When you find a property significantly cheaper than comparable locations, you may assume it’s too good to be true. However, research may reveal that this is a distressed commercial property. While this may sound scary, in many instances, investing can be a profitable experience. However, you should not purchase one without understanding the extent of what this means and how to identify potential risks. Keep reading to learn what you must know and why connecting with a Texas commercial real estate lawyer is in your best interest.
What Is a Distressed Commercial Property?
A distressed commercial property can refer to a variety of issues. In general, however, this is used to describe real estate for sale because of outside forces. In general, this can be because the property is in foreclosure, the asset of a bankruptcy sale, an investment partner has passed away, or the property is in disrepair and the owner cannot afford to make the necessary updates.
Though it may not seem like a great idea to purchase a distressed property for commercial purposes, there are several reasons you may want to invest. Generally, it is often a more cost-effective purchase, as you can get a property similar to others for significantly lower. Additionally, those selling distressed properties are looking to make these transactions as quickly as possible, meaning they won’t wait to see if they can get a better offer.
What Can I Do to Protect Myself During This Purchase?
It’s important to understand that in many instances, there are serious risks involved with purchasing distressed commercial property. While all real estate investments pose risks, the challenges associated with these properties are much more significant. You may find that the repair cost outweighs the profit you would garner from purchasing the property, or that there is litigation against the property you would inherit when you make the purchase. However, there are things you can do before deciding to help ensure you make an informed choice.
Generally, one of the most beneficial ways to protect yourself is to perform due diligence. This allows you to inspect the property for issues with roofing, windows, or structure. You can also conduct a title search during this period to ensure no liens or lawsuits are surrounding your property.
Another thing you can do to help protect yourself is to perform a market analysis on the property. This process involves examining the local trends and demographics. You may find that if the analysis shows an upward trend, you may feel more comfortable investing as you’ll find this to be more profitable. However, you may also find that performing an analysis shows that the investment may not be profitable based on local economic trends.
As you can see, there are many critical considerations you must make if you’re interested in investing in a distressed commercial property in Texas. That’s why the team at Dillard Property Law, LLC is ready to help. We understand how complex these matters can be, which is why we will do everything in our power to guide you through this process so you can achieve peace of mind about your investment. Connect with us today to learn more.
