How To Find Distressed Properties That Are Below Market Value In 2024

Are you a real estate investor looking to stay ahead of the competition? If so, investing in distressed properties is a great way to acquire long-term profitable investments.

Distressed properties can be much cheaper than those on the market, and savvy investors know that there are numerous advantages to investing in this type of property.

However, knowing how to find distressed properties isn't always easy, so that's why I am here. This blog post will cover useful tips for finding the right distressed properties for your portfolio and discuss their benefits.

So, real estate investors and wholesalers, read everything and buy your first distressed home. 

What Does A Distressed Property Look Like?

As property owners, seeing a once beautiful home now in disrepair can be disheartening. Broken windows, overgrown grass, and potential vandalism often characterize a distressed property.

It's not uncommon to come across a possible vacant property with boarded-up windows and overgrown bushes.

It's important to remember that these properties can impact the surrounding community, often bringing down property values.

However, with the right real estate tools and resources, distressed properties can be revitalized, bringing new life to the neighborhood and creating a positive impact for everyone involved.

So if you want to buy houses to kickstart your real estate investing career, or you're looking for a revitalization project to give back to your community, this blog post will help you.

The Step By Step Process For Finding distressed properties

When investing or buying a fixer-upper, it's important to identify distressed properties with the most potential for a good return on your investment. Here are the steps you should follow:

1. Drive For Dollars

One of the best ways to start the search is by hitting the road and "Driving for Dollars."

By driving through neighborhoods and jotting down the addresses of distressed homes, you'll have a targeted list of potential properties to investigate further. But how do you get property details on those homes?

It's all about researching and utilizing resources like online databases and local government offices.

You can also use a real estate app such as Deal Machine, which will allow you to search for property records and contact information at the click of a button.

It takes care of most of the work by finding the property owner and allowing you to send out mail to the potentially motivated sellers.

With some legwork and determination, you can uncover valuable distressed properties and turn them into profitable investments. So grab a pen and paper, hop in your car, and get ready to find some diamonds in the rough.

2. Leverage Your Network

One of the best ways to find distressed properties is to leverage your network. Talk to your real estate agent and tell them exactly what you're looking for.

They might have some off-market properties that aren't on the multiple listing service and fit your requirements. Additionally, reach out to other investors in your area. They could have leads on properties that might not be public yet.

Building relationships and networking will set you up for success in finding your next investment property. Don't underestimate the power of your connections.  They could be the key to finding your next diamond in the rough.

3. Real Estate Wholesalers

Another way to locate distressed properties is by working with a wholesaler who understands your investment strategy.

Real estate wholesalers are professionals who have a specialize skill in finding properties that need work and connecting them with investors.

Utilizing their services has a few benefits: saving time on the search, getting access to properties before they hit the market, and negotiating more favorable terms with the seller. 

4. Distressed Property Websites

If you're searching for a great deal on a property, your search just got much easier, thanks to the internet. In fact, finding distressed properties for sale is a breeze when you search online.

Several websites are dedicated to helping you track down these types of properties, and they offer a variety of search filters to help you narrow down your results to exactly what you're looking for.

Some of the websites you can try are associated with Fannie Mae, REO properties, and other bank or government agency-owned sites.

Lastly, you can check on foreclosure sites or view expired listings. From foreclosures to short sales and everything in between, these sites make it easy to find distressed properties in your area. 

So if you're ready to start your real estate search, don't overlook the power of searching online. You never know what hidden gems you might uncover.

5. County Tax Records

When it comes to finding distressed properties, county tax records can be an invaluable resource.

With some research, you can discover properties that have fallen behind on their property taxes, making them potential candidates for foreclosure or sale.

County tax records contain valuable information, including the name and address of the owner, the amount of delinquent taxes owed, and even the property's assessed value. By delving into these records, you can gain a competitive advantage by identifying properties before they hit the open market.

So if you're serious about investing in distressed properties, make sure you spend some time researching county tax records to uncover hidden gems that others may overlook.

