Expand Your Yard For Free With NSP

I thought I had come across a great deal when I bought the railroad bed behind my house for $3,500 (and I did), however I recently found that in some cities even better deals can be had to expand your yard.  NSP stands for Neighborhood Stabilization Project.  In Benton Harbor the NSP takes tax foreclosed property that didn’t receive bids during public auction and makes the best effort possible to use these properties to reduce blight, increase property values overall, and of course bring the properties back to the tax rolls.  One of the primary methods of achieving this goal is through a side lot purchase program.

Side Lot

Neighborhood Stabilization Side Lot Purchase Program:

Vacant lots adjacent to owner occupied properties can be sold to the owners for a token amount of $1 in the following circumstances:

  1. The owner must use the home as a principal residence
  2. The owner must not be delinquent on property taxes owed to the county.
  3. The vacant lot must be contiguous to the applicant’s parcel
  4. The applicant’s household income must be below 120% of the median income for the area.  For a family of 4 this would be an income of $65,880.
  5. IF income is outside of this range the Land Bank will work with you to acquire the lot you want (you just won’t get it for $1).
  6. IF two property owners are interested in the same property the owner with the largest property line with the vacant lot will get it.  If both parties have the same amount of a property line, THEN it will go to the highest bidder, or be split. (1/2 a lot is WAY better than no addition)

For a full set of regulations governing how the Land Bank acquires and disposes of property, check out their website.

How Many Properties Are Available?

The purple lots are Land Bank owned property

Map off about 1/4 of Benton Harbor; The purple lots are Land Bank owned property

The amount of properties for sale in the Berrien County Land Bank have fluctuated greatly. In 2013 there were 450 properties for sale following the tear down of several hundred structures with a NSP2 grant from the federal government. By the end of 2013 109 vacant lots had been sold to homeowners with adjoining property.  Currently there are 99 properties in the land bank available for the side lot purchase program.  A full list is available on the Berrien County Land Bank Website.  Every year the county gains a new crop of tax foreclosed properties and ultimately some of them don’t sell at auction, adding to the Berrien County Land Bank’s property rolls.  As you can see there are some locations where more than one contiguous lot is available.  You can only purchase 1 lot through the NSP program for $1, however if the Land Bank Authority likes the plan you present for its use, they may be able to sell you the other contiguous lots as well, it never hurts to ask.

Berrien County charges $15 per day or $50 per month to access their interactive mapping site, however a limited version of the interactive site showing the land bank properties and tax sale properties is available at no charge.  This does not include the data layer, so the tax assessments and ownership information is not available. It is still a very useful tool to see if any properties are available next to yours.  To access the free version, follow this link, then click on ‘Layers’ in the upper left hand corner; then click on ‘Land Bank Properties’ from the drop down menu, bypassing the login boxes. This will bring up the interactive county map.

Berrien County typically hosts two auctions, the first with the back taxes owed as the minimum bid, and the second with a minimum bid of $50 on each property.  Funds raised from these auctions are used to demolish blighted structures that are beyond repair. For 2015, there are 89 structures scheduled for demolition and 320 properties on the auction block. One major property scheduled for demolition is the old Mercy Hospital building, which sits on 4 acres.  This massive structure will be torn down and the property will be sold at the 2016 tax auction.  The cost of demolition for this property will obviously far exceed the typical demo costs of derelict houses.

But wait, there’s more….Benton Harbor City owns several properties outside of the land bank.  Some of these are parks and other municipal assets, but many are vacant lots.  When searching the GIS mapping system for Benton Harbor City as the owner of property, we get this map, with all the yellow properties being owned by the city.  The purple lots are still the land bank properties.  I’m sure the city would be more than happy to sell some of these lots to adjacent land owners willing to purchase them.

Benton Harbor City Side Lots

Side Lot Programs in Other Cities:

Michigan has 38 different land bank authorities, which all operate under the same set of rules.

In Kalamazoo, preference is given to adjacent property owners, but this is not a requirement to purchase a side lot through their program.  The Kalamazoo Land Bank also has an Adopt-A-Lot program in which you can get a one year lease on a lot to do a wide array of things with it. Kalamazoo currently has 136 vacant lots available for purchase.

