Distressed properties investing is about buying problems at a discount—then solving them safely. The discount comes from uncertainty, not just ugly paint.
Where distressed deals hide
- Code violations and municipal liens
- Probate / inherited properties
- Tax delinquency (motivation signal—not always a deal)
- Landlords with chronic vacancy / poor management
- Major deferred maintenance (roof, foundation, plumbing, electrical)
Due diligence stack (don’t skip)
- Title: liens, judgments, ownership chain, HOA issues.
- Structure/systems: roof, foundation, water intrusion, electrical, HVAC.
- Exit: can it rent at target price and finance (DSCR/conventional)?
- Budget: add contingency (10–20% based on uncertainty).