I believe it is a larger issue than what we define as the economy, which is mostly measured in corporate profits and Wall Street performance, this is not what the average person perceives.

With a passion for finding undervalued properties and transforming them into profitable assets, they are eager to learn, grow, and build a successful real estate portfolio.

If you catch these at the pre-foreclosure stage as slow pays or initially in default all the better as the bank has less in collection expense.You can still work out a discount but even buying at the payoff it can be profitable depending on the property value.You can practically force a lender to sell as it can fully indemnify them as a full payoff as demanded, continuing with a foreclosure becomes a rather vengeful act by the bank to punish a borrower, they don't want to go there.

Currently own a STR thats been profitable for almost 3 years now and in the midst of a Live-in Flip.

small profit Lessons learned?

For traditional loans that rely on personal income and DTI (Conv, govt), there is no requirement that the properties be profitable.

I also do consulting from time to time to share how leverage and build a profitable holding company or fix/flip entity.

In an oversimplified view, revenue of $1,000 and expenses of $1,000 offset to $0 and you made no profit...yet.

.: Quote from @Theo Hicks: In ideal conditions:Pref equity receives higher ongoing distributions but no profits at saleCommon equity receives lower distribution and profit at sale (assuming their is cash flow left over after pref equity is paid and assuming their is profit at sale.In non-ideal conditionsPref equity may receive ongoing distributions less than pref, or no ongoing distributions at all, but the pref accrues.

So there is no discount or profit to be made.