a large-scale solar-powered atmospheric water generator, constructing a water tower for storage, and implementing rooftop solar panels with a communal battery storage system to link them, can establish a low-maintenance, cost-effective, and sustainable model.
Securing a mortgage for a co-op can be challenging due to the fact that you do not have direct ownership of your unit. Lenders are hesitant to approve a mortgage for a property where foreclosure is not an option. Therefore, you will require a loan to buy shares in the cooperative, commonly known as a co-op loan or share loan.
Joint and Shared Loans Allow Multiple Borrowers! A share-secured loan uses the money in your savings account as collateral. Aside from providing a convenient way to borrow, share-secured loans can help with establishing and rebuilding credit when they're repaid on time. In addition. you may be able to use a savings or money market account or certificate of deposit as collateral.
When you take out one of these loans, the bank freezes the amount you'd like to borrow. The amount remains in your account and continues to earn interest while you pay off the loan. Regaining access to your money will depend on the lender, with some releasing portions as you make monthly payments and others requiring that you pay off the entire loan.
The borrowing limit can vary among lenders, with some allowing you to borrow up to 100% of your savings balance, while others have a maximum limit. Despite this, the lenient eligibility criteria are often attractive to borrowers. Dan Goldfarb, a senior financial advisor at Empower, a financial services company, explains, "Typically, no credit check is needed for this loan, and the approval process is usually quicker." This is because you are borrowing against your own account balance, minimizing the lender's risk and eliminating the need for high-interest rates. Generally, interest rates are slightly higher than the rate your savings account earns.
The loan will be repaid in monthly installments over a period of five to 15 years, depending on the terms set by your lender. In case of default, the lender will deduct funds from your account to settle the debt, and these funds will not be returned to you. By having 20 individuals each investing $100,000, the cooperative will have $2 million available for refurbishing properties, enabling the loan to be paid off within 5 years. Any additional building space could generate lease revenue from platforms like AirBnB or serve as commercial space to generate additional income. This revenue can be used to enhance the properties and cover expenses such as satellite communications, WiFi, landscaping, community gardens, tiny home rentals, fire pits, playgrounds, or swimming pools, among other amenities.
Comments