7 Tips For Finding Distressed Properties for Sale in the D.C. Area

Table of Contents

Investors searching for rental homes in the Greater D.C. region might look for distressed properties because of the value they can provide. Distressed properties are often attractive to investors because they’re undervalued, which could increase your profit margin both while you rent to tenants and when you ultimately sell.

A distressed property is a home at risk of falling into foreclosure. This label means the current owner isn’t keeping up with mortgage payments and the house is in a state of pre-foreclosure. Property owners in this situation may look to unload the home at a reduced rate to escape their financial burdens. 

The main issue is that distressed homes sometimes aren’t physically maintained by the owner and, therefore, could require significant repairs before moving in tenants and collecting rent. You’ll need to put some work into the home before it’s ready, which could scare some investors away.

Learning how to find distressed property that suits your needs can lead to some highly profitable real estate deals. You may be asking yourself “How can I find distressed properties near me?” You’re in luck because this guide explains the process and provides tips on closing the deal.

A Look at Distressed Real Estate Buyers

Purchasing distressed real estate is relatively straightforward, but you should be aware of your competition. These homes can come at reduced rates, so many people with the time and know-how to fix them up could be in the market. Those buying distressed real estate include the following:

Homebuyers

Entry to the D.C. real estate market is challenging, as the typical home costs over $1 million in 11 towns and cities in the metro area. The result is many families end up in condos and apartments after relocating to D.C. Those searching for a single-family home in the region could look to distressed properties for the cost savings they provide. 

Investors

Real estate investors are always digging for a good deal, and distressed properties could provide some cost advantages. Picking up a single-family home at a low price, fixing it up, renting it out for a few years, and selling it is the ultimate goal of many investors, and distressed houses can provide that opportunity. The result can be a greater return on their investment.

Real Estate Agents

Most real estate agents understand the advantages of buying distressed properties and could purchase any that look like a reasonable deal as an investment or a new residence. These agents also know how quickly the D.C. real estate market can move and have a good idea of the characteristics a profitable distressed property might have.

Distressed properties could have less competition, but multiple buyers could be interested in a home you uncover. You’ll want to be ready to make an offer as soon as you find a distressed home in a desirable neighborhood because there will be others looking for the same thing.

Seven Ways to Find Distressed Properties

Locating distressed properties and making an offer early in the process gives you the best chance of success. You’ll want to be proactive because experienced buyers will be all over properties offering significant value. Tips on how to find distressed property include:

1. Focus on One Neighborhood

There are hundreds of homes for sale in the D.C. area at any given time, so selecting a neighborhood and narrowing the search from there is advisable. Identify the part of the city you want to buy in and search for homes for sale. You can then narrow that search by price and attributes to help identify distressed properties in the area. 

2. Go Beyond the Distressed Label

Sellers typically don’t tell buyers the property is distressed because it could depress their sale price. You won’t likely see the word “distressed” on the listing, but terms like “motivated seller” could appear. Other attributes of a distressed property include a lengthy period on the market or multiple re-listings.

3. Look at the Condition

Perhaps the best telltale sign of distressed property is its physical condition. Distressed properties could have peeling paint, broken windows, and poorly landscaped yards because the owner can’t afford these expenses or has given up on trying to maintain the home. You could also see mail piled up outside or unread notices attached to the home’s exterior, potentially meaning the property is uninhabited.

4. Search Tax Records

Public records can inform you of properties with delinquent taxes, which could indicate the owner is experiencing financial problems. Owing taxes could also motivate the owner to sell, leading to a lower sale price. This process will take a bit of work because you’ll have to look at available listings and compare them to the tax records.

5. Check for Delinquent Mortgage Payments

Local public records also have information on missed mortgage payments. Owners who aren’t making mortgage payments often want to unload their properties as quickly as possible to minimize their losses and avoid foreclosure, and savvy investors can take advantage. 

6. Evaluate Probate Opportunities

There is potential to find distressed properties in probate court. Homes are sometimes left behind following divorce or death in the family, particularly when the person inheriting it doesn’t want or can’t afford the home. Investors can purchase these properties at reduced rates, and the seller is happy because they don’t have to deal with making listings and fielding offers.

7. Search Online

Online tools are your friend as you search for distressed property in the D.C. area. A good starting point involves using Google Street View to see a recent photo of the home, which can offer insight into its current condition. There’s a better chance of the house being available for a bargain if these recent photos show neglect.

Following a few tips can prevent you from missing out on some distressed property deals in your desired neighborhood. You’ll have to be proactive, but the effort could result in an excellent investment for your future.

After You Buy a Distressed Property

Purchasing a distressed property could put you on the hook for repairs and maintenance before moving renters into the unit. You’ll also have to vet these tenants, collect rent, and maintain the home moving forward. Working with a property manager can help.

Nomadic Real Estate offers property management services in the D.C. area. Our experienced team will help ensure your tenants are content while handling any day-to-day issues that arise along the way. Contact Nomadic Real Estate to learn more.

Share via Email
Share on Facebook
Share on LinkedIn
Share on Twitter

Get help from DC's top real estate team.

Founded in 2005, Nomadic is the go-to full service real estate firm in the DMV. We've helped thousands of landlords, investors, and residents and we would love to connect with you next.

Check out more of our blog posts below!

Or search for a different topic:

IT Support by SADOSSecure, Fast Hosting for WordPress
Scroll to Top
Scroll to Top
Explore Logo

Get a free INSTANT home valuation report!

Automatically delivered straight to your inbox within seconds.

Explore Logo

Thinking of selling? Get an instant property value report:

Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.