Buying from banks or institutions is just like buying any other real estate. But if you want to buy a distressed property then here is a simple and quick guide for you.
Finding a Distressed Property
Not all distressed properties are the same. So find the property you want, take time to look at the property and when you are happy with it then put in an offer to the seller.
Finding a distressed property is not easy; but you can find one with a little research.
Making an Offer
When buying a distressed property you should not offer too much and not too little but the right offer. You can look at the whole property and what are its assets and downfalls. You can then offer based on your findings and explain to the bank or the decision maker how you arrived at the price.
Remember to:
· Have all the information to make an offer
· Explain your offer
· Show you can pay
· Minimize any contingencies
Don’t Forget Due-Diligence
Regardless of property type due diligence is always important. Especially when buying a distressed property due diligence will help you find any defects in the property and will help you avoid big losses later on. A proper due diligence will also help you in pricing any distressed property right.
Verify the condition and occupancy of the property. For private sellers you can check for bankruptcy and do title due-diligence.
Spending some time in due diligence is always a good idea as it will give you a better investment choice.
Funding the Property
Once your offer is accepted you have to think about the funding process. Although there are many options you can choose what’s best for you. But you can’t get a traditional mortgage if the property needs a lot of repairs.
Some of the options are:
Credit lines – If you are a note buyer you can use your credit lines for acquisitions.
Hard money – You can get hard money for short term and lenders lend money based on your merit not credit score.
Once you find a property, make sure to do due diligence and offer a price that’s right for the property and for you.
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