Detroit sells side lots for $100 a piece, which, given how many they have available, seems to be overpriced.  Even so, if you happen to live next to an abandoned lot, doubling the size of your yard for $100 is still an amazing deal, even if it isn’t in the greatest neighborhood.  The Detroit Land Bank has tens of thousands of properties. A full list can be found on the Land Bank’s website. With the shear scale of the Land Bank owned properties in Detroit, I think the city should actively combine these parcels into much bigger lots before selling them off.  For example, instead of having 16 lots on a block, turn it into 2 large lots.  This creates more desirable parcels and vastly reduces the number of parcels in the city.  People with a half acre of land are less likely to let it go than people with a 50 X 100 lot.

My experience:

I have never participated in the side lot program, because I never knew it existed before! When I bought my current house in 2011 it came with the adjoining lots on both sides. Had it not included those lots, I probable wouldn’t have bought it.  The main reason we wanted to leave our previous home wasn’t because of its Benton Harbor address, it was because we had a tiny city lot.  If our yard had been twice its size we may have stayed there.

Where Mrs. C’s mom used to live, the two lots directly North of hers were abandoned lots. I wouldn’t be surprised if during the 15 years she lived there at some point those lots were owned by the land bank. It would have been really nice for her to have had that extra space.

Beyond A Bigger Yard

Increased Home Value:  For home owners there is a big upside to buying a side lot when they go to sell. Most city blocks are far smaller than what most home buyers would find ideal.  A 2011 community preference survey found that 49% of householders prefer single family homes on large lots (over 9,500 sq. ft) compared to 31% who prefer smaller lots. What’s more interesting is that for Benton Harbor specifically, the ‘2012 Plan For Neighborhoods‘ published by the city of Benton Harbor shows that large lot single family homes are under represented at 40% in the area compared to the 49% preference.   In an area where the average house is on .15 acres, having .30 acres makes a big difference. Having a larger yard can mean a faster sale and a higher sale price. An extra lot may even allow a home owner to build a garage who didn’t have the space to do so before.

Housing Preference

Reduces Blight/Dumping: Maintained lots look a lot better than overgrown lots.  When someone is taking care of these parcels it reduces the odds that people will dump trash in those locations and it makes the neighborhood look far nicer.  Even if the utility of a side lot isn’t a big seller for you, the positive effect of losing an eyesore on the block is well worth the $1 purchase price and subsequent roughly $40 per year in property taxes. Putting an abandoned lot to use also raises the property values of everyone in the neighborhood.

Other Uses: Vacant lots can be used for other things besides yard extensions.  I firmly believe that individual ownership of contiguous property is a great approach to solving the blight problem in our troubled cities, but there are some areas where none of the neighbors want to take on the responsibility or where all the structures are owned by rental companies, that have no desire to maintain the extra lots.  In many cities, including Benton Harbor, community gardens are sprouting up in these locations. My family doctor, Dr. Don Tynes, has three separate community gardens set up in Benton Harbor, covering over a half dozen city lots, with plans to expand. Most community gardens are vegetable gardens, but I think it would be cool to see some community orchards established as well.  Southwest Michigan is one of the best locations on Earth for fruit tree production and we are well known for Apples and Peaches.

Slowly but surely these programs are reducing blight in our communities.  There is a lot of positive action going on in Benton Harbor, and with initiatives like these the city as a whole can eliminate vacant and derelict property. If an abandoned lot is not on the list of land bank owned properties, keep an eye on the tax auctions to see if it is coming up for sale.  It takes three years for a property to end up on the auction block after failure to pay property taxes.  Another option is to find the tax id of the property using the interactive map mentioned above, then using the register of deeds website to find out who owns the property, or pay the $15 for one day access to the full mapping site, which will also give you the address the tax bill is sent to.  If they aren’t using it, you may be able to get it for a low price.

 What do you think of Land Bank side lot purchase programs?  If the lot next door to your house was abandoned would you be willing to buy it for a dollar and maintain it? This subject also makes me think of the best side lot deal in history; Thomas Jefferson’s 1803 purchase of the Louisiana territory from France for $15 million. The size of the U.S. was doubled for less than 50 cents per acre when adjusted for inflation.

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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