The term “distressed property” may conjure up images of unsightly houses that appear dilapidated and beyond repair. However, the term really isn’t as scary as it may seem. Distressed housing simply means a home that’s fallen into a short sale situation, foreclosure or is an REO (bank owned) property.
While it’s true that sometimes these properties need extensive work, that’s not always the case and sometimes you can find a fantastic deal – whether you’re purchasing a home for primary residence or to fix, flip and rent out.
According to a national survey, buyers who purchase distressed homes save approximately 27 percent when buying distressed properties. If you select a home that doesn’t require extensive repairs and upgrades, you’ll likely have a significant amount left from your budget to tackle renovations.
Many people are also concerned about how to finance a distressed property; however, financing this type of home isn’t really all that different than traditional properties. Also, there are special loans and incentives specifically for purchasing a distressed property.
FHA 203k loans are one of the most popular methods of purchasing a distressed property. This type of loan allows you to borrow money, using only one loan, for both home improvement and a home purchase. 203k loans are guaranteed by the FHA, which means lenders take less risk when offering this loan. As a result, it’s easier to get approved (especially with a lower interest rate).
Ready to start checking out distressed properties in the Denver metro area? Contact Metrowest today – we specialize in these types of sales and would love to show you around!