Buying distressed properties often appeals to few investors. This way of property investing is often overlooked. This is because people feel overwhelmed once they understand the level of work required before they can sell or rent out their properties. However, the experts will confidently tell you that the real treasure in property is distressed properties.

What does distressed property mean?

These are properties that are typically about to be repossessed or taken because the owners could not pay towards the monthly bonds. Most of the time, these dwellings have been neglected and poorly maintained resulting in deplorable conditions.

How do you identify a distressed property?

With distressed properties, the following usually applies:

  • Distinct from other houses in the same street because they are seriously neglected
  • Yard of such homes are overgrown with weeds and plants
  • Painting on the wall is peeling and faded
  • Lights are off even at night
  • Signs of vandalism like damaged shutters and windows that need repairing or replacing

Why should investors consider distressed properties?

In spite of their unattractive look, there are great investment opportunities with such properties. If you’re searching for an area where properties sell well, then you will not go wrong with buying distressed properties there. More advantages include:

Offered high-profit potential

There’s potential to increase the purchase value and make good money with the right financial plans and renovations in place. When you decide to use this strategy, always consider the kind of state the property is in and determine how much it would cost to repair it.

Great value for money

Often times, such properties are marked and marketed below market value. This is very advantageous if you are property shopping in a good neighbourhood. In most instances, you might be able to negotiate the price for a lower offer because these sellers are eager to sell their properties quickly.

Better funding options

You have a better chance of securing a home loan from a bank as a result of the low value of a distressed property. Some banks are even interested in selling distressed properties. So as an investor this is favourable and means that you could end up paying lower interest rates, monthly bond payments and closing costs.

Instead of buying property just because it’s cheap, rather invest with the idea of fixing and selling it for a great profit.

Our mentors and experts will walk you through finding distressed properties and give you useful tips on the property purchasing process. For more information register for our FREE online webinar.