When a property is in very good to excellent condition, it can be difficult to know what to charge for the property.
If the property looks clean and fresh, then charge little or no fees. If the property looks old and rundown, then charge a fair amount of money to restore it to its former self.
It’s your decision on how much you charge, but remember that you are being charged for your time and resources spent on the property. A reasonable fee would be $500-$800 per item restored.
The second half of this article talks about assessing how much distress a property is in so you can determine if any repairs can be made for free or at little cost.
Contents of a contract for sale
A contract for sale is a legal document that binds both the buyer and the seller. It sets forth the terms of a transaction, including price, terms, layout, and restrictions.
Most contracts for sale have a list of down payments and deadline to complete this transaction. This helps with two reasons: One is to verify ownership and the other is to help with financing if needed.
The ownership must take full responsibility for completing this transaction, which includes paying for the property and obtaining any necessary permits. In order to legally transfer ownership, both parties must also obtain an attorney or judge’s approval.
This article will talk about some common distress properties that are good for investors or sellers.
Definitions of bankruptcy and default
Bankruptcy and default are both legal concepts. While it does not affect your property’s value, having these terms defined can help explain what actions mean and can be a big help inunderstanding whether a property is in distress.
The effects of bankruptcy on a property sale
After a period of disuse or abandonment, property can gain value. This is called re-saleable condition.
If you are looking to buy a property in poor condition, don’t worry! There are still many happy buyers out there. In fact, after the 2008 financial crisis, there was a drastic decrease in the number of buyers, but not sellers.
Now, more than ever, you can gain exposure to your target market by selling in poor condition. Even with very low sales numbers, you will be compensated for your work because of the difficulty in acquiring property in this market sector.
When investing in real estate, it is important to understand the effects that bankruptcy and other conditions have on property value and valueability. Knowing these details will help you successfully market and sell your property.
Before signing a contract, know your options
There are many ways to re-develop a property. Some options include baking powder mountains, converting buildings into housing units, and creating business operations. While none of these solutions are negligible in the community, they can be difficult to navigate and understand.
Baking powder mountains are large plots of land that are re-developed into a new development. These can look beautiful, but are usually not financially sound as they require significant capital to complete.
Converting properties into housing units is an option that some see as a solution to property inequality. However, this can be very expensive as new construction often requires new taxes paid on old land assets.
Creating new operations such as a retail mall or business center is also possible and cost effective.
Consider getting a second opinion from an expert
Before making any changes to a property or area that is in distress, the seller or owner should seek out professional advice. Using your own thoughts and/or tips for remedial action may result in poor quality property or area, which would not be appropriate for the investor market.
As part of the advice-giving process, the seller or owner should listen to what they have to say and possibly agree with before coming up with solutions.
Having the ability and willingness to get second and even third opinions is important as it can help determine whether or not a property is worth investing in or whether there are issues that need to be addressed before anything can be sold.
It also protects the investor from making a bad decision based on input from someone who did not value the property enough.
Research the property history and records
Even if a property is only recently distressed, it is still important to research the property history and records for this information to help determine if the property is in need of additional investment or change.
This helps determine if the property has any prior investments, insurance claims, etc. that can contribute to a higher value today. It also helps determine whether or not the property has any previous owners who might have contributed to its distress or what they might have brought to its value.
In order for a buyer to see what contributions were made, they would need to purchase those records.
Inspect the property closely before purchase
When it comes to investments, there are things you need to look for when it comes to the property you are investing in. It is not a casual ride into the property hood so term we do this type of work, we make sure that we inspect the property thoroughly and that we find all of the necessary details to make this a quality investment.
It is important to note that at-least-slightly-demolished properties do not qualify as good investments. While these types of properties can be fun to own, they are more of a transient thing (until next buying season rolls around).
When it comes to finding a distressed property, there are several things that should be looked for. Firstly, find a large enough buyout or price cut.
Know what to look for during a walk-through
When a property is beginning to show signs of distress, it is important to pay attention. These signs can be things that require repair or improvements, such as water damage or stains, and modifications to the property.
Some of these signs are easier to spot than others. For example, a rundown building with poor design might look worse-off than a more contemporary one. Or one owner may have modified a property well, while another did not apply enough care.
When deciding what to focus on during a walk-through, know what you want to see and why you should come for a visit. A well-taken picture of the property at closing can help investors make an informed decision on whether or not they want to invest in the property.