Sometimes, properties, whether single-family detached homes, multiple-unit dwellings, or commercial property, can be bought for a much lower than market price because of their deteriorated condition.

This is usually the case when an owner/seller has put off necessary maintenance and repair work for many years. These are commonly referred to as “fixer-uppers” or “handyman specials.” Some real estate investors specialize in this facet of the market. They buy rundown properties, fix them up, and then either resell quickly for a profit or hold for years collecting ever higher rents. In your analysis of a property, it’s important to determine if it’s a good purchase because of its poor condition.

Does that condition allow you to buy low? Be aware, however, that buying rundown properties has its challenges. These include the time, effort, and cost of bringing the property up to standard. One of the biggest mistakes an investor can make is to purchase a rundown property for under market cost only to realize later that by the rime the costs of fixing up are added on, the total cost is above market. Buy only if you can get it cheap enough.