Buying Abutting Property
Real estate owners who stay in touch with their neighbors can be first in line when the neighbor of an abutting property wants to sell.
Abutting or adjoining properties are neighboring real estate with at least part of one boundary touching part of your property.
If you own a house, semi-detached, recreational property, or even a condominium unit and the owner of a property bordering on yours considers selling, you want to be among the first to know and to act on that knowledge.
There are strong advantages to owning abutting property as well as your current real estate:
1. Proximity to neighboring homes may limit what you can do on your property. In turn, an adjoining neighbor’s add-on or build-up may have a negative impact on your home. Buy the property beside you and you’ll have renovation “elbow room” and can escape being over-shadowed by a neighbor’s expansion.
2. Buy the adjoining real estate and you may be able to combine the properties into a large lot that which would enable you to build an even larger home or add more amenities or trees.
3. Rent out the second property and you’ll have income, deductible maintenance costs, a say in who lives there, and the full benefit of that property’s appreciation in value.
4. Owning adjoining properties is equivalent to having a sound and privacy barrier—breathing space—between your real estate and that owned by others.
5. Townhomes and condominium units with common walls provide opportunities for expanding space without moving. Check out the legalities of such possibilities when you buy the first property or at least long before an abutting unit is on the market.
6. If you own a recreational property, buying an abutting property could improve your enjoyment by extending your water-front or expanding your view. You’ll definitely have control over more of the environment.
7. Larger properties provide opportunities for development to add multiple units or build up, all of which can increase property value.
8. You’ve chosen to live in an area you believe in. With two properties you’ll at least double your investment return as local real estate values rise. Buy more—whether you hold separate title on each property or combine some—and you’ll be investing in something you can live on or in and enjoy as it grows in value.
Here’s how buying the house across the driveway worked out for one couple: Mike and Melissa Russell (not their real name) struggled financially to buy their first house: one of the more modest detached two-storeys on a tree-lined residential street in the best neighborhood they could afford. They put location ahead of decor and house size knowing location could not be changed, and decor and size were what renovation was all about.
Years passed and the house became too small for their growing family. Moving was out because they had so many friends in the area, had so many connections to the neighborhood, and their children loved their schools. Then, the elderly neighbor living directly behind their property died suddenly.
The Russells knew the house and decided to approach the estate to buy it. After appraisals to establish fair market value and discussions between their lawyer and that for the estate, the Russells were proud owners of a second house.
They quickly completed cosmetic improvements on the house and rented it to cover costs including taxes, maintenance, and a mortgage designed to be paid off as quickly as possible. The two backyards were combined. The Russells created a large vegetable garden, outdoor kitchen, and patio. Over the years, friends helped the Russells add a pool and a basketball court to maximize the double yard.
After a few years as landlords, they could afford to carry the second house themselves. With the help of friends, the Russells transformed the basement into a sports playroom for the children, added a separate smaller rental unit, and created an office for Melissa’s online business.
Their plans for the future include selling the second home to subsidize travel and modernizing the original house once Mike takes a pension from his job. Living in their original home will mean no downsizing required, renovation without a mortgage, and staying in the neighborhood the Russells have always loved.
Whether you buy the house across your mutual driveway or backyard fence, the end unit beside you in your townhouse row, or the condominium unit above yours, buying abutting real estate should always be considered as a serious option before the opportunity is lost.
Be sure you have done your “homework”. You may only have a short head start before everyone knows the property adjoining yours is for sale. Here are a few of the questions that help you prepare in advance:
The location was an excellent investment for your home, but does this neighborhood warrant the further real estate investment?
Is staying in this location the best short and long term decision for you and your family?
How will you finance the purchase of the second property? Will rental rates cover mortgage payments and other expenses?
What municipal bylaws and other legal issues may undermine your projected use of the second property?
If you did not make this investment, how else would you put your money to work for your future?
Buying an abutting property is not always the right idea, however, it is always the right thing to consider very seriously when an opportunity to purchase presents itself. Be prepared by considering your options well in advance. You never know when a neighbor will knock on your door and ask…
Written by PJ Wade
November 8, 2016
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