Whether you’re a seasoned investor with years of experience in the game, or you’re brand new to the world of commercial real estate, distressed properties are a lucrative investment for professionals of all backgrounds.
Depending on the situation, distressed commercial properties have the potential to yield serious return-on-investment. But, how exactly can you find them?
In this article, we outline how to find and analyze distressed commercial properties, including multifamily assets and vacant land. Read on to learn how CRE tech like Reonomy simplifies the distressed property search, how to identify properties in distress and other helpful tips.
Table of Contents (Click to Jump to Section)
- How to Find and Analyze Distressed Properties
- Interpreting Signs of Distress
- Other Ways to Find Distressed Properties
Simpler Sourcing: How to Find and Analyze Distressed Properties
Although listings platforms can provide a solid start, there’s an easier way to find distressed commercial properties. Reonomy, the market’s leading commercial real estate platform, allows you to find these properties with the click of a button. By combining updated data with powerful search functionality, Reonomy serves up properties actively in the pre-foreclosure stage for better prospecting.
How to Search for Distressed Properties Using Reonomy
No matter the commercial asset type you’re interested in, Reonomy’s powerful data engine pulls exactly what you’re looking for, so you can find distressed properties to pursue, faster.
To do so, simply click into the Debt tab in the Reonomy platform. Here, you’ll find two pre-foreclosure related drop-down menus: “Auction date and Pre-foreclosure category.
Auction Date can be applied to properties that are approaching auction. These choices include:
- “Next 2 weeks”
- “Next month”
- “Next 3 months”
- Create a custom date range
Pre-foreclosure category highlights what phase of pre-foreclosure a property is currently in. This includes:
- “Final Judgement of Foreclosure”
- “Lis Pendens”
- “Notice of Defaults”
By using these filters, as well as any of Reonomy’s other filter options, you’ll be served up properties that match your pre-foreclosure search options.
Finding Distressed Commercial Properties
Reonomy also makes it easy to filter your search based on commercial asset type. To do so, you can select the Asset Type tab in the Reonomy platform to find certain assets like offices, mixed-use spaces, retail spaces, warehouses and more. When used in conjunction with the pre-foreclosure filters, Reonomy will automatically serve up the exact types of distressed properties you’re looking for.
Finding Distressed Land
Similarly, finding distressed land is just as simple. To find distressed land, simply apply the pre-foreclosure related filters of your choice. Then, click on the Asset Type tab in the Reonomy national platform. Here, you can select the Vacant Land filter to be applied to your results. This includes a variety of specific vacant land categories, such as agricultural land, barren land, and residential vacant land.
For example, say you’re looking for agricultural land that’s currently in Lis Pendens. By applying these filters, you’ll be served up 700+ results automatically that meet your criteria and can explore on an individual level.
Finding Distressed Multifamily Properties
To find distressed multifamily properties, such as duplexes or apartment buildings, the same process can be applied.
Again, select the pre-foreclosure related filters you want to search by. Then, click on the Asset Type tab and choose Multifamily. You can either search for all multifamily properties in the platform, or narrow down your search to specific submarkets, like cooperative, triplex, or nursing home. After you’ve selected your search filters, you’ll be served up a number of properties that match your preferences.
Interpreting Signs of Distress
When you’ve completed your search, you’ll want to explore each property individually to learn more about the asset and confirm if it’s worth pursuing.
By clicking into a property that interests you, you’ll find more debt-related information under the Debt tab on the property card. This includes pre-foreclosure records, like status, category, judgment amount and document type, as well as auction and trustee information, when applicable.
Historical sales information is a great tool to leverage when searching for distressed properties. With Reonomy, you can search for assets based on specific sales records to narrow down your results, or dive deeper into transactional data in each individual property. Transactional cues include:
- Most recent sale price – If you’re a sophisticated investor or broker, you’ll know whether or not an owner paid too much for their property. Using this intel, as well as Reonomy Comps to see what other properties have been valued at, can help identify assets that might not be turning a profit.
Reonomy’s robust debt and mortgage information can also help uncover distressed assets. Like the other filters, you can either search using this information to tailor your results, or explore debt records in each property card. Debt cues include:
- Maturity date – Maturity date refers to when a loan is coming to term. To identify a property in distress, you can look specifically for properties that might be ending their loan in the next 3 months.
- Most recent mortgage amount – This information can help you determine if a mortgage amount is too high and might be producing negative cash flow
To learn more about how to search via property debt, read our full article here.
Besides sales and debt cues, there are a variety of other cues that can also be used to help identify distressed commercial properties:
- Portfolio information – Reonomy allows you to view entire owner portfolios directly in the platform. If you see patterns of other recent sales, that owner might be in distress and looking to get rid of other assets quickly.
