A distressed commercial property can actually be a good investment, but this is not the kind of thing that you just want to jump into without doing any kind of research. It is smart to know how to protect yourself and your interests when purchasing these properties. You also want to be sure that you are getting the best possible terms on every deal you make. A Long Island, NY real estate closing lawyer can help you with that.
What is a Distressed Commercial Property?
A distressed commercial property is already under foreclosure. It could also be owned by the lender already. Essentially, someone else made an agreement to buy and pay the mortgage on this property, but they failed in their commitment for whatever reason.
In some cases, the current owner of the property is selling it. They might be underwater on the property and willing to sell it for less money in order to put themselves on slightly better financial footing.
Why Buy a Distressed Property?
A distressed commercial property is likely to cost less than a similar property being sold through traditional methods. If it is a short sale by the buyer or a foreclosed property being sold directly by the lender, the main priority is usually just to get the property sold. No one is holding out for the best possible deal or offer.
So when you buy a distressed property, you are potentially getting a great deal on an investment property. We say “potentially” for a reason though, and that is because there are potential risks and drawbacks to buying such properties.
What Are Some Risks of Buying a Distressed Commercial Property?
A distressed commercial property could come with some headaches of its own to deal with. You need to be careful about researching a building and make sure that you know about any potential drawbacks. Some things to be on the lookout for include:
Repair costs: If a property was foreclosed on or abandoned, it is likely to need some repairs. If the property was not particularly well cared for before, the repair bills could definitely be a drain on any investment fund. So try to know what you are getting into, what you would be willing to spend, and what kind of profit you are aiming for when you are investing in distressed commercial properties.
Pending litigation: A property could also be attached to pending litigation. Lawsuits can go on for a long time, so you have to seriously consider whether this is something that you will want to continue dealing with.
Contact Our Law Firm
So whether you are ready to purchase your first distressed commercial property or you already have some experience dealing with this kind of real estate, contact David A. Gallo & Associates LLP. We can guide you through the entire process and help you protect your investments.
