Factors leading to appreciation

[Dressy]

Originally Posted by Axiom

Buying a distressed property is not a walk in the park. Yes, there are deals to be had, but you better know what you're doing or your fabulous deal could end up being your biggest nightmare.

Besides you have to have a lot of cash apart from downpayment to rehab the property. You can apply for a home repair loan but the interest on those are higher than on home mortgage. You have to spend money on rehab, you have to pay interest on home repair loan, you have to pay more interest on your mortgage (because your downpayment would be less), and in addition to all that you have to pay rent, because you have to live somewhere while the rehab is going on.
You may also have to deal with problems like obtaining permits for all the work, and sometimes you will have to obtain permits on previous work that has been done before without permit. There are many variables and great risk. Unless you are a investor that can tolerate some risk by gaining on other deals...it is too risky. YOu need to have a lot of expertise in this in order to deal with distress properties, especially you have to know very well what the rehab will worth even before you submit an offer. In addition to that it is actually difficult to knock the price down , because you are dealing with a bank. So, all you have to do is wait until they drop the price to the fair level, and thus you have to wait. and time is money too.