Leveraging
Distressed Assets
By Lori Greymont
to be in line with the neigh-
borhood’s other distressed
homes. All distressed prop-
erties have liens, usually tax
liens, but sometimes water or
sewer liens. Factor those into
your purchase price. Most
on-line real estate sites can’t
help much with understand-
ing property condition. There
is no substitute for feet on the
ground, which leads us to….
3. Build a Team. Because
you’ve concentrated your ef-
forts, it’s a lot easier to find
someone willing to drive by a
property and peek in the win-
dows. This banking meltdown
has allowed the creation of
many support businesses for
the banks to look at, price and
manage their own distressed
assets. You can search the inter-
net for “Distressed Asset Man-
agement”, “BPO’s”, “Drive-
By Services” or a host of other
words and pull resources that
are your feet and eyes on the
ground. Plug into the existing
network of professionals and
within a day or less you will
know if you found a gem or
not. And when you work with
someone you like, call them
back for repeat business. Rela-
tionships are also key.
4. Sell Quickly. There are more
properties one the market than
anyone can buy so how do you
sell your property ahead of the
neighbor? Finance your buyer.
There are many creative fi-
nancing methods that you can
employ that offer you control
and a great return. If your
buyer can be approved by you,
they can make a decision in
days and be in the home in less
than a week or two. This helps
preserve your asset from van-
T
here’s a house on Vine
Street in Atlanta. The
homeowners default-
ed and the bank fore-
closed. Then the property was
listed at 80% of its value by
an agent specializing in REOs.
The three-bedroom, one-bath
house in a decent working-class
neighborhood didn’t sell. So the
agent dropped the price. And
dropped it again. Why wouldn’t
the house sell? It was in good,
not great, condition. The house
didn’t sell because no one in
the neighborhood could get a
loan. Finally, the asset manager
had to get the distressed prop-
erty off the books. He slashed
the asking price to $10,000 and
listed it with other similarly
priced houses, and then sent the
bargain list to investors.
Distressed assets can be huge
money makers for savvy inves-
tors—as long as they follow
the five principles for convert-
ing empty properties into cash-
producers.
1. Concentrate Efforts. De-
cide in advance which areas of
the country you’d like to invest
in. You’ll find the best bargains
in the mid-west and southeast.
Focus on a few cities and learn
as much as you can about them.
Other investors are a great help
with this investigation. Also
read local blogs. What are
properties renting for? What is
the inventory?
2. Do Due Diligence. Once you
have focused on a few areas,
start perusing lists of distressed
assets. You’ll want the newest
house you can find AND with
the least liens. Make sure you
adjust the offer price on this
Realty411Guide.com
Continued on pg. 59
PAGE 49 • 2011
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