Buying Investment PropertyWhat Is Distressed Property and How to Find One? by Charles Mburugu October 12, 2019October 10, 2019 by Charles Mburugu October 12, 2019October 10, 2019If you are looking for a great return on investment on real estate deals, then you should consider distressed property. Whether you are a beginner or experienced real estate investor, purchasing distressed property is a great real estate investment strategy that can generate a high profit.What Is a Distressed Property in Real Estate? Simple definition – A distressed property is one whose owner is unable to keep up with mortgage payments, and thus is at risk of losing his/her home through foreclosure or repossession. As the name suggests, distressed homes are usually in a dilapidated state, needing repairs and renovation. They could even be homes whose construction was halted midway because the owner/ landlord ran out of financing, and therefore could not complete the project.The best thing about buying distressed property is that such houses are usually sold at a price much lower than the actual property valuation. Property owners and lenders are willing to sell at very low prices to ensure that they get their money back.How to Find Distressed Property: 5 Easy WaysFinding distressed homes for sale is not difficult. Here is how and where to find distressed properties:1. Auctions One of the best places to find distressed property listings is on auction websites. You can check auction listing sites such as Tranzon.com and Auction.com to look for distressed real estate in your area of interest. You can then place your bid on specific income properties through the site. Besides online listings, you can check your local newspapers for notices of impending foreclosures.2. Check the MLSEvery real estate investor needs to learn how to find distressed properties on the MLS (Multiple Listing Service). However, only people with a real estate license are allowed to access the MLS. If you don’t have a license, you can still work with a real estate agent or property manager that has one. A listing that is labeled as real estate owned (REO) or short sale is usually an indication of distressed property.You should also look out for properties that have been listed for more than 90 days. Usually, this duration will give an indication of the seller’s motivation level. If the property has been on the market for a long time, the person selling distressed property has probably become more desperate. This gives the buyer an upper hand in the negotiation process.Related: 10 Best Real Estate Negotiation Tips for Buyers3. Drive for DollarsDriving through the neighborhood you are targeting is a great strategy for finding distressed properties. Some of the telltale signs to look out for include exterior paint that is peeling or fading, broken shutters and windows, an overgrown yard, uncollected newspapers, and notices posted on doors. When you come across such properties, be sure to note down the address so you can begin digging for more information.Don’t forget to talk to people that might have some useful information about the abandoned properties. For instance, neighbors could be very valuable sources of information about the property and the owner. A real estate agent would also be quite happy to offer useful details since vacant homes are a liability for them. Most of their customers don’t like living next to distressed houses. You can also find out who owns a property using a database like Mashboad. Finally, look out for mail carriers that operate in your target neighborhood and ask them for information.Related: What Is Driving for Dollars in Real Estate?4. Attorneys Quite often, homes become distressed due to legal problems. This is why attorneys can be a great source of information about distressed properties. Here are some of the attorneys you could talk to:Probate attorneys – People who inherit property suddenly find themselves responsible for mortgage payments, costly repairs, and back taxes. If the heir has no financial capability, the only option left is to sell the property to settle the costs. Networking with probate attorneys in your target area will give you an idea about people that want to sell their inheritance.Family law attorneys – Quite often, divorce is accompanied by property disputes. This means that couples filing for divorce might also be going through a foreclosure process. Striking a rapport with family law attorneys in your target neighborhood will keep you informed of properties that are in the early stages of the foreclosure process. Alternatively, you could check your local newspaper for posts of divorce filings.Remember that during a divorce, there is probably more than just the family home at stake. The couple might have other assets such as inherited property or vacation homes that they want to sell quickly.Foreclosure attorneys – These attorneys work directly with banks that have foreclosed homes. In fact, bank officials usually don’t make decisions without first consulting the attorney. Make friends with a few foreclosure attorneys and you will be the first to know about real estate investment opportunities.5. Mashvisor Property MarketplaceThe Mashvisor Property Marketplace is one of the best resources for finding and analyzing off market investment opportunities such as bank owned homes, foreclosures, and short sales. These are, as mentioned, some of the best distressed properties to get your hands on. But Mashvisor makes the search easy, efficient, and useful for real estate investors. You can narrow down your search using filters such as budget, miles, rental strategy, and type of property (single family homes, multi family homes, condos, or apartments). You can also analyze the investment potential of properties using metrics such as cash flow, monthly expenses, cash on cash return, cap rate, and occupancy rate. A full analysis report can be generated as a pdf document at the click of a button. Finally, contact details for property owners are readily available! This means that you can reach the property owner via email or phone and quickly start negotiating deals.Start looking for distressed property for sale on Mashvisor now. Sign Up for MashvisorRelated: How to Find Off Market Properties – InfographicA Few Final WordsWhile a distressed sale has distinct advantages, it also comes with its own share of pitfalls and problems. Since such homes are sold ‘as-is’, you might find yourself left with the burden of paying for a lot of repair and renovation. If the repairs required are extensive, some mortgage lenders will not even be willing to offer distressed property loans for your purchase. You should, therefore, do your due diligence before investing in a distressed property.Do you have questions about Mashvisor? Read our FAQs and learn about our tools. Start Your Investment Property Search! START FREE TRIAL AuctionDistressed PropertiesForeclosuresProperty Search 0FacebookTwitterGoogle +PinterestLinkedin Charles MburuguCharles Mburugu is a HubSpot-certified content writer/marketer for B2B, B2C and SaaS companies. He loves writing on topics that help real estate investors and agents make better choices. Previous Post Landlord’s Guide to Renting to Someone with Bad Credit Next Post Rental Property Cash Flow: What’s Considered Good? Related Posts What’s the Average Return on Investment in the US Real Estate Market? How to Invest in Positive Cash Flow Real Estate Properties? 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