New investors love distressed properties. Why? They are what we refer to as undervalued deals. This becomes extremely attractive to investors because there is a huge area of opportunity to potentially increase your profit margin.
First and foremost, we need to understand what is considered a distressed property. A distressed property is usually neglected either physically, financially, or both. These are usually homes where the owner is unable to keep up with mortgage payments, upkeep, maintenance or repairs, and due to their inability to maintain the property, it could be facing the risk of going into foreclosure. Not all distressed properties are necessarily pre-foreclosures, but it is common. There are several ways the property gets into a problem situation and as investors we want to find the solution(s).
Now that we understand what distressed properties are, how do we find them?
Many novice investors want to find their deals on the MLS, online websites, or with a real estate agent. While you may find deals those ways, the best deals usually come where there is less competition. Hence, distressed properties. Most new investors don’t know how to find them or how to communicate with the owners in the event that they do find them, so it allows for less competition overall. Let’s review 7 areas of distresses real estate:
These examples can mean the owner is overwhelmed or has given up on maintaining the property either because they can’t afford to or have lost interest in doing so. This could be an indication that there is some motivation, and in that case, the owner may be willing to negotiate the price and sell the property at a discount and/or creatively.
In conclusion, finding a deal is not easy and takes a lot of work. However, if you get creative and think outside the box of just going to retail websites, you may have a great opportunity to find a hidden treasure, like a distressed property. Utilizing your Power Team members can also help open doors for investments. Check out the Power Teams content in the club to learn more about that.
Big picture takeaway points
Self-reflection questions to think more about the content
Legacy’s Building Wealth Club offers you the financial education needed to pursue your goals. Let our education and experience lead the way!