For many real estate investors, the best investment they will ever make is in distressed property. You know the ones. They look tired. They are ill kept. They feel worn. Not the investors, the properties.

Distressed properties can bleed you financially to death. That’s why they end up on the market at fire sale prices. The owners are tired of problems they either can’t or aren’t willing to solve. For a buyer, that’s great. The best reason for considering distressed properties is that they need change, and making a needed change is very positive for the buyer. The reason a property is distressed is because of bad management due to negligence, poor maintenance due to a lack of a good work order software, low quality occupants due to poor screening, dated components, etc. In each of those cases, a little change can make a big difference.

After the purchase, elbow grease is often the biggest investment that needs to be made. With a few hours work in a yard, the curb appeal can be improved dramatically. With a couple days work and a bit of paint, a tired look can be updated and improved. If you throw in a good online work order software to make sure none of the necessary work slips through the cracks, then you’re property will be in tip top shape and will be able to demand higher rents.

Consider this, if you are buying an apartment building where a unit or two is totally un-rentable and has been vacant for a long time, then that unit has not been producing income. The price you pay will be based on the income of the property. If you put in the work, the property will have a sudden jump in value.

Of course, having a property that looks good still won’t do you much good if you don’t manage the tenants correctly. If you make a logical plan, your management system can get rents collected and remove problem occupants swiftly. Staying on top of those two areas alone will increase revenues dramatically.

Once you’ve made the necessary repairs and started managing correctly, you can look at additional improvements. Covered parking, garden space, and laundry facilities are all good improvement ideas for an apartment complex. Make sure you consider the cost to operate any improvements. For example, a swimming pool can cast a lot to operate, possible more than the income you can get from increased rents.

In all cases, if you can reverse the distressed trend of a property, you can improve revenues, reduce expenses, increase value, build equity and create wealth for yourself. Unfortunately for many investors, they cannot look past the flaking paint and the cracked windows to recognize the gold covered opportunity within. Don’t be one of the many would-be investors who look back and say “I shoulda bought that when I had the change.” Do your homework, perform the due diligence and the profit potential will be obvious and the ultimate wealth development will be yours. Get the education you need, the help to make it happen and the opportunities will drop one at a time like yellow metal ducks in a carnival shooting gallery.

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