Why Distressed Properties Make Great RentalsMar 10, 2023
Distressed properties refer to properties that are in poor condition, require significant repairs or renovation, and often have been abandoned by previous owners. These properties can be a great opportunity for real estate investors to purchase at a lower price and turn them into profitable rental properties. In this blog post, we will explore why distressed properties make great rentals.
- Lower Purchase Price:
One of the primary benefits of investing in distressed properties is the lower purchase price. Because these properties are in poor condition and often require significant repairs, the sellers are usually motivated to sell quickly and at a lower price. This provides real estate investors with an opportunity to acquire properties at a lower cost, which can help increase the return on investment.
- Opportunity for Renovation:
Distressed properties provide an excellent opportunity for real estate investors to renovate and improve the property. By investing in repairs and upgrades, the property's value can increase significantly, which can lead to higher rental rates and a higher return on investment. Additionally, investors can choose to renovate the property in a way that is tailored to the rental market, making it more appealing to potential renters.
- Higher Cash Flow:
Distressed properties can provide investors with a higher cash flow than other rental properties. Because the purchase price is lower, the investor's mortgage payments and other expenses are lower, resulting in a higher monthly cash flow. Additionally, by renovating the property and increasing its value, the investor can charge higher rent, leading to a higher monthly income.
- Opportunity for Appreciation:
While distressed properties may require significant repairs and renovations, they also have the potential for significant appreciation. By renovating and improving the property, the investor can increase its value, leading to a higher appreciation rate. Additionally, if the property is located in an area with a high demand for rental properties, the value may increase further, providing the investor with even higher returns.
- Diversification of Investment Portfolio:
Investing in distressed properties can provide real estate investors with a diversified investment portfolio. By investing in properties that require significant repairs and renovations, investors can balance their portfolio with lower-priced properties that have a higher potential for growth and appreciation. This can provide investors with a more balanced and diversified investment portfolio, reducing the overall risk of their real estate investments.
Distressed properties can be an excellent investment opportunity for real estate investors looking to expand their portfolio. With lower purchase prices, the opportunity for renovation and appreciation, higher cash flow, and a diversified investment portfolio, it is easy to see why distressed properties make great rentals. While these properties may require significant repairs and renovations, the potential for higher returns and lower risk make them an attractive investment option for many investors.
As long-time investors, we have also diversified into leasing homes. House Sold Easy is likewise actively looking for homes for lease-purchase or on rent-to-own agreements.
Our lease-purchase program offers varied benefits, including a waiting list of ready tenant-buyers. We can also lease-purchase a house in as-is condition. Call us at 636-525-1566. We’ll explore more on how you can turn distressed properties into great rentals.