- Physical information – Using Google Earth, Reonomy also provides a visual aid to display each and every asset in the platform. Distressed properties might physically look distressed, either with decay or neglect. While these assets might require a bit more TLC, these signs can point to an owners delinquency and, therefore, might be an opportunity worth pursuing.
Pursuing Distressed Properties
The final step in your distressed property prospecting process? Reaching out to owners. Reonomy makes it easy to uncover owner information directly in the platform, so you can negotiate deals directly with decision-makers using the asset and portfolio information you uncovered in sourcing. Here’s how:
How to Find Owner Contact Information
Once you’ve found distressed properties you’re interested in pursuing, Reonomy allows you to uncover ownership information directly in the platform. To do so, click into the property’s respective Ownership tab. Then, click the button labeled “Get Contact Information.” This will unlock the full-scope view of property ownership.
On this page, you can see specific LLC-related details regarding who owns the property, professionals associated with the LLC, their contact information as well the contact information for the owning entity itself. You can also see other individual ownership details, such as mailing addresses, phone numbers, and email addresses. This allows you to reach decision-makers directly, rather than getting blocked by gatekeepers.
How to Label Properties of Interest
If you want to move forward with a distressed property, Reonomy allows you to save your results with a labeling tool. This enables you to mark properties you’re interested in to explore at a later time or to export in a report when you’re ready.
To label an individual distressed property, click on the text that reads Add Label +. Here, you can add a customized colored label to the property. You can also label properties in bulk by clicking the More drop-down in your list of results, then choosing Label.
This list of labeled distressed properties will appear in the My Properties tab in the left sidebar of the Reonomy platform.
How to Export Contact Information for Outreach
After you’ve decided on the distressed properties you want to pursue, Reonomy makes it easy to export contact information in bulk for outreach. This includes the full scope of contact information associated with your properties, so you can have everything you need for outreach with a click of a button.
To do so, click on the Export button on the property search page. Here you’ll be served up a menu with two boxes to select, need be. The first is labeled “Get contact information.” The second is labeled “Only export properties with contact information.” This selection would eliminate any results that did not have contact information on record.
Once you’ve selected your options, you can adjust the number of distressed properties to export. Reonomy allows you to export 2000 results at a time. Then, click Export and run your report, which will download a CSV file of the distressed properties you’ve selected to pursue further.
Other Ways to Find Distressed Properties
Although Reonomy is a quick option, it’s not the only option. Listings platforms can also be used to discover distressed commercial properties that might be of interest to you.
REO and Banked-Owned Listings Platforms
Depending on what type of asset you’re looking for, there’s a variety of listings platforms that allow you to search for real estate owned (REO) or bank-owned commercial assets. These are properties that have already been repossessed by lenders or banks and are typically a priority to re-sell as quickly as possible.
Below is a list of potential REO and banked-owned listings platforms to help you find repossessed commercial assets…
One of the largest commercial real estate listings platforms, Loopnet provides an easy way to find distressed properties, specifically REO and bank-owned assets. Loopnet allows you to search specifically for bank-owned property in different states and locations across America and Canada.
Bank Foreclosures Sale is another listings platform that specializes in both residential and commercial distressed properties. Similar to Loopnet, you can search explicitly for banked-owned assets “30%-60% below market value.”
Preforeclosure.com is a listings site that lists properties, mostly residential but some multifamily, in the preforeclosure stage. You can search by city, state, zip code or listing ID, and explore auction and foreclosure information.
Individual Banking Sites
For example, Southeast Bank Properties has an entire listings page dedicated to commercial properties for sale through them. Searching on these websites makes it easy to find distressed properties and deal directly with banks or lenders who own them.
Distressed Properties For Sale by Owner
For Sale by Owner, or FSBO, refers to when owners sell their commercial properties without the representation of a broker or agent. This eliminates middle-men fees and allows the seller and buyer to work directly for more flexible, customized negotiation.
Similar to REO and banked-owned distressed assets, there are many ways to find distressed commercial properties for sale by their respective owners. Below is a list of platforms to help you get started…
While often overlooked by larger real estate listings sites, Craigslist is a viable way to find distressed assets for sale by owner. No matter the asset type or location you’re interested in, you can use keywords like foreclosure or lis pendens to find distressed properties before the competition does.
Though it’s primarily residential, For Sale By Owner us one of the biggest providers of FSBO liforsalebyowner.foreclosure.comstings and can be used to find multifamily properties, too.
To find distressed assets, For Sale By Owner has an option to search specifically for foreclosures in each state. Each listing is matched with foreclosure details, tax information, asset intel and contact information, making it easy to assess the situation for potential pursuing.
In short, discovering distressed properties doesn’t have to be difficult. Considering the variety of listings platforms on the web, as well as the market’s leading searching tool, finding your next potential investment can be as simple as clicking a button. Start your Reonomy trial today, here.