The prices of U.S. homes were up 6% annually, and the median price of a home sold was $432,812 this past month. This indicates that despite several detractors, such as high mortgage rates, the US real estate market continues to thrive in these adverse times. 450,239 homes were sold over the course of the last month.
But during these trying financial times, how do you know if a real estate investment is worth the risk? Does it make a difference if you’re buying for yourself or if you’re buying with the intention to rent? According to Saddat Abid, an established property buyer, CEO, and millionaire, it’s all about taking calculated risks.
“My biggest real estate career risk was dumping a ton of money into a distressed home in a bad neighborhood. It was a huge, old building that needed plenty of work, and lots of people advised us not to go for it.” But ultimately, Abid did and was able to turn it around to the sound of immense profits. This is called investing in a distressed property. Abid continues, “I recognized promise in that area because there were future infrastructure projects and a gradual change to the community’s demographic. It was a big investment for me to totally rehab the house to its current level of modernity while maintaining all of the original character.”
A distressed property is a property that is either currently in foreclosure or is on the verge of it and thus is almost certainly available for a fraction of its actual worth. These buildings tend to be beaten down and in need of costly repairs, but a distressed property in a great location is still a great property and can be turned around and made to generate huge profits.
Such was the case with Abid’s distressed home, as the surrounding area began gentrifying in the short time that followed, and the property values of the distressed property shot even beyond their initial value as a result. To this point, Abid says, “Few risks for realtors are more fruitful than investing in undervalued properties in emerging neighborhoods. Inexplicably, these areas have not gotten the attention of investors and will be perceived as dubious in the sense that their future development is difficult to ascertain.”
While many may look at Abid’s track record with distressed properties and see big risks that he and his team just so happened to get lucky with, Abid reveals that it’s actually much more carefully curated than it might seem. Utilizing market analysis and carefully weighing the options when it comes to factors like planned infrastructure, population growth, and prognostications, Abid is able to take calculated risks that are far more likely to pay off. This takes patience, willpower, and a strategic belief in oneself, but Abid has been able to turn this system into millions of dollars.
In a competitive and uncertain real estate market, the most reliable resources you have are a combination of intuition and analysis, both of which have served Abid exceedingly well and helped turn his long-term planning into large-scale success.