6. Use Real Estate Wholesaling Software

If you're a real estate investor looking for distressed properties, you might want to consider using real estate wholesaling software.

This software can provide you with a database of distressed properties and their owners. With this information, you can contact property owners and negotiate a deal. The software can also help you find potential buyers for the property.

Some of the features you can expect from this software include lead generation, deal management, and marketing tools. Using real estate wholesaling software can save you time and energy and help you find the best deals on distressed properties.

So if you're a real estate investor looking to expand your portfolio, try this software and see how it can help you find your next distressed property.

7. Court Records

If you're in the market for a new property, searching public court records is one hidden gem for finding potentially distressed properties.

While this may seem daunting, searching for foreclosed property can result in a lucrative investment. Public court records provide insight into various legal proceedings, including foreclosures, divorces, and bankruptcies, where properties may be at risk of being seized or sold.

By doing your due diligence and researching these records, you may find properties needing immediate attention and investment opportunities that may not be available through traditional avenues.

So, don't overlook the power of public court records in your search for a new investment property.

8. Talk To Out-Of-State Owners

Are you searching for distressed properties? Then, talking to out-of-state owners should be on your to-do list.

The term absentee owner refers to someone who owns a rental property but doesn't live in that particular state.

These owners are usually harder to reach, which makes them less likely to fix their property issues. When you speak to an out-of-state owner, you'll likely find many distressed properties because they have probably neglected their property.

Persuade them with informative and approachable communication that you will be responsible for maintaining and fixing the property. This way, you can use the opportunity to purchase and improve the property.

So start making calls today, and make sure your persuasive tone gives out-of-state owners a reason to sell their distressed properties to you.

9. Explore Probate and Pre-Foreclosure Listings

If you're looking for a good deal on a property, exploring pre-foreclosure and probate listings might be just what you need.

Pre-foreclosures occur when the homeowner is behind on mortgage payments, and the lender has initiated foreclosure proceedings. These properties often sell for lower than market value as the owner is motivated to sell quickly.

Probate listings, on the other hand, are properties that have been left behind due to a death in the family, and these can also be obtained at a discounted price.

You can find pre-foreclosure and probate listings by checking with your local county courthouse or using online resources.

It's essential to carefully review each property's details before making an offer, but with a little extra effort, you may be able to find a diamond in the rough.

10. Send Direct Mail Campaigns

Another effective strategy is to send out direct mail campaigns to the owners of potentially distressed properties. It's important to research owner details and targets those who are likely motivated sellers.

You can increase your chances of finding great investment opportunities. Rather than waiting for these properties to hit the market, take a proactive approach and reach out directly to the owners.

Not only does this give you a head start, but it also allows you to build relationships with potential sellers and gain insider knowledge of upcoming opportunities.

With a targeted direct mail campaign, you can find the perfect distressed property and set yourself up for success in the real estate market.

11. The MLS

the MLS may be the place to start your hunt. The MLS, or Multiple Listing Service, is a database of properties listed by local real estate agents.

Many real estate agents have access to this database, giving them an advantage in finding properties that aren't always available to the general public.

If you don't have a real estate license, working with a local agent can be a great way to gain access to the MLS and start searching for distressed properties.

Whether you're a first-time real e investor or a seasoned pro, a knowledgeable agent can help guide you through the process of finding your next property investment.

12. Attend Real Estate Auctions

If you're in the market for a distressed real estate property, attending real estate auctions is a solid route to take.

Auctions offer a unique opportunity to buy REO properties [Real estate owned], homes that have been foreclosed on and are now owned by the bank.

These homes often need work and can be sold for a fraction of their value. But don't be fooled. Attending real estate auctions can be a competitive game - you will need to do your research beforehand.

Knowing the true value of a property, sticking to your budget, and not getting caught up in bidding wars are just a few things to keep in mind. Nonetheless, with some effort, attending real estate auctions can be an effective strategy to find the perfect distressed property.

