Purchasing distressed property from banks or other institutions is quite similar to purchasing any other real estate. However, if you want to buy a distressed property, then here is a simple and quick guide for you.
Finding a Distressed Property
All distressed properties are not created the same. Thus, it is essential to find the property you are looking for, take time to assess the property, and when you are satisfied with it, you can put out an offer to the seller.
Finding a distressed property isn’t easy; however, you can find a suitable one with a little bit of research.
Making an Offer
While buying a distressed property, it is important to offer not too much and not too little but make the right offer. You can analyze the entire property and what its assets and downfalls are. You can then make an offer based on your results and explain it to the bank or the decision-maker as to how you have arrived at the price.
Some points you should keep in mind while negotiating:
· Have proper information about how you can make an offer
· Explain your offer
· Show your ability to pay
· Minimize any contingency
Don’t Forget Due-Diligence
No matter the property type, due-diligence is always vital. Especially when purchasing a distressed property, due-diligence will help you find any loopholes in the property, and it can help you avoid big losses later on. A proper due-diligence will also help you in offering the right price for any distressed property.
It is important to verify the condition and occupancy of the property. In the case of private sellers, you can check paces for bankruptcy and also perform title due-diligence.
Spending some time in a due-diligence will is always a good idea as it allows you to make a better investment choice.
Funding the Property
Once your offer is accepted, you have to think about the funding process. Although there are various options, you can choose what’s best for you. However, you cannot take a traditional mortgage loan if the property needs a lot of repairs.
Some financing options that you can choose from are as follows:
Credit lines – If you are a note buyer, you can use your credit lines for acquisitions.
Hard money – You can get hard money for the short-term, and lenders lend the money on the basis of your merit and not the credit score.
Once you find a suitable property, make sure to carry out due diligence and offer a price that is suitable for the property and can be a great investment for you.