Can you keep a secret?
My favorite type of property is a distressed property. They are properties that are short sales and foreclosures. Even better is when it is undervalued due to cheap cosmetic damage. Quick fixes allow me to experience instant equity.
What is a Distressed Property?
My definition of cosmetic damage are properties that need unskilled repairs, new flooring, paint, appliances, etc. They are cheap non-structural fixes that add instant equity into the house. It also allows me to update the house in a way that fits my taste. So for me it is an instant equity.
Now you are probably thinking, “No need to keep this a secret because, guess what Elizabeth, you are nuts! No one likes short sales and foreclosures. So good riddance!”
Well guess what, in my opinion they are the best kept secret!
Four Reasons a Distressed Property is a Smart Choice
1. Tend to Be Under Market – Because of the negatives, there is a stigma causing the property to be considerably less desirable. So if you are willing to put up with the extra paperwork and uncertainty, you can get instant appreciation.
2. Longer Time Period – Allows you to lock into a house while you are still organizing the nitty gritty. Short sales can take 3-12 months so it is plenty of time to get everything organized.
3. Impartial Party – Since you are dealing with a bank, all they care about is their bottom line.
4. Slow – This can be an issue for some. For many, if planning properly, it can be an added bonus. For someone with a move 6+ months out then it is the perfect way to have a house under contract without having to close within 30-60 days. For an investor, it allows you to lock your property in without having to extend funds within that same time frame.
Foreclosures and short sales can also be a pain in the tush because of the paperwork and the fact that they can fall through. The fact is that they have made me lots of money for just dealing with paperwork. As a young, budding investor, time is not always money in the case of offering writing.
Short sale waiting is just butt time. It is just waiting for time, not actually work. So if time is not money in the sense of quickness, give the extra look, starting looking at houses earlier than normal, and don’t exclude this awesome distressed property type.3