Why Distressed Properties

[Xavier Mc holder]

Good Afternoon everyone,

I would like to pick the minds of the many investors on BP as to why an investor might find more reward in purchasing distressed properties like the many that can be found in Philadelphia “philly”, Baltimore or Newark as opposed to a foreclosed property or one that would need little to no repairs?

My thoughts are that because of the low purchase price investors are enticed. I have seen REO properties in these areas for as little as $16,000 but, the repairs needed to bring the property up to par to either hold the property for cash flow or sale is extensive. Have any of you done or went through this on your first investment? Would you recommend this to others as a first investment? What was your experience?

[Shawn Washington]

Hi Xavier, 

I purchase many of my properties in distressed areas. I can usually find good deals where the numbers work for my buy and hold requirements. I work with a team of contractors that give me good prices where I can keep my rehab cost down. Keep in mind that many of the popular/expensive neighborhoods in Philly were once distressed. This gives me the opportunity to invest early and make money while waiting for the neighborhood to turn over. This doesn't work for everyone but it has worked great for me over the years. You'll have to figure out what works for you.