The current real estate market has created an ultra-competitive environment for home buyers. No longer are the days when real estate investors could outbid competitors, secure a property, and flip it for an easy profit. As a result, many real estate investors are turning to distressed properties more and more.

The amount of inventory that is currently available in the real estate market is very low. Coupled with a growing pool of buyers and historically low interest rates, it’s become increasingly difficult to land properties at a decent price.

Consequently, real estate investors are having to find new ways to locate properties to fix and flip while still making a profit.

Because many distressed properties are sold without hitting the market, they can help eliminate costly bidding wars and can get the property in your hands as soon as possible.

But how do you go about finding distressed properties to invest in that will actually turn a profit? Here’s how.

Where to Search for Distressed Properties

Many distressed properties are hiding in plain sight. What may look like an ordinary home may turn out to be a gold mine. The current economic landscape has put many homeowners in a bind. Facing a looming end to the COVID foreclosure ban, many homeowners may be looking to shed their homes before it’s too late.

There are many ways to find these properties.

Look for Neglected Properties

Also known as Drive For Dollars, simply driving around an area searching for properties that look to be neglected is the old-fashioned way of finding a distressed property.

Look for common characteristics such as overgrown weeds or neglected lawns, peeling paint, broken windows or exterior damage, and notices on the door.

However, not all distressed properties are going to show signs of damage.

Tax Records/Sheriff’s Department

Checking the county’s tax assessor’s website is another way to identify homeowners that may no longer be able to hang on to their homes.

Identifying properties with unpaid back taxes is a sign they may be behind on their mortgage, thus about to go into foreclosure.

Delinquent Mortgage Payments

Homes with delinquent mortgage payments make up the vast majority of the distressed homes. Those who can no longer make their mortgage payment may be more inclined to sell at a price that’s more appealing to a real estate investor.

You can check the county’s legal notices for any properties with delinquent mortgage payments filed with the court.

REO/Bank Owned Properties

Many banks and lenders list the properties they have in their possession.

Most properties that banks own are not listed on traditional MLS reports. By searching local banks for a list of locally owned properties, you can search for properties other real estate investors may not be privy to.

Probate and Family Attorneys

Whether a property is going through probate proceedings after the owner’s death or through a divorce, these properties must be sold and sold quickly.

These present an excellent opportunity for real estate investors looking to score a property swiftly and at a good price.

Contact local attorneys for leads on properties that may be coming available soon. By doing so, you can get early access to properties before they hit the market.

Property Auctions

Although not as ideal during the COVID pandemic as many property auctions and REIA events are being held virtually, property auctions can still provide an opportunity to score a great deal on distressed properties.

Checking online listings will provide the most opportunities to find distressed properties.

Consider the Costs Before

Taking on a property simply because you get a good deal or can land it before anyone else isn’t always the best option. Lengthy renovations and costly repairs can keep you from turning over a property quickly.

The more time spent fixing and flipping a house, the more interest and carrying costs you’ll incur.

Even while searching for distressed properties in off-the-beaten-path places, keep in mind the costs and time associated with each project. This will ensure your white whale of a deal doesn’t turn into a disaster. Once you identify a property to purchase, reach out to a lender, like my company InstaLend to arrange for financing the acquisition and renovation costs of the property.