The Key to Success in Distressed Buying and Selling
Windowofworld.com – How to be successful in distressed buying and selling? Today, more than ever, we are bombarded with “get rich quick” schemes in the media. In the era of modern 24/7 electronics where the separation between work and pleasure is obscured by constant demands for higher and faster productivity, the allure of this so-called business opportunity with the promise of more money with less work is the modern “screaming siren. “: even the most sophisticated of us are drawn to the dream of throwing away the” rat race “for the sake of working as your own boss, making lots of money.
Today, one of the most advertised opportunities on the internet, (apparently second only to the avalanche of spam for sexual performance enhancement) is buying and selling distressed real property. Here, supposedly free foreclosure lists are marketed with the “promise” that even uninformed real estate investments can make huge profits.
If you are looking for a quick solution, click on the “Viagra” ad, because speculating on real property that is problematic, while potentially very profitable, requires more knowledge and ethical attention than advertised. So before you scream, “Take This Job and Push,” and go through the list of properties foreclosed for a “buy low, sell high” opportunity, this article will give you some practical advice for avoiding a bad investment experience with distressed real properties. potentially causing your own financial difficulties.
The first step to successfully investing in distressed real property is to understand the nature of the problem associated with ownership, use, or occupancy to distress real property. The most common problem that causes distress is foreclosure. Foreclosure involves a lien.
A lien is an interest in tangible property owned by creditors, whether consensually or non-consensually, often to guarantee the obligations of the previous owner or owner of the property. In foreclosures, holders of consensual (mortgage) or non-consensual liens (involving creditors: mechanical pawns, intermediary pawns, tax liens, municipal pawns, or judicial liens) seek to extinguish the interests of subordinate lien creditors (those with more rights low) and the rights of real property owners; and to sell actual property on a judicial sale to meet a debt that guarantees the plaintiff’s lien.
Most states, such as Illinois, require the confiscation of real property by lawsuit, with the owner and all other stakeholders being given the opportunity to be tried in court. Mortgage foreclosure laws are harsh, but generally give property owners the opportunity to reclaim the mortgage on residential property or to pay off debts that secure the mortgage, before the property is lost through a judicial sale.
Foreclosures often involve complex legal and factual issues, and this is especially the case when property owners are trying to stop foreclosures through filing a bankruptcy petition.
Many “problems”, apart from foreclosure, can cause real property to become “stressed”. Any of the following situations, some of which do not involve financial difficulties or the property owner’s creditor problems, can cause the property to become “distressed”, and thus provide a great investment opportunity for the knowledgeable investor:
(a) serious disagreements between owners of real property, including those arising from divorce or dissolution of business organizations related to real property;
(b) environmental contamination of property;
(c) unpaid real estate taxes;
(d) inability to obtain municipal authority for the use or proposed use of property;
(e) real property involved in the bankruptcy case;
(f) owner-tenant disputes;
(g) probate and inheritance issues;
(h) building, fire and other city code violations;
(i) disputes arising over the right of a non-owner to enter or use the property through a facility or license.
While the truth of “location, location, location” may apply to real property in general, the axiom for distressed property is “homework, homework, homework.” This is the second and most important step in successfully investing in distressed real properties. Investigating problem properties includes the typical “due diligence” required for non-distressed properties, plus a thorough and ongoing review of all legal, business, and financial issues that cause, complicate, or reduce property difficulties.
This investigation requires more than just gathering facts. Distressed property can involve a true minefield of complex legal and financial issues, which, at first glance, may make the purchase price attractive, but can lead to large outlays after purchase.
In all business acquisitions, a sound, fluid and flexible strategy is essential. This is especially true in acquiring distressed property because the purchase of “distressed” real property often does not involve a willing seller, at least in the initial “stress” stage. And, as investors approach the final stage of distress, when owner approval is no longer or less of a problem, or owners are more discouraged and proportionately more agreeable to the sale, competition among interested buyers increases dramatically.
Timing is very important: positions and motivations change rapidly with stressful properties. An investor in a distressed property must have the ability to complete transactions quickly, especially if there is competition for the property. To become a “player” in this arena, “Money is King”: you need immediate access to money to cover it, and you cannot postpone deals with contingent financing or engage your potential lender. This is especially true for foreclosures where the sale is an auction.
Since so many aspects of problematic properties involve technical legal issues, sharing the responsibilities of a pre-sale investigation and formulating an acquisition strategy with a competent attorney is essential to avoid pitfalls and increase the likelihood of success. Having ready access to real estate professionals who qualify as advisors is another important step to successfully investing in problematic properties, where investors must rely on qualified lawyers to assist in maneuvering through potential mining areas.
However, in this era of legal specialization, it is difficult to find a lawyer with sufficient experience in all the important areas of litigation and real estate development, bankruptcy and bankruptcy, mortgage, credit facilities, leasing, brokerage and construction law. relating to residential, commercial and industrial properties. The search for a qualified attorney is just as important as the search for eligible properties.
It is advisable to seek advice from real estate professionals, coupled with investigations of investors themselves. However, a savvy investor should not replace his own “straight” investigation, without the help of a qualified lawyer, in hopes of saving professional fees. In the end, this can lead to very costly mistakes.
So go ahead and download those foreclosure lists off the internet! There are great opportunities to buy and sell real property in a depressed economy, especially when interest rates are low and there are qualified buyers available to “flip” the property for a quick profit. And remember, with good professional help and careful investigation, the risks of investing in distressed properties can be greatly minimized with a large return on your investment.