I’ve talked a lot before about how focusing your energy on “distressed” deals, such as foreclosures and short sales, can bring you a good profit in the real estate game.
Many people get into the real estate investing business by watching those TV shows where the hosts find and flip – or even build – the perfect home. In reality, being an investor requires smart strategies that work fast – not requiring a long search or an agonizing (and expensive) renovation process.
Whether you’re a breakout investor or a seasoned pro, read my five reasons for seeking out distressed investment opportunities. Then, get out there and use that keen eye to find some great deals of your own.
1. Sellers Are Motivated
I talk a lot about finding “motivated sellers” to increase your success rate. There are few sellers out there more motivated than those looking to get out of a foreclosure or short-sale situation. That means that these deals can be closed quickly, maximizing your profit from the investment rather than waiting on details and decisions from the seller.
2. Deals Are Easy to Find
Wondering where to look for these distressed property sales? The truth is that such deals are far from elusive. It can be as easy as browsing your local Craigslist real estate boards. You can also participate in auctions, or do things the old-fashioned way and cruise your city for real estate signs that may indicate which properties are up for a quick sale.
3. Prices Are Lower
When a property is going through the foreclosure process, or up for a short sale, the price is often significantly lower than market value. Distressed properties are almost always priced to move, making them an economical investment for anyone on a tight budget or timeline.
4. Higher Possible Margins
Once a distressed property is officially yours, there is huge potential for you to re-sell and profit in a big way. You’ll be able to rent out or flip the property quickly, at slightly above market value, for an instant windfall of capital for your next project. Flipping a property that you got at a bargain doesn’t always require renovations, though by investing in a distressed property, you’ll likely have equity to do so without taking on the big costs.
5. You Can Make an Impact
By helping a homeowner through their distressed real estate sale, you can make a big difference in his or her life. No matter their circumstances, people deserve to be treated with compassion and respect, especially when it comes to the sale of their property. Odds are, by making it a smooth transition, you’re taking a lot of worry off the seller’s plate.
No matter your stage of the real estate game, try to remember that each type of real estate deal provides various drawbacks along with the obvious benefits.
Pursuing distressed property investments is just one strategy among several. Educate yourself on the risks and perks of your strategy before you dive in for best results!
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