Home > Finance > Contrarian Capital Management: Reasons to Acquire Distressed Property

Contrarian Capital Management: Reasons to Acquire Distressed Property

ContrarianCapitalSince the firm’s founding in 1995, Contrarian Capital Management has considered investing in distressed real estate a top priority. Co-founder Gil Tenzer comes from a 24-year background in real estate and drives most of the company’s efforts in that area. Specifically, Contrarian Capital Management uses proprietary sourcing techniques and collaborates with local partners to acquire distressed property.

Real estate becomes distressed when it has entered foreclosure, providing the opportunity for investors to acquire it at bargain basement deals. Homeowners are eager to get rid of such property since they are experiencing financial difficulties, and the bank wants to sell the property to break even or better on the money it loaned to the homeowner for a mortgage. Many individuals do not buy distressed homes to live in but rather to resell. As market values increase, investors can make tidy profits on such property.

Investors should take care not to purchase distressed property in a state of disrepair. At the same time, homes in need of a little elbow grease can still sell for high values later on. Inspect the home to target repairs and upgrades at reasonable prices, and make those upgrades to increase the home’s value as market prices rise.

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