How to Find Distressed Properties: 10 Proven Methods

Distressed properties aren't just rundown houses. Distress can be physical (deferred maintenance, damage) or situational (foreclosure, divorce, inherited property, tax liens). The key is the owner's motivation to sell quickly, often below market value. Your job is finding these situations before other investors.

Drive neighborhoods looking for signs of distress: overgrown yards, boarded windows, code violations, accumulated mail. Use an app like FlipMantis to capture addresses, auto-lookup owner info, and add to your CRM instantly. Best for: local investors, finding properties before they hit any list.

Homeowners behind on mortgage payments are motivated to sell before the bank takes over. Access lis pendens and NOD (Notice of Default) filings through county records or data services. These owners have a timeline—use it to create urgency. Best for: experienced investors who can move quickly.

Inherited properties often become burdens. Heirs may live out of state, lack funds for repairs, or simply want cash. Monitor probate court filings for recent deaths with real estate assets. Approach with sensitivity—these are grieving families. Best for: investors comfortable with longer sales cycles.

Property owners behind on taxes are often behind on everything. County tax assessor offices publish delinquent tax lists. These owners need solutions. Some may be open to selling; others might need creative financing. Best for: cash buyers and investors offering seller financing.

Properties with code violations face fines and legal action. Owners may be overwhelmed or unable to afford repairs. Request code violation lists from your city's building department. These properties often need significant rehab—price accordingly. Best for: flippers and landlords comfortable with major rehabs.

Owners who don't live at the property (absentee owners) are more likely to sell. They may be tired landlords, inherited the property, or moved away. Pull absentee owner lists from tax records—look for properties where the mailing address differs from the property address. Best for: anyone doing direct mail or cold calling.

Owners with lots of equity have room to negotiate. Combined with a motivation factor (age, out-of-state, long ownership), these leads convert well. Stack filters: high equity + absentee, or high equity + 55+ age. Best for: wholesalers looking for deals with room for assignments.

Divorce forces property liquidation. Court records are public—look for cases involving real estate division. These sellers are motivated by timelines, not maximizing price. Approach professionally. Best for: investors in active markets with high divorce rates.

Properties that didn't sell on the MLS have motivated owners who still want out. The listing expired, but the motivation didn't. Pull expired listings from your MLS access or a data service. Best for: agents and investors with MLS access.

Attorneys, property managers, contractors, and estate planners encounter distressed situations daily. Build relationships with these professionals. Offer referral fees. Join your local REIA. The best deals often come through relationships, not lists. Best for: everyone, regardless of experience.