How to Identify Distressed Properties as a New Investor
Distressed properties draw many types of buyers, who don’t want an opportunity to make money on an undervalued investment? There are a lot of important tips on how to identify distressed properties are into consideration, these are but a few that should be considered.
Familiarize yourself with local foreclosure laws
Understanding how to foreclosure sales work in your county is crucial in becoming a good distressed property investor. Make sure you understand the local foreclosure laws Also, stay up to date on any developments that might affect the buying or selling of distressed properties in your vicinity.
In Colorado, start your journey to understanding the laws here and get professional advice, it’s worth the expense, believe us!
Look at the property, not the neighborhood
Homeowners never want to brand their own home a “distressed property.” If you’re curious how to find distressed properties in denver for sale without even using the term “distressed,” look for owners who are very willing to sell.
Pay attention to how long houses have been on the market. You can even go back and check with expired listings on your favorite sites.
Look at early trends in a neighborhood
Properties never become distressed suddenly. It is often easy to look at homes bound for bank ownership with signs of wear and tear. If you are eager to invest in a neighborhood, watch carefully for any properties that aren’t properly maintained. They may be set for foreclosure, allowing you the opportunity to buy them.
Be realistic about comps and which ones you use
House comps will keep you from overpaying for a house that you are purchasing and allow you to assess a fair listing and selling price. When searching for comps, make sure to research and find ones that are as accurate and similar to your property. Local knowledge of the area is helpful. Having a team that can discuss and brainstorm, even better!
Estimate costs before you make an offer
In many situations, a distressed property often has more issues, and it can be costly. Get an inspection at the house or learn to walk a property and look for these issues.
When you’re knowledgeable of necessary repairs you can justify your offer. So key when calculating ROI from your potential deal. Experienced flippers know what they are comfortable tackling, and when to walk away.
When to Walk
There are some big-ticket items that may be involved in distressing refurbishment such as sub-flooring, foundations, roofing, plumbing, power, and floors that can be completely overhauled. Smart buyers know what comes with big problems and know when to walk away. You could be paying as much as the property is worth or more. Be aware of the costs and try to avoid homes that require renovation you’re not comfortable taking on.
Troubled properties offer attractive investment opportunities. It is both a perfect chance for investors to make money and lose money. Build a plan, know what you’re getting into, and find a team you trust for investment options.