The best property deals are from those home sellers who want to sell house fast.
For whatever reason, there will be people who need the money right away and are just looking to jump at the first chance they get to sell their house. The only problem with these types of deals is that, even though the cost is low, if you’re looking for a potential fixer-upper, the costs of renovating and rehabilitating the property to the point of making profit might be too steep for you.
Of course, that’s not always the case. Some rush sellers do sell houses that can be sold for a higher profit as-is or with little renovations.
Most of the time, though, the house will be decrepit and/or distressed.
In such cases, what do you do? Are they still worth the investment? Or, are you better off looking for a different fixer-upper project?
Below, we discuss the pros and cons from buying properties from people who are rush selling their house.
Pros of Buying a Distressed Property
1. Low cost
Even if it’s located in a nice neighborhood and near a school, distressed properties won’t sell for a high price.
That’s where you come in.
The potential for huge profit is there if the property is located in an ideal location, surrounded by everything that families need, from schools to stores, and far from noisy or busy streets.
Because of the low cost and the potential for high profit, distressed properties make for a great investment.
2. Better deals from lenders
Distressed properties can be an eyesore for entire neighborhoods.
If you’re interested in buying one, you might find lenders more than willing to help you out by giving you a better deal.
From lower interest rates and closing costs, to longer mortgage payments, lenders will be more than willing to help you out if you’re after a distressed property, regardless of whether you plan on selling it for profit eventually or just buying it to live on it.
Cons of Buying a Distressed Property
You’re not the only one who has an eye on that distressed property. You’ll most likely be competing with dozens of other home investors, all of which have just as much money to throw around as you do if not more.
If you’re looking for a very quick fixer-upper, distressed properties might not be for you.
2. Maintenance and repair costs
Not all distressed properties are the same. However, one thing that most have in common is that they might not have been maintained for years if not decades.
That can present a huge problem for you.
Even if you managed to buy the distressed property, there will be problem areas that the previous homeowner might not even know about. In this case, it’s up to you, the new homeowner, to repair the damage, and depending on the extent, the costs of rehabilitating the property might not be enough to make it worth investing in.
Foundation issues, in particular, are a huge red flag, despite how low the cost of the distressed property is.
Get to Know the Fixer-Upper Game Better
Playing the real estate investing game isn’t easy, especially if you plan on investing in distressed properties.
If you have the time, money, energy, as well as finances, and most important of all, work ethic, to dedicate to learning how to make the most out of distressed properties, then you’ll end up with low-cost and high-profit investments.
If you don’t have any and all of those things, then you’re better off trying your luck with other “easier” real estate investments.