We’ve all seen distressed properties on our drive to work. The signs are unmistakable – A rundown home with a tarp on its roof, an overgrown lawn, boarded up windows. Many of these properties are vacant because they’re uninhabitable, which exacerbates the lack of maintenance. Like a vicious cycle, the condition of the property goes from bad to worse. There’s one such home I pass by everyday – It has vines growing on the side of the house that have now reached the roof!
For owners of such properties, dealing with them is a significant hassle. The properties can’t be sold in the retail market because banks won’t lend money to buyers interested in them. The properties can’t be rented in as-is condition either. However, if there is a mortgage on the property, that still has to be paid. The taxes and insurance still need to be paid. Sometimes, the county issues citations to force the property owner to bring the property into a habitable state. For property owners, this can be an emotional and financial strain.
In case you own a property like this, here are three conventional ways + 3 creative ways of dealing with it.
3 Conventional ways
Sell it ‘As – is’
If the emotional drain is significant and you would rather get out of the property, consider selling it ‘As is’ to a house flipper. You won’t get top dollar if you do this, but this will stem the money drain and grant immediate relief. You usually get your money within a couple of weeks, and the problem property is off your hands.
No matter what your friendly realtor told you, you can always list your property ‘As is.’ This way, you market your property to potential house flippers looking for such properties on the MLS. You will need a specialist Realtor to help you with this. Finding a buyer this way may take longer, and the commissions are typically higher. When done right, this can be a good option to have as a back-up.
Rehab the property
If you have the money to rehabilitate the property, consider doing it. If you have a reliable contractor, this option can be a good one to explore. After the rehab, you will be able to attract retail buyers who will be able to buy your property at market price. A potential downside is that holding periods can be long (sometimes six months), and the holding costs can eat into the potential profits faster than I can say “Boo!”
3 Creative ways
Rehab & List
This is an option we’ve put together, and we don’t know anyone in the marketplace who offers this. We will rehab the property at OUR expense and list your property. We charge 0% interest, and you don’t have to make any down-payment. We collect our money when the property is sold. This option gives you the highest value for your property without the heartache of the rehab. It’s like the best of both worlds (price and convenience).
You can even sell your home with owner financing. Even if you have an existing mortgage, the new deal can be structured around it. You can get cash for your equity now, and the mortgage can stay in place. The advantage of this option is that the closing is usually faster, and you get a better price for your property in ‘As is’ condition.
You can lease your home to a tenant-buyer with the option for him to buy it at a later date. You would not be responsible for the repairs, and the tenant-buyer would take full responsibility for them. Until the day he decides to buy, you would continue to collect the rent and gain the tax advantages of property ownership. Sometimes you can even negotiate a hefty down-payment towards the purchase price.
Each deal is unique. You should connect with a specialist to review which of these six options is a good fit for you based on a combination of your requirements + your property.
Graystone Investment Group
Graystone is an experienced Investment Group in the Greater Tampa Bay market. Our company is designed to help new and seasoned investors.
If you’re ready to dive into the real estate market, contact us. Whether the type of real estate investing you want to do is wholesaling, buy-and-hold, commercial investment, or fix-and-flips, we can help.
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