The HOWs and WHATs of Identifying Distressed Properties

Identifying distressed properties will get easier as you gain experience. If you learn what to look for, with time you’ll be able to recognize them even when you’re not looking.
Boarded Up Home in Foreclosure

Identifying distressed properties will get easier as you gain experience. If you learn what to look for, with time you’ll be able to recognize them even when you’re not looking. But in the beginning, you’ll need to put some work in. Here are a few pointers.

Training is important if you want to be a successful investor. A BIG part of the job is learning how to be a good detective. Ready to do a little digging? Before you can do that you need to know what to dig for. A few things will be obvious and other things will require a deeper investigation.

Here’s a list of 6 WHATs that scream DISTRESSED PROPERTY. Carry a notebook and pen so you can scribble down the address and details.

1. Broken Windows
If a property is well maintained, in most cases broken windows are repaired soon after the damage occurs. When a home is vacant or has been abandoned, broken windows remain broken or are boarded-up. Anytime you see a property with broken windows, jot the address down and keep your eye on it. If it isn’t at least covered with plastic, it is likely no one is looking after the property.

2. Peeling Paint
Not all properties with peeling paint indicate they’re severely distressed, but it’s something to pay attention to. Investigate further to determine if there are other signs of poor maintenance. Sometimes people have fallen on hard times or they are elderly and unable to maintain upkeep. Peeling paint is more common in older homes in older neighborhoods, but you might find one or two in a lower-end residential area.

Identifying distressed property isn’t that hard when you know what to look for. But before you follow the trail of breadcrumbs to the motivated seller, you’ll need to verify whether properties are potential investment opportunities.

3. Overgrown Landscape
When driving through a neighborhood it might be evident that homeowners are trying to outdo each other by having the most well-groomed lawn or attractive landscaping. You might also stumble upon a home that sticks out like a sore thumb.
Neglected yard care is EASY to pick out—especially in a neighborhood where most of the properties are well cared for. Unmaintained lawns with high grasses and weeds are often a clue that the property owner is unable to maintain, or just doesn’t care anymore. Either way, you might be looking at a potentially motivated seller. Jot down notes and look for other clues.

4. Accumulated Trash or Debris
If the house looks basically maintained but there’s a significant accumulation of trash or debris, the property is likely neglected. It could also mean the homeowners did some spring cleaning or gutted the garage, so look carefully before making assumptions.
Neglected properties will have things like litter and junk in the front and/or backyard, and they might have bags or boxes strewn about. You might also see broken appliances, rusted chunks of metal, and plain, ordinary JUNK. All are noteworthy.

5. Overflowing Mailbox/Old Newspapers
Newer neighborhoods may have switched to locked mailboxes in which case this clue will be less obvious. If the street you’re prospecting on still has street side mailboxes or those attached to the house check to see if any are stuffed with old mail. It might be they are on vacation or it might indicate the home is vacant.
Old Newspapers in the driveway are another clue no one is home. Ask any burglar. Again, check for other clues before you assume.

6. Boarded Doors and Windows
The doors and windows of some vacant houses are boarded for a few reasons: to prevent breakage in a vacant property, they’re already broken, or to prevent entrance to the house. Whatever the reason, these are clues to severely distressed properties—also defined as GOOD DEALS if you choose to go this route.

Identifying distressed property isn’t that hard when you know what to look for. But before you follow the trail of breadcrumbs to the motivated seller, you’ll need to verify whether properties are potential investment opportunities. The best way to do that is to sit down with your notes to make the determination. Once you’ve done that, gather all the information you can about the owner. You might very well have a motivated seller on your hands!

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