The Obviously Distressed Property
Every real estate investor and Realtor has a story about a distressed property that was in such disastrous condition that they puzzled over how people could live there. Grease encrusted kitchens, trash all over the place, grimy walls, holes in the plaster. Usually houses like this are full of stuff. Lots and lots of stuff. Everywhere.
Even at a bargain price, can these homes be good investments? How can you turn a profit with a house that looks like it was featured on Hoarders? Shouldn’t it just be bought as a knockdown, and start over with new construction?
Investors look for the structure of a house, the bones, to see if it is a viable option for investing. When a house is structurally sound, with good foundation, roof, walls, and no problems with mold or infestation, an investor can make a profit with a well planned clean out and restoration.
Anyone who buys a fixer upper needs to have their numbers well planned. Know what it costs to clean, redo the kitchen and bath, and make necessary repairs. Work with a reliable contractor and a realtor who will market the property to your advantage. And know just what you are buying – behind the dirt, grease, and garbage, is the house in a good area? Can it be desirable to buyers at a profit?
Does the home need electrical and plumbing repairs? How extensive will these be? Are there leaks in the roof, cracks in the foundation? What actually needs to be replaced, and does it fit in your budget? How is the furnace, the cooling system, the driveway and walkway? Will you need to replace the boiler, the water heater, or have new walkways or driveways installed? Know your budget, know your market, and know the difference between a great opportunity and a money pit.
Sometimes the turnaround from hoarder hovel to beautiful home can be quite dramatic, ever with just a cleanout, a paint job, and new counters, cabinets, appliances, and bathrooms. Partnering with a Realtor who is experienced in marketing distressed properties is always essential. A Realtor with the CDPE designation (Certified Distressed Property Expert, from the Distressed Property Institute) has special training, experience, knowledge, and skills suited to the challenges of selling distressed property. An experienced investor can turn a truly distressed property into a home anyone can be proud of, and make a profit.
Rehabbing distressed properties is one way of making money that requires working smarter – and working hard. Develop a solid working relationship with workmen who can get the job done on your timetable and a realtor who is experienced at aggressively marketing and selling homes in the area, and you may find that you reach your payday sooner that anyone thought, including you. And no one will believe that the house you sell was once the junker that was the talk of the neighborhood.