There are many investments that are made in real estate, most which are expected to allow the price of the property to go up. However, sometimes the value of a property starts down. With the housing market down and foreclosure on the rise, it is tempting to to jump and start buying and selling distressed properties. It is very tempting, specially with all of the infomercials about the riches to be made if you buy there 36 cd and 14 book guarantee to riches with distressed properties. Don’t get me wrong, I love real estate investing. What I don’t like to see is unprepared investors getting hurt in the real estate investment road.
I believe that right now is a good time to invest in real estate and to make money if you are well prepared for it. I think that it would be foolish for some to think that now might be a good time to invest in distressed properties, because they expect to find low hanging fruits that just anybody can pluck. I think it would be foolish to think that all distressed properties are made equal. That type of thinking is what get the inexperienced hurt in real estate investing. So prepare yourself, educate yourself about the your local market and trends, invest on some training, invest time on sites like this one and ask questions to those who have been in the trenches longer than you. There are plenty of books and websites that can teach you the basics, but beware of those that charge thousands of dollars for a “Get Rich Quick Real Estate Plan” (The ones getting rich are them, while you find out that a little bit of information – which usually you find free on sites like this one or on the internet and a lot of cheerleading is a costly combination.)
If you decide that the rehab business or “fix and flip” is your way to make money, then take a moment and study the property before you start. The first thing that should come to your mind is if a property is distressed, it means that it has not had the care and attention needed by the previous owners. Most likely, the home is part of a foreclosure, abandoned home, or other problem and may have not been lived in for a specified amount of time. Any distressed property will need a lot of attention given to it if you decide to invest in the property.
Before looking at this type of property, you will want to make sure that it will be worth your investment. While a distressed property will usually go down thousands of dollars because of the quality, it may not be cheaper. It will be expected that you put a specific amount of work and money into the home in order to repair it and get it back up to being part of the market. In other words, you need to develop an investment budget for the project.
If you are able to get an extra loan, have more money, and want to fix up a home, then a distressed property is for you. However, if you don't want to put in the extra effort, then finding this type of property may loose you money and comfort in your own home. You will also need to decide whether you will be able to profit off of the investment in the long run according to the neighborhood, market, and your intentions for using the property.
While a distressed property can benefit, it will need to fit your goals and your lifestyle in order to be an effective investment. As long as you have assessed your financial stability and goals and are able to put in the extra money, time and work, you can take a distressed property and turn it into what you want. This will give the property the dream of moving from rags to riches.
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