How to Invest in a Distressed Property
Updated: Feb 16, 2019
There are many ways one can invest in real estate, one of them being flipping houses for a profit. For seven years, Transforming Property Solutions has purchased distressed homes to renovate in Central Florida and surrounding regions. In this time, Al Gibbons – CEO of Transforming Property Solutions – has learned and perfected the art of this branch of real estate investing. According to Gibbons, “It is very different from house flipping shows, the process of buying and renovating a house can be lengthy and difficult. However, it doesn’t have to be.” With his years of experience, he shares some tips on how to successfully find homes to flip for a profit.
The first step is finding a distressed property. One can find slow selling homes in real estate websites. Yet the prices for these properties might not yield an ideally profitable renovation, and might even turn into a loss. The best way to find distressed homes is by consulting with banks and financial institutions, as well as government-owned foreclosed properties, which are usually auctioned.
Once you have begun the search for the property you will flip, make sure to spot red flags. The most important thing to remember is that the cheapest house isn’t always the best. Before you visit a potential rehab property, research the average price per square foot of other homes sold nearby and the potential selling price of the house once it’s been restored. Take into consideration all the renovations that will have to be made, the estimated cost of each and how it affects the profitability of the home. Remember there is always room for change in your estimates, so make wise, budget-friendly decisions when picking a property.
There will always be unexpected expenses when flipping houses. Budgeting for these is crucial to not spend more money than initially planned. To avoid encountering any unforeseen problems with the property it is important to have a professional thoroughly inspect every aspect of the house to uncover any problems. If it is in good shape for a profitable renovation, you can get started right away.