Whether you’re a seasoned CRE 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? And how can you be sure your investment will make you the maximum returns?
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.
How to Find and Analyze Distressed Properties
Although traditional 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 helps you identify properties actively in the pre-foreclosure stage for better prospecting. Therefore, you can connect directly with the current owner, saving valuable time and capital.
How to Search for Distressed Properties Using Reonomy
No matter which commercial asset type you’re after, Reonomy’s powerful data engine pulls exactly the information you need. This helps investors find the ideal property, faster.
To start your search for available distressed properties, 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
The Pre-foreclosure category shows at which stage properties currently are in the pre-foreclosure process. Choose from the following options:
- “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 discover ideal 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, select the Asset Type tab in the Reonomy platform. Here, you’ll find certain assets like offices, mixed-use spaces, retail spaces, warehouses and more.
When used in conjunction with the pre-foreclosure filters, Reonomy can help you identify the ideal distressed property and asset type to meet your needs.
Finding Distressed Land
Similarly, finding distressed land is just as simple. To find distressed land, 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 see hundreds of results that meet your criteria. Then, you can explore each result on an individual level to find the perfect investment opportunity.
Finding Distressed Multifamily Properties
To find distressed multifamily properties, such as duplexes, townhomes, or apartment buildings, the process is the same.
Start by selecting the pre-foreclosure filters for your search. 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 get a list of properties that meet your requested parameters.
Interpreting Signs of Distress
After completing your search for distressed properties, you can explore each property individually to learn more about the asset and confirm if it’s worth pursuing.
Find a property in the listings that interests you. Then, you can find 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 for each individual property. Transactional cues include:
- Most recent sale price -Sophisticated and experienced investors know whether or not an owner paid too much for their property. Using this intel, as well as Reonomy’s comps to compare property values, you can discern if a property will likely turn 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 three 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 for the owner.
Besides sales and debt cues, there are a variety of other indicators that might 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 will likely require some TLC and elbow grease, the owner may be willing to sell well below market value. A visibly distressed property can point to an owner’s 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, the contact information for the owning entity itself.
You can also see 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. Contacting the owners directly can save you valuable time and money by eliminating the middlemen and reducing competition.
< data-toc=”Label”h3>How to Label Properties of Interest
If you want to move forward with distressed property acquisition, Reonomy allows you to save your results with a labeling tool. This enables you to mark properties 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 Distressed Property Contact Information for Outreach
After you’ve identified 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 see a menu with two boxes to select. The first is labeled “Get contact information.” The second is labeled “Only export properties with contact information.” The second option will eliminate any results that do 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 up to 2000 results at a time. Once you’ve selected the identified properties, click Export and run your report. This 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 and seamless option, it’s not the only option for identifying distressed commercial properties. You can also use traditional listings platforms to discover possible investment opportunities.
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 properties 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 the United States and Canada.
Bank Foreclosures Sale is another listings platform specializing in both residential and commercial distressed properties. Similar to Loopnet, you can search explicitly for banked-owned assets. Properties are often 30%-60% below market value.
Preforeclosure.com is a listings site featuring mostly residential properties but in the preforeclosure stage. However, investors can find a handful of multifamily listings as well. 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. Searching on these websites makes it easy to find distressed properties and deal directly with the banks or lenders who own them.
Distressed Properties For Sale by Owner
For Sale by Owner, or FSBO, is a term used when owners sell their commercial properties without the representation of a broker or agent. This process eliminates middlemen fees and allows the seller and buyer to work together directly. Often, this process leads to a more flexible, customized negotiation for both parties.
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 is one of the biggest providers of FSBO listings. Forsalebyowner.com also lists multifamily properties listed for sale directly by the owner.
To find distressed assets, For Sale By Owner has an option to search specifically for foreclosures in each state. Each listing features foreclosure details, tax information, asset intel, and contact information, making it easy to assess the property and contact the owner directly if interested.
In short, discovering distressed properties doesn’t have to be difficult. Considering the variety of online listings platforms, as well as the market’s leading search tool, finding your next potential investment can be as simple as clicking a button. Start your Reonomy trial today, here.