Are Distressed Properties Worth the Investment?

 Posted on December 00, 0000 in Commercial Real Estate

Distressed properties may come at a discount, but that savings comes at a cost. They require a great deal of time, money, and energy. Even then, there are no guarantees that the property will turn into a valuable asset. That means investors must ask themselves one very important question before purchasing distressed property: is it really worth the investment? The following can help guide your decision, and offers some strategies to improve the chances you will be able to turn your distressed property into a valuable asset.

Examining the Potential Benefits of Distressed Property

Because they are offered at a lower price, distressed properties have the potential to turn over a higher yield. That is what makes them so appealing to investors. Did you know, though, that stabilizing the property can even further multiply your profits? In addition, you may be able to increase the overall marketability of surrounding properties. If you happen to own any of them, this could further increase your propensity to turn a profit.

Are the Potential Benefits Really Worth the Risk?

Unfortunately, not all distressed properties can turn a profit. Some are sinkholes - properties that you invest so much in, they could never offer a return. If this is the only property you have in the area, it can result in significant loss. There are also no guarantees that other properties in the area can help mitigate that loss. This is why it is so critical that investors take the time to carefully weigh the pros and cons of every distressed purchase. For example, reach out to an attorney to help you with your due diligence prior to making a purchase.

Turning a Distressed Property Into a Valuable Asset

As you are working toward improving the property, you will also want to start implementing strategies that can turn a profit. Be efficient with your operations. Lower your expenses and ensure that you are getting the best vendor pricing. Increase square footage and focus on improving areas that are most likely to appeal to your buyers. Lastly, if you are planning on renting the property instead of selling it, consider raising the rent over a reasonable period of time. If you have other properties in the area, you may want to consider employing this last strategy with those as well.

Get Experienced Legal Assistance

Before you agree to purchase a property, ensure you have the guidance and experience of an attorney on your side. Contact Lindell & Tessitore, P.C. and speak to our Naperville real estate lawyers about your goals and ambitions. We can help you plan for the future. Schedule a consultation to learn more. Call us at 630-778-2818 today.

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