Key Highlights
- Many real estate professionals believe distressed properties are and will become increasingly available to investors due to COVID-economy
- This post looks into advantages of buying distressed properties, evaluating distressed properties and how to find them
The COVID pandemic and its resulting economy have turned the world inside out. Here in the US, our country has the very unwelcome distinction of having the most coronavirus cases in the world. Our economy has tanked; our unemployment rates are on a par with those of the Great Depression; our daily work and personal lives are upside down.
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Some economists and investors believe that the housing market will lead our country out of the current COVID-recession as people still need places to live. Still other economists/investors believe now is the perfect time to look at all properties, residential, commercial and distressed, as opportunities for investment.
Adam Gower, Ph.D. is one of those investors as well as the founder of GowerCrowd.com that specializes in digital real estate syndication. Gower believes there will be thousands of distressed properties becoming available as many property owners become unable to pay those properties’ expenses, be those expenses mortgage payments, taxes, DTL ratios, overhead and/or updating, physical/contamination damage repair, cash crunches due to COVID, etc.
Gower sees advantages to buying distressed properties. Such return on investment (ROI) advantages include…
- Price – distressed properties often cost less than other properties in the same neighborhood
- Sweat equity or property improvement – invest 30% of on-going value to realize 50%+ ROI in actual value once property up to snuff
- Recapitalization – structure joint venture deals in which owner contributes land to redevelopment effort while buyer takes over all property expenses such as mortgage payments, taxes, etc.
- Buying senior loans on property from original lenders (bank) while buyer becomes the lender, though this option can be high risk, high cost and time consuming
Here, we’ll concentrate on Gower’s recommendations concerning ways to find distressed properties
- Commercial real estate brokers constantly have their ear to the ground for sellers who may be over-leveraged and/or looking at distressed debt, particularly due to COVID closures.
- Lenders, your lender specifically, with the most knowledge about “pending” distressed opportunities – another VERY important reason to have a solid relationship with your lender!
- Check out Notices of Delinquencies (NOD) for bankruptcy filings
- Related to bankruptcy filings are receivers who orchestrate asset sales subject to the court’s approval – find receivers at National Association of Federal Equity Receivers or your state’s Receiver’s Forum
- Connect with your local Title Officer
- Connect with your Appraiser
- Connect with you local Planning Office as any plans submitted are considered to be in public domain
- Build your network of property owners, investors, architects, commercial real estate attorneys, contractors, you name it
- Use technology
- Reonomy – uses predictive analytics @ properties and owners
- STR – considered THE website for hotel properties
- PropertyRadar – analytics to track distressed properties
- CoStar– online marketplace for commercial investing that just acquired Ten-X which is auction-based platform
- com
- Virtual FSBO.com
- First Financial Network
- Carlton Group
We could go on and on but our recommendation is to go to
for best advice strategies as well as access to Gower’s training programs for investors.
Thanks to Adam Gower of gowercrowd.com.
Also read: Which Locations Have The Largest Share of Vacation Properties?, NAR’s Q2 2019 Commercial Real Estate Trends and Outlook, Home Prices in Arizona and Florida Expected to Drop
