The term distressed generally depicts a negative scenario, but this term often conveys opportunity in the real estate industry. A distressed property represents an excellent opportunity for investors to buy at a bargain, rehabilitate a property, and diversify an investment portfolio.
There are plenty of distressed properties out there, but without experience, it can be hard to know how to find good investment opportunities. This is because many distressed properties are also off-market properties. In this blog, we’ll explore how to find off-market properties and make the most of a distressed property investment.
What is an Off-Market Distressed Property?
An off-market property is any property that has not yet been added to the Multiple Listing Service (MLS). This may include properties being held as unique “pocket properties,” which means the realtor is waiting to recruit an ideal buyer. However, this is not common for distressed property, so it’s likely off-market for another reason — perhaps the owner is not yet ready to sell or they are marketing it privately rather than publicly.
A distressed property typically refers to a home or other structure that has fallen into severe disrepair. In a best-case scenario, it may need new flooring and a new roof, but in a worst-case scenario, the foundation may need to be repoured. Homes that meet these criteria and are unlisted are considered off-market distressed properties.
Where Do You Find Distressed Property in Texas?
You can find distressed and off-market properties in Texas in several different places. The first source that many people go to is local public records. Property sale and transfer records will help you immediately identify a specific property owner. Before this step, though, you can scope out potential Texas investments the old-fashioned way—driving around, canvassing neighborhoods, and noting any properties that may be a good investment.
Benefits of Buying Off-Market Properties in Texas
Buying a distressed off-market property in Texas can be incredibly profitable, but this is hardly the only benefit of your investment. Texas is known as a generally affordable place to live and invest, so there’s a good chance you’ll be able to find some stellar deals as you start searching for your next property. Although property tax rates are higher in Texas than in many other places, the low cost of living offsets this expense and makes the Longhorn State a great place to invest in real estate.
Benefits of Selling Real Estate in Texas
After you’ve purchased a distressed property, you have your work cut out. You’ll likely need to complete a total renovation on the property, upgrading its fixtures and possibly even repairing the structure. Though once you do this, you’ll own a piece of real estate that’s ready to be flipped. There are generally two paths to profit: you can sell the property to a homeowner or investor for an immediate profit or you can establish a recurring revenue stream by renting the property. In Texas, real estate closing costs are reportedly lower than the national average, which means selling in this state can be particularly lucrative.
As in many states, Texas is full of opportunities for real estate investors. While finding distressed off-market properties can be a challenge, the affordable cost of living in Texas makes finding these properties well-worth the effort. To begin finding deals, start driving for dollars and looking into local public records. Just make sure you’re familiar with all of the Texas real estate and wholesaling laws before you strike a deal. Click here to learn more about how to operate within the boundaries of the law.