Whether you’re someone who is looking to buy a home for yourself or you’d like to purchase a house that you can renovate and then sell for a profit, you should definitely consider looking into getting a distressed property. Those are basically homes where previous owners have defaulted on their mortgage. Not only is it a great way to get the house of your dreams, but one at a cheaper price than some of the other homes that are on the market.
If this sounds like something that you would really be interested in, we have listed five things that you should consider before buying a distressed property. That way, you can make the kind of real estate investment that you can feel confident about.
Get pre-approved. Before you can make an offer on a distressed home, you are going to need to prove that you can afford to pay for it. This would include getting pre-approved for a house loan. That’s why, before you do anything else, you need to take the steps towards pre-approval. This would include providing the loaning institution that you’re interested in working with a proof of your income, proof of your assets, your employment verification, your credit report and also a copy of your driver’s license along with your social security number.
Find a real estate agent with distressed homes experience. When you’re in the market for a distressed house, the process can go a lot easier for you if you find a real estate agent who specializes in those kinds of properties. For a list in your area, go to your favorite search engine and put “real estate agent, foreclosure” along with your city and state in the search field.
Have the home professionally inspected. Although there are a lot of distressed homes come at a really great price, the reality is that many of them also come with a lot of work that needs to be done; sometimes so much that it’s not worth making the purpose. So, before making an offer, it’s important to have the house inspected; preferably by a professional. That way you can know exactly what you’re getting into should you decide to go forward with the purchase.
Be prepared to make repairs. Even the best of homes usually need repairs; especially ones that have been foreclosed on. So, make sure that you have a budget in place to take care of things like painting your walls, installing new insulation and giving your appliances the maintenance that they need. ($1,500-3,000 is a good amount).
Avoid neighborhoods with several distressed homes in them. Say that you find the perfect house at the perfect price and you’re ready to put a down payment on it so that you can get the house’s U.S. title records. Before you do, we recommend that you take a stroll down the neighborhood to see how many other houses have a “For Sale” sign in their yards. A distressed home in a great neighborhood will raise its value. However, a distressed home in a neighborhood that is full of them will only cause your house to get cheaper and cheaper over time. For more information on investing in distressed properties, visit Realtor and put “distressed properties” in the search field.