If you are looking to find a cheap investment property and don’t mind making some repairs, the best way would be to lookfor distressed homes for sale. A distressed property is a home whose current owner is unable to maintain it, either financially, physically, or both. The owner may be unable to keep up with the monthly mortgage payments and risks falling into foreclosure. Properties under foreclosure are also considered distressed.
Distressed properties often suffer from long-term neglect and are in poor condition. More often than not, the seller is motivated to sell, making distressed homes for sale by owner attractive to real estate investors. The deals are typically undervalued, thus increasing the potential profit margin. Moreover, there’s usually less competition for these properties.
So, how do you find distressed properties for sale? Read on to learn more.
8 Ways to Find Distressed Homes for Sale
If you are still a beginner real estate investor, you may be wondering how to find distressed homes for sale. Well, first, it is important to note that nobody refers to their home as “distressed.” Simply searching for “distressed homes” online won’t give you much. With that said, here are eight creative ways to find distressed homes for sale near me:
1. Drive for Dollars
Driving through an area where you want to buy an investment property is a great way to find distressed properties for sale. You just need to find a target neighborhood near you and drive around to look for distressed properties. Distressed properties usually stand out from other properties. Pay attention to abandoned homes with overgrown yards, faded/peeling exterior paint, and broken windows.
There may also be “For Sale” or “For Sale By Owner” notices on the doors. If you come across a property that meets these descriptions, note down the address and investigate it further. With this method, you may find distressed properties for sale that are not listed on the MLS. However, you will need to do the legwork.
2. Check the MLS (Multiple Listing Service)
You can find distressed properties online by checking the MLS. The MLS works differently depending on the state. Regardless, the MLS can be a great resource for finding distressed properties. However, only those with a real estate license can access the MLS. Those without a license can work with a property manager or agent with a license.
Some of the distressed properties you can find on the MLS include short sales and bank owned homes. Moreover, look for properties that have hit the 90-day mark. This is usually an indication that the seller is desperate and motivated to sell.
3. Work With a Real Estate Agent or Broker
A real estate agent can also be an invaluable resource when it comes to finding distressed properties for sale. It is actually one of the best ways to find distressed properties. First, real estate agents and brokers belong to a vast network of real estate professionals, including lenders and other agents. Therefore, they can get information about distressed properties for sale that might not be available to everyone.
Experienced local agents and brokers will also have a good understanding of the local housing market. It means they may possess information on distressed properties that are not listed online. They can give you access to great real estate deals before it’s too late. In addition, as mentioned above, agents have direct access to tools such as the MLS. Therefore, you should consider working with a real estate agent and developing a relationship with them.
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4. Join Real Estate Auctions
When thinking of how to find distressed properties for sale, you may also want to look at real estate auctions. At real estate auctions, you will be able to find several distressed properties in different stages of the foreclosure process. They include short sale homes and REO properties. With some research, you can find out about the real estate auctions taking place near you, attend some, and bid. There are also several online auction listing sites that you can consider to place your bid. One example is Auction.com.
5. Use Mashvisor Property Marketplace
You can find distressed houses for sale by searching online real estate listings. The easiest and fastest way would be to use the Mashvisor Property Marketplace. The tool allows investors to find off market properties like short sales, foreclosures, bank owned homes, and auction properties in the US housing market.
Unlike the other methods of finding distressed properties, Mashvisor allows you to analyze investment properties to guarantee profitability. You will be able to calculate key metrics such as rental income, cash flow, cap rate, cash on cash return, and occupancy rate. Furthermore, you can use filters like budget, rental strategy, property type, number of bedrooms, and number of bathrooms to narrow down your search to match your criteria.
In addition, with the said tool, you won’t have to worry about how to find out who owns a property. You can easily access all the current property owner data, including emails and phone numbers, with the click of a button. Therefore, after identifying a profitable property for sale that suits your criteria, you will be able to connect with the property owner and start the negotiation process.
Visit the Mashvisor Property Marketplace today and find the off market property you’ve been searching for!
6. Search Through Tax Records
One seldom used but effective method of finding distressed homes for sale is checking tax records. The tax information is a matter of public record, meaning the public can access it unless a court order or state legislation prevents them from being released. By sifting through the tax records, investors can find tax-delinquent owners who are highly motivated to dispose of their property at a lower cost.
7. Check Lender and Bank Websites
Distressed properties are not only available for sale through online property marketplaces. Lender and bank websites can be valuable sources of listings for such types of investment properties.
Financial institutions often dedicate a section or hub on their website to advertising distressed properties with the intention of selling them as soon as possible and keep them off their books. For savvy real estate investors, finding such sales at the most appropriate time can be the difference between hitting it big or going bust in their property investment.
8. Follow the Best Practices
Adhering to a few best practices can help increase the chances of being successful in your distressed property investment. Below is a list of a few things to put into action after a distressed home for sale:
- Find a contractor who will check the property’s condition and help determine if repairs are needed.
- Hire a professional property inspector and appraiser to evaluate the property before making an offer.
- Consider making a cash offer.
- Obtain pre-approval for a mortgage if an all-cash offer is not feasible.
- Hire an experienced real estate agent to do the negotiating.
The Bottom Line
Distressed real estate investing offers distinct advantages. However, distressed properties are often not as easy to find as other types. By learning how to find distressed homes for sale, you will be putting yourself in a better position to take advantage of these real estate investment opportunities.
Use a mix of the above strategies to find a range of potentially lucrative real estate deals. Nevertheless, it’s important to note that not all distressed properties are good for investment. This is where Mashvisor’s real estate investment tools come in handy.
Sign up for a 7-day free trial to use Mashvisor tools to analyze distressed homes for sale to find the best one for you.