Not all properties are created equal. Some can become very difficult for homeowners, realtors, and real estate investors to resell. Depending on the holding costs and resell value fluctuations, many of these hard-to-sell properties can sometimes sell for less than they were purchased. While these properties might have some unique challenges for selling, investors need to ensure they optimize profits by selling at the right time. So what properties are among the toughest to sell and what makes them harder to sell? Why would savvy real estate investors buy them anyway?
In this article, CT Homes will explore some of the most hard-to-sell homes, unsellable property types, as well as some of the strategies real estate professionals utilize to get the most value out of these hard-to-sell homes and properties.
Hard to Sell Homes & Property Types
There is an expansive list of reasons why a property might be difficult to sell. These reasons stem from locational preferences to property conditions, but a few obstacles don’t mean that you have an unsellable property on your hands. Let’s review some of the hardest to sell homes and property types.
1. Rural Land
Rural lots and acreage can often be some of the cheapest and least expensive real estate to get into for individuals that are tight on capital. Many deals can be found on lots from coast to coast, with no credit check, owner financing, and minimal down payment. Some rural lands are very remote. While this is less of an issue when there is internet to provide work, there may be a lack of utilities, or simply not much to do. After purchasing, those that thought they could live there may end up abandoning their properties if they aren’t used to that type of lifestyle. There is also normally less demand, and a far smaller buyer pool for this type of property compared to, say, a condo in Manhattan. This could be seen as a drawback but it’s also advantageous for buyers. If rural land can be bought cheap while undervalued and held until they appreciate, there can be great profits unlocked. The holding costs on these properties can sometimes be less than $100 a year.
2. Mobile Homes
Mobile home parks are making a notable comeback in investment circles. Demand for mobile home park living is surging too. There is a massive demand for affordable housing in the US, and mobile homes are a cost-effective solution. These properties can be incredibly strong cash flow producers. However, mobile homes are still associated with a certain stigma, and unfortunately, most mortgage lenders aren’t interested in financing them for applicants. That can make mobile homes very difficult to sell. In retirement areas where parks are surrounded by wealthy and luxury homes, there may be cash buyers, but many of these properties may need to be sold with seller financing.
3. Condo-Hotel Units
As the economy regulated after COVID-19, condo-hotel units are coming back on the rental property market. Some of these units might be in an exclusive luxury building in prime locations. The arrangement can be appealing for some investors that would like their properties to double as occasional vacation homes. However, these units can be hard to finance and often require large down payments. Sometimes this isn’t a problem, but even the most prestigious developers and well-located condo-hotels have suffered from a lack of interest when times are tough. Some condo-hotel investors have even gone bankrupt due to a lack of movement. If you’ll use this property anyway, and can afford to hold on long term, a condo-hotel unit may be worth buying. Make sure to pay attention to the fine print and double-check the numbers before buying a condo-hotel unit.
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Co-ops are a property type that is owned by a corporation, investors do not own units outright but the transaction is typically more financially stable than owning a condo or home. While co-ops are cheaper and a foreclosure is rare, co-ops almost became extinct in most of the U.S. during the last housing boom. Co-ops are considered hard to sell because they’re difficult to finance in the eyes of lenders, and a lack of true ownership can be a huge turn-off to other buyers. But a new surge in foreign investment and the ability to use co-op structures to qualify hundreds of international investors for visas at the same time is reviving their appeal. Investors need to make sure their co-op is in the right location to draw these tenants, and that the marketing and aesthetics appeal to the right buyers too.
5. Over-sized Homes
Over-sized homes are just one type of over-improvement in the real estate game. A mistake commonly made by regular homeowners and newbie investors is that size equates to value. It doesn’t matter if you have a 3,500 square foot home with 5 bedrooms if every other property for miles tops out at 3 bedrooms and 1,400 feet. Appraisals that support a higher loan amount will be a nightmare to secure. No matter how much others want to buy your masterpiece, they often simply won’t be able to finance it due to the skyrocketed value. Many experienced investors focus on the ugly house on the block for a good reason, the room for improvement is much more natural compared to the local listing.
6. Tiny Houses
Tiny houses may be trending on TV and in the minds of many who seek affordable housing and financial freedom. However, many mortgage lenders won’t finance small square footage units making tiny houses hard-to-sell homes. This issue not only applies to creative new housing structures but condos as well. If end buyers can’t finance the property, they are harder to sell. But if the buyer pool is big enough there can be seller financing options, or some cash buyers lurking out there that could work for the transaction. Luckily, the holding costs on these properties can be lower while you are waiting to resell.
7. Stalled Construction Projects
The financial crises of the early 2000s have left many communities littered with stalled and failed construction projects. From entire new communities to hotels, to strip malls and homes, construction stalled for a long time. Buying a half-finished property can be difficult in terms of navigating permits, code issues, and financing. But the data shows that construction REOs and non-performing loans have made up the bulk of distressed bank inventory for a while. That’s a chance at even bigger discounts, and less competition. For those that can get in and finish the work, or re-brand the project and raise more capital, there can be substantial profit margins for this “unsellable” property.
H2: Learn How to Get Rid of a House That Won’t Sell with CT Homes!
These hard-to-sell properties can be both risky and highly rewarding with an investor that is experienced in real estate marketing and has the reserves to cover holding costs and set up pre-arranged exits. Just because a house or rental investment might be viewed as unsellable property, with the right experience and sales strategy, even the hardest-to-sell home can find a happy buyer on the market. CT Homes specialize in CASH AS-IS offers to help expedite your real estate experience. Contact CT Homes to get your hard-to-sell home or property on the market today!