Investing in Distressed Properties

 

In today's market, distressed properties offer valuable opportunities for both professional and beginning real estate investors.

David Ebrahimzadeh has been investing in distressed properties for years and believes that any investor can find opportunities in this market. The key is to understand how it works.

If you have never invested in distressed properties before, you might wonder whether this is a wise decision. Yes, it can work with the right strategies! In this article, David Ebrahimzadeh, founder and owner of Corniche Capital explains why you should consider investing in distressed assets.

 

What is 'distressed property'?

The term "distress" refers to assets that have lost value due to an economic downturn. Generally, distressed properties have been foreclosed, bankrupted, or have been short sold.

A distressed property is one that is either in foreclosure, pre-foreclosure, or under the control of a lender. A property becomes "distressed" when the owner falls behind on their mortgage payments and/or property taxes. Also, real estate may become "distressed" during bankruptcy or divorce proceedings.

 

Should you buy a distressed property?

Investors and general buyers can find distressed real estate attractive since it allows them to purchase property often far below market value. A distressed property can be bought for a low price and sold for a higher price. According to David Ebrahimzadeh, banks will even sometimes offer lower mortgage payments and interest payments on distressed listings, since they are often happy to get rid of the property.

However, distressed properties can sell quickly, so you should expect plenty of competition. Also, be aware that distressed properties sell as-is, so if you want to profit, you're on the hook for any and all repairs, upkeep, and improvements. A distressed home purchased at auction, for example, could mean you have to evict occupants and cover tax liens, as well as other costs.

 

How Can Real Estate Investors Find Distressed Properties?

You can easily find distressed properties. It can be difficult, however, to find distressed properties that make good investments. In order to find and evaluate these properties for potential success, top real estate investor David Ebrahimzadeh recommends real estate investors to:

 

·        Look for properties in poor condition

·        Check tax records

·        Look for delinquent mortgages

·        Consider buying REO and Bank-Owned property listings

·        Maximize your profits

·        Search online

Conclusion

Distressed real estate investing can be a lucrative investment model with the right approach. As long as you follow some best practices, you can profit from distressed properties while reducing the risk to your long-term income.