Distressed properties often get a bad rep because people get overwhelmed when they realise the amount of work that needs to be put in. It’s why it’s often overlooked by most investors but the experts will tell you that if you’re looking to find a hidden gem, look at distressed properties.
What are distressed properties?
Distressed properties are usually under foreclosure because the owners could not make bond payments. In most cases, these homes have not been maintained and have been neglected. As a result, it’s in poor condition.
How to spot a distressed property
Distressed properties would usually:
- Stand out from other homes on the block because they are in a state of neglect
- Lights are not turned on at night
- Homes with yards overgrown with weeds
- Broken windows and shutters in need of repair
- Faded and peeling paint
Why investors should look at distressed properties
Despite its look, these properties offer great opportunities, especially if you’re looking for property area. Further benefits include:
Most distressed properties will be marked below its market value. This is even better for you if you’re looking in a good neighbourhood. In most cases, sellers are looking to sell the property fast, so you’ll be able to negotiate the price further down.
With the right budget and renovations, it could be worth much more than the purchase value. When looking at distressed properties, always look at what condition it’s in and calculate how much it would cost to renovate property.
Better financing options
Due to its low value, you might have a better chance of getting finance from a bank. Some banks are also interested in selling distressed properties. You could end up with lower interest rates, closing costs, and monthly bond payments.
Don’t go for property just because it’s cheap. The idea is to have a vision that you can fix up the property and sell it for a great profit.
Our experts will guide you on how to find distressed properties and provide you with tips on the process when purchasing the property. Book your FREE seat at our seminars, to find out more.