Even though the real estate market seems to be picking up, there are some good deals to be had. Indeed, there are still some distressed properties on the market, and that can allow you to pick up a home for much less.
Before you head out to buy a distressed property, such as a foreclosure, it helps to be on top of the situation. Here are a few tips for buying a distressed property:
Have Your Funding Ready
One of the best things you can do when you shop for a distressed property is to have your funding lined up and ready. You need to know exactly how much you have available, and you need it ready to go.
It’s especially important to have your funding lined up if you are buying a distressed property at auction. There are times when you can work out the details, such as when you buy a short sale, without having all your funding ducks in a row, but, for the most part, it’s a good idea to be ready with your funding.
In many cases, you need to make a fast deal when you buy a distressed property. From foreclosures to short sales, one of the keys to getting the best deal on any distressed property is to be prepared, and ready to close quickly.
Inspect the Home in Person
It often helps to inspect a distressed property in person. Why is the property distressed? You need to know what you’re up against. In many cases, a home that has been foreclosed on and that has been abandoned for a while has a number of issues. A short sale, on the other hand, might just be a case of the owner needing to sell quickly, and there might not be major problems with the home.
Look at the property and figure out what is going to need to be fixed about the home. If you aren’t going to be able to make the needed upgrades in a cost-efficient manner that allows you to recoup your outlay in a reasonable amount of time, you shouldn’t buy the home — no matter how good a deal you think you’re getting.
See the property with your own eyes. In some cases, it makes sense to bring some sort of professional along with you to help you assess the situation. It’s not necessary, but if you are concerned about the seriousness of the work that is going to need to go into the distressed property, you might want another opinion before you commit your capital.
Know the Market
Don’t forget to research the market. You should understand the locality, as well as what to expect from the area. You should also understand your goals for the distressed property, so that you can fit it into the market.
What are your goals for the property? Do you want to buy the home and live in it? Do you plan to rent out the property and generate income? What points of interest are in and around the neighborhood? Do you know what to expect from the market in terms of a possible recovery, or is it likely to see problems in the future?
Do your research so that you understand the market and you know how it fits with your goals. Once you have a good handle on what you hope to accomplish, and as long as you have the funds available and you know what you’re getting into, you should be able to get a good deal. Distressed properties can offer you great opportunities to get a good deal, whether you want to live in the house yourself, or whether you want make money off of it as an investment.
