Tips for Buying Distressed Properties
Written by SayBuild Administration // December 13, 2019 // Home Construction // Comments Off on Tips for Buying Distressed Properties
Buying and flipping distressed properties is a great way to make money. Before buying anything though, it’s important to do some research and know what you’re getting into. The appeal of distressed properties is that they’re available at huge discounts.
But if you aren’t careful, you could end up with a money pit that costs more to rehab than it’s worth. These kinds of homes are available “as is,” so you get something the way you see it; the owner will not make any repairs prior to the sale. Banks usually own distressed properties and just want to get rid of them without putting money into them.
Follow some of these tips for buying distressed properties, so you can get a good deal.
Hunt for Properties
The best way to find a distressed property is to get in your car and drive around. A distressed property is easy to find because they’re neglected with over grown lawns and stand out among the nicer homes in the area. You can also look online or hire a realtor to do the leg work for you. Every listed home is available to view online, but you won’t get a real sense of the property’s condition from pictures alone.
Buy in a Good Neighborhood
Finding a distressed property in a good neighborhood is ideal, as this will help you get a good deal when it’s time to sell. These homes are typically faster to rehab and flip as well. Avoid buying in bad neighborhoods that have many other abandoned properties. This tells you—and home buyers—that the neighborhood is depressed and that people are leaving it. You’ll have a tough time selling in a neighborhood no one wants to live in.
Do a Walkthrough
Not every seller will let you do a walkthrough before you buy a distressed property—but ask for it all the same. You should perform every walkthrough with a licensed contractor by your side. The two of you should pay special attention to any water damage on the walls and ceiling, as it likely points to other problems. Whether it’s a leaky pipe or worse, repairs can get expensive. Check for cracks in the foundation, a leaky roof, lead paint, asbestos, and anything else that will be pricy to fix.
Be Ready for a Slog
You’ll have to deal with banks and lenders rather than home owners. As such, buying distressed, abandoned, or bank-owned properties is an arduous process. Banks drag their feet, and weeks can turn into months as you try to complete the deal. Documents will go missing, and new liens and encumbrances magically appear all the time. Be patient, but prepare to lean on the seller to move things along.
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