PROS AND CONS OF BUYING A DISTRESSED PROPERTY

Distressed properties are often an opportunity to secure a highly favourable deal – provided you do it sensibly with a full picture of the pros and cons.

Pros
• Finding an exceptional bargain, possibly in an area you would otherwise not have been able to afford.
• Favourable T’s & C’s, including preferential borrowing rates and no transfer duties.
• The opportunity for a quick return on your investment if you can ‘flip’ the property and then sell it at prevailing market prices.

Cons
• Properties are sold ‘voetstoots’ – what you see is what you get. Owners who have fallen behind with bond repayments may have also neglected the upkeep of the property.
• ‘What you see’ can be tricky as access to view the property may be denied by current owners or tenants.
• Offers on distressed properties must be ‘clean’ and not subject to financing or the sale of another property.
• The transfer of distressed properties can take more time than a standard property purchase.
• Buyers may be liable for outstanding levies, rates and taxes.

Savvy buyers know that there is a lot of skill (and a little luck) involved in securing a real bargain. This is why having the right advice can make all the difference.

Source:  www.rei.co.za