A distressed property provides opportunities for real estate investors and potential owners to buy homes at lower than market value. But what else is there to know about distressed properties?
Freedom Home Buyers is here to provide a detailed explanation of distressed debt, distressed homes, and everything else to know before buying or selling a distressed property.
What is a Distressed Property?
A property becomes distressed whenever homeowners are unable to satisfy obligations regarding their mortgage payments. Homeowners can default on their homes for a variety of reasons including unfortunate circumstances, or sudden unavoidable events.
Divorce is one of the more common reasons that properties become distressed. Both individuals are likely eager to sell off the property to hasten the separation and tend to their outstanding financial obligations. Another situation that arises is when one of the homeowners passes away before paying off the mortgage. The remaining family will likely need to sell off the property due to inability to satisfy the financial agreement further.
There are numerous other scenarios when this can occur as well including home abandonment or disrepair, construction abandonment, or becoming bank-owned foreclosed properties. In all of these cases, there is opportunity for those investing in real estate to purchase, renovate, and resell the home, also known as “flipping.”
What is the Benefit of Buying Distressed Properties?
In all of the mentioned scenarios, homeowners or banks are attempting to sell the property quickly to recoup finances that are already lost. This means that the property will be sold at a price that’s notably lower than it originally sold for. Distressed properties generally require cleanup and repair. In the case of abandonment, these renovation projects may take a significant amount of time and investment.
However, the costs of investment are often worthwhile as these properties can generally be rented out and accrue a profit. In time, the collection of rent from reliable tenants will be more than often to meet the initial investment, and then some.
For those simply looking to buy a house, a distressed property can also be valuable. You’re still receiving the benefits of purchasing a property at a lower cost, with your focus being on making the necessary repairs and renovations.
Finding Distressed Properties
There are numerous strategies for identifying and locating distressed homes. Due to the potential for easy profit, this can be quite a competitive process depending on the area. Some eager investors will take the time to survey neighborhoods looking for derelict properties. Looking into these properties is a good tactic for getting your foot in the door early.
Other options can be effective and require additional research and time. You can search public records to find information regarding ongoing court cases, researching tax delinquent properties among public listings, or even heading to the bank. When properties are claimed by financial institutions, they go to auction and then are sold by real estate agents working for the banks.
Freedom Home Buyers – Jacksonville, FL
If you’re looking for quick cash or assistance with distressed sales, you can count on Freedom Home Buyers. Whether you’re just looking for a quick sale, or if life has thrown you some unfortunate circumstances, we can help get you through it. We’re located in Riverside and welcome any motivated sellers to come by and see what we can do for you.