How to Find Distressed Properties to Invest in

When it comes to real estate investing for beginners, buying distressed properties for sale is something worth considering.

Generally, a distressed property is a home where the owner is unable to keep up with the physical or financial costs of owning the property. Quite often, such properties are at risk of foreclosure due to unpaid tax liens, utilities, or mortgage payments.

Distressed homes for sale can be grouped in five main categories:

Bank repossession houses for sale
HUD homes
Pre-foreclosure and foreclosed property for sale
Vacant or abandoned places for sale
Short sale properties

Benefits of investing in distressed properties

Before we look at how to find distressed properties online and offline, let us consider the three main advantages of investing in distressed homes:

Lower price – Usually, banks and owners of properties at risk of foreclosure are eager to get rid of these homes as fast as possible. As a result, they are frequently willing to sell the properties at a price below market value. Investors can take advantage of this during the negotiation process when buying a house for sale by owner.
Potential for high ROI – When you buy a distressed home below market value and renovate it, you can get good return on investment from rental income. In addition, the value of the property will keep appreciating over time.
Multiple financing options – Since lenders and banks are motivated to sell distressed properties, they are willing to provide financing to investors. You might also end up paying lower interest rates and closing costs.

How to find distressed properties for sale

Here are the 5 best ways to find distressed properties for sale:

1. Driving for dollars

As the name suggests, this strategy for how to find distressed properties involves driving or walking around a neighborhood to locate homes. Here are some of the tell-tale signs of a distressed home:

Overgrown grass
Peeling paint
Notices on the front door
Boarded up doors or windows
Broken rain gutters and shudders
Damaged roof
Unkempt lawns
Caution tape on some sections of the home
Cardboard or taps over windows
Uncollected mail or newspapers

Wondering how to find out who owns a house? Simply note down the address and visit your local county offices or website. You should be able to find out more details about the property, including the name and contact details of the owner. Alternatively, you can use the Mashboard to get various homeowner data in the US housing market.

2. Real estate auctions

How to Find Distressed Properties: Real Estata Auctions

You can find distressed properties at real estate auctions

Though buying property at auction is riskier compared to buying through the traditional process, it is an opportunity to get a great real estate deal. All you need to do is to learn as much as possible about how real estate auctions work. Such auctions fall under 3 main categories: absolute action, minimum bid auction, and reserve action. With online real estate auctions, you will be required to pay fees like buyer’s premium, transfer fees, technology fee, auction service fee, and earnest money.

You can find auction listings from Craigslist, newspapers, real estate agents, banks and lenders, lawyers,and accountants. In addition, you can check auction sites such as Hubzu, Auction.com, Foreclosure.com, RealtyBid.com, Bid4assets.com, and Concierge uActions.

3. Government agencies

Different government agencies foreclose on homes every day. The Federal Housing Administration (FHA), the Department of Veteran Affairs (VA), and the Department of Housing and Urban Development (HUD) foreclose on property owners who have defaulted on their mortgages. The IRS repossesses properties for unpaid debt. You can also find foreclosure lists from the Drug and Enforcement Administration (DEA).

Here are some of the sites where you can find government foreclosure lists:

HUD – HUDHomeStore.com
IRS – Treasury.gov
FDIC – FDIC.gov
Army Corps – Disposal.GSA.gov
Fannie Mae and Freddie Mac – HomeSteps.com and HomePath.com

4. County records

County records can give you a good clue about distressed properties in your neighborhood. You can start by looking at the delinquent tax records. If a property owner cannot pay his/her taxes, there is a high possibility that he/she is behind on his/her mortgage payments as well. As a result, he/she is a potential distressed property owner.

Next, visit the local municipality’s building department or health department to get a list of homes subject to code violations. Some of these violations can be minor or major enough to warrant the condemnation of a building.

5. The Mashvisor online marketplace

You cannot talk about how to find distressed properties without mentioning Mashvisor. Mashvisor is a popular real estate website that helps investors find and analyze investment properties all over the US housing market. It uses big data and predictive analytics to help you make informed real estate investment decisions. When you sign up, you will have access to many real estate investment tools including the Mashboard, the Investment Property Calculator, the Property Finder, the Real Estate Heatmap and the Mashvisor Property Marketplace.

To get access to our real estate investment tools, click here to sign up for Mashvisor today and enjoy 15% off.

The Mashvisor Property Marketplace is the ultimate tool for finding off market properties for sale. The massive database includes properties like tenant-occupied rentals, short sales, auctioned homes, and foreclosures properties for sale. You can sift through the numerous listings using the following filters:

Location
Miles from location
Budget
Rental strategy (traditional or Airbnb)
Property type (single family home, condo, multi family home, apartment, etc.)
Number of bedrooms
Number of bathrooms
Desired cap rate
Desired cash on cash return

To learn more about how we will help you make faster and smarter real estate investment decisions, click here.

The names and contact details of property owners are readily provided on this platform. Moreover, the good news is that Mashvisor not only helps you find houses, but also helps you analyze the profitability potential of an investment property for sale. Once you’ve narrowed down your options on the Mashvisor Property Marketplace, you can then analyze it using the rental property calculator. To access the calculator, simply click on the listing you want to analyze. You could also enter the address of any home in the US residential market that you’ve found through any other method and use this tool to analyze its profitability potential. The rental property calculator will estimate:

Property price
Recurring monthly expenses
One-time startup costs
Traditional and Airbnb occupancy rate
Traditional and Airbnb cash flow
Traditional and Airbnb rental income
Traditional and Airbnb cash on cash return
Traditional and Airbnb cap rate

The estimations are based on actual real estate data obtained from Airbnb, Zillow, and the multiple listing service (MLS). Once you are done with all the analysis, you can download a PDF report that carries all this data.

To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.

Conclusion

With this investor’s guide, finding a distressed property that fits your criteria should not be difficult. Be sure to leverage the machine-learning real estate investment software of Mashvisor to make the right choice.

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How to Find Distressed Properties to Invest in: 5 Ways