Don’t get CAUGHT into the distressed asset trap! Who would not be interested in getting a good deal on a real estate investment? But before you jump in headfirst on a distressed deal, hold on to your cash because I’m about to reveal the 4 red flags that could save you from a potential disaster.
- Development Plans : Always look into the latest Development Plans and Remarks. You might think you’ve found a great deal on a retail shop, but if a new flyover or Metro station is about to pop up, it could tank your investment.
- Condition of the Property : Distressed properties often require significant repairs and renovation. Before making an offer, have a professional inspect the property to determine the extent of the repair needed and make sure you factor in this repair cost before you put in the offer.
- Tenancy Issues: If there are tenants already, check their rental agreement, payment history or any possible eviction challenges. Problematic tenants can become a major cause of concern for the property owner.
- Limited Inspection Access: If you can’t conduct a thorough inspection of the property due to restricted access or unwillingness from the seller, it could be a sign of undisclosed problems.
Remember, apart from these, also think about location, nearby developments, and overly optimistic projections and always get a professional to assess the legal aspects before you seal the deal. Comment “InvestSafe” to receive a checklist of all aspects to be looked into while evaluating an investment proposal. Follow me to learn more about commercial real estate.
Stay cautious, and best of luck with your investments!