Distressed real estate assets can be a great investment for a seasoned real estate investor. However, if you are not a seasoned real estate investor, a distressed real estate investment can conclude to a huge financial disaster. Fractured condos are just that, distressed assets that have been incomplete by the developer. There may have been a number of pitfalls why the development was incomplete:
- Real Estate Crisis
- The bank stopped funding the project
- The developer went bankrupt
Acquiring distressed real estate assets like fractured condos, a real estate investor must strategically plan his/her exit strategy such as:
- Buy and hold
- Repair and Sell (Flip)
A seasoned real estate investor requires strong cash assets, an attorney, a budget and a sharp real estate agent to find and sell the distressed real estate asset. The real estate investor must ask themselves do they want to become that landlord who is carrying costs and liability, or do you just simply sell the development or sell each condo unit individually, that is a condo conversion.
Not all fractured condos are good investments; real estate investors should consider the demographics of the area besides assuming the distressed asset will have a fast resale or fast rental occupancy. If you want to invest conservatively with fractured condos, purchase fractured condos that are near your area, do not purchase distressed real estate assets that are in unstable markets.
Discounted distressed real estate doesn’t necessarily result in a good investment; it may turn out to be to a costly loss and a huge nightmare.
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