If you’re looking for a property to invest in, you may consider distressed properties. These properties offer the opportunity for an investor to purchase real estate at a reasonable price with less competition. Before you start searching for distressed properties in Las Vegas, take the time to understand what they are.
Definition of a Distressed Property
A distressed property is one that is nearing foreclosure or has already been foreclosed and is now owned by the lender. Because the owner didn’t have the funds to make the mortgage payments, they also probably couldn’t afford the upkeep on the house. Distressed properties often need repairs or updates to make them appealing to regular buyers. These homes sell for less than other properties in the same neighborhood, making them an attractive investment for an investor.
Types of Distressed Properties
There are three main types of distressed properties. They are based on where the property is at in the foreclosure process.
Foreclosures
These are properties that are either in active foreclosure or are being sold at a foreclosure sale. The property owner is given notice by the bank after falling behind on their mortgage payments. The lender sets a time for the home to be sold through an auction or foreclosure sale. Investors can attend those sales and purchase the property.
Real Estate Owned (REO) Properties
These are properties that the bank or mortgage company owns after foreclosure. They have gone through the sale process, and no one bought the property. Lenders don’t want to keep these properties, so they will sell to interested parties as long as they have the funding. Often, the lender will accept a lower offer because they don’t want to maintain the property.
Short Sales
While homeowners are in the foreclosure process, they have the right to sell the home before the bank takes ownership. This sale is known as a short sale because they sell the home for less than the amount owed to the bank. The lender must agree to a short sale for the transaction to occur. The homeowner can avoid having a foreclosure on their record and the buyer gets a good deal on the property.
Why Buy a Distressed Property?
Distressed properties appeal to investors because of the lower price and less competition. Traditional buyers are less interested because many of these properties won’t qualify for a traditional loan. The buyers don’t have the funds to pay cash, so they must find a lender who will approve a loan on a property that doesn’t meet certain requirements.
Real estate investors usually take one of two routes with distressed properties. They will fix the place and maintain it as a rental property. The other option is to make the repairs and renovations and sell it at a higher price. Either way, the investor makes money on these properties.
If you want to invest in distressed properties around Las Vegas, contact LV Asset Holdings. We can provide a list of available properties that meet your criteria. You can get the list for free when you contact us online.