13. Short Sales

Another strategy is to focus on short sales when it comes to finding a torn-down home. This is when a homeowner with delinquent mortgage payments sells their property for less than what is owed on the mortgage.

While it can be lengthy to purchase a short-sale property, it's often a win-win for the distressed homeowners and the buyer. The foreclosure process can be costly and damaging to credit scores, so a short sale can help homeowners avoid that scenario.

And for buyers, short sales can lead to substantial savings on a property. It's important to note that a short sale requires the lender's approval, but with due diligence and patience, it can be worthwhile for those looking to invest in distressed properties.

Tips On How To Buy Distressed Properties After Your Search

Now that you know how to find distressed properties online and offline, it's time to learn how to review property details to make a smart purchase.

What Are The Pros And Cons Of Buying A Distressed Property?

Pros

One of the biggest pros of buying a distressed property is that you can potentially make more money from your investment.

Since these homes are typically sold at a discount, you can buy low and possibly sell high. Also, if you plan to fix up the property yourself, there can be substantial long-term savings from not having to hire contractors.

You can then easily work with a licensed real estate agent who can help you sell to home buyers with cash on hand.

• Positive Impact on the Community
• Diversification for Your Investment Portfolio
• Property Appreciation

Cons

Some negatives of buying distressed property include the potential cost of repairs. It's important to factor in the cost and time needed for renovations when you're evaluating a property.

Even if a home looks like it needs only minor work, problems can arise once you start digging in that aren't visible on the surface.

There is also the possibility of dealing with liens or other multiple notices that were not factored in. That is why speaking with the property owner or whoever is in charge of the home is important.

• Costly Renovations
• Legal and Regulatory Issues

Final Thoughts

It requires much research and understanding whether you purchase foreclosed homes, distressed properties, or short sales.

But if you do your due diligence and understand the risks associated with distressed property investment, it can pay off in the long run.

With patience, dedication, and solid planning skills, purchasing distressed properties can be a great way to build wealth through real estate investments.

Of all the business ideas I talk about, fixing up a distressed home and turning it into a rental property or a flip is among the most rewarding.

FAQ:

How To Qualify Distressed Properties?

If you're looking to buy distressed properties, knowing how to qualify them is key. The first step is to run the numbers.

This means looking at the property's condition, the cost of repairs, and the potential resale value after those repairs are made. Researching the neighborhood, the local real estate market and the property's history is also important.

In many cases, distressed properties are in foreclosure due to delinquent mortgage payments, so you'll need to get familiar with the foreclosure process in your area.

In short, qualifying distressed properties takes time and effort, but with careful research and analysis, you can unlock the potential for some great real estate deals.

Are Distressed Properties Worth It?

Buying distressed properties can be smart for real estate investors looking to snag a deal. While these properties may require fixing, they often have a much lower price tag than non-distressed ones.

In fact, many investors swear by the strategy of buying low and selling high after making some renovations. Of course, it's important to do your research first. Just because a property is distressed doesn't necessarily mean it's a good buy.

Look at recent sale prices for similar properties in the same area and factor in any needed repairs or renovations when deciding whether a property is worth it. But distressed properties can be a gold mine for those willing to put in the effort.

What apps are good for distressed properties?

Some of the best apps for finding distressed homes are:

• Deal Machine
• Carrot
• PropStream

With these AI apps, you can easily find property owner contact information, track properties in foreclosure, and more.

You can also use them to find deals that may be worth investing in quickly. With these tools, you can start building your portfolio of distressed properties in no time.

What is an example of a distressed property?

A distressed property is a type of real estate that needs repairs or hasn't been maintained properly, often resulting in a low selling price.

Foreclosed homes are a common example of distressed properties. They are residential properties that a lender has taken over after the previous owner failed to make payments on their mortgage.

These properties may require significant repairs or renovations, but with some elbow grease and some investment, you can turn a distressed property into a valuable asset.

It's important to do your due diligence before purchasing a distressed property to make sure you have a good understanding of the potential costs and to ensure the property is worth the investment.