What are distressed properties and how to profit from them

07 May 2024

This term migrated into the real estate world from the investment sphere. Distressed properties are those traded below market value, for example, when the owner urgently needs to recoup funds. Such real estate is especially popular in flipping and among investors selling apartments by assignment. Let's delve into more detail.

Upgrade for resale

In the real estate market, you can find liquid properties in good or promising locations that are significantly cheaper. Typically, these properties require investment in renovation, remodeling, furniture purchase, appliances, and more. The entire upgrade should be completed within a period of up to 3 months. Upon resale, such investments yield an average return of 10%.

Resale by assignment

You bought an apartment from the developer with the aim of subsequent resale. After a year, for example, you paid 30% of the apartment's value. Prices for new developments from the developer have risen during this time. On average, new development prices in the market increase by 22%. You resell the apartment and profit from the difference between the initial price and the updated one.