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Distressed Properties

Distressed Properties

The economy has had a major boom in the real estate market in the last five years, but we are already seeing signs of that slowing down. A distressed property can either be based on economics or the condition of the actual building itself.

Let’s address economics first. We see states people are leaving in large numbers like California, Illinois, Connecticut, New York etc. People are moving due to the lack of freedom with small businesses and their citizens. The beneficiaries of this movement are Texas, Arizona, Florida, Tennessee, Arkansas, North Carolina, and South Carolina, as examples.

This greatly affects real estate values moving forward as the economy is in a full-on recession. Starting in the second quarter of 2023, we’re going to see far more foreclosures. This can obviously be a big benefit to investors that have more of a supply of properties to consider moving forward. This will also include commercial property and shut down states’ office buildings. Strip centers could be out of business with vacancies, like what we are starting to see in vibrant cities like Atlanta. Chaos is going to rule economically and when there is chaos it’s an excellent time to become wealthy if you don’t get caught up and the drama and focus on the opportunity in front of you.

The second aspect of this is properties that are in distress, meaning they were built in 1968, 1975 or in 1987 as an example. They have not been updated, they have green kitchens, harvest gold bathrooms, cottage cheese ceilings, bad flooring, and bad cabinets. As we always say, “the most important aspect is, don’t get caught up with the ugly when you walk a property. Don’t look at what it looks like now, be a visionary. Look at the property and see what could be, not just what is.”

The number of distressed properties, just as in the paragraphs above, based on economics, are going to go up big-time in the future. You could not have picked a better time than now to enter the real estate investing market. Don’t worry about interest rates, concentrate on properties below value or you create your own equity. You can even get in and get out quickly or turn the property into a rental, Airbnb, or VRBO. The possibilities are endless when you look at the big picture and think like an investor.

Areas of Review

Big picture takeaway points

Big picture takeaway points

  1. Start thinking like an investor.
  2. What is the cause of distressed properties?
  3. Economics greatly affect the real estate market.

Reflection

Self-reflection questions to think more about the content

  1. Why are people moving from other states?
  2. Would I recognize a distressed property?
  3. How would I go about buying a distressed property, and what would my plan be for selling that property?

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