Distressed homes are one of the best sources for income revenue for the real estate investor. He or she can make a generous income by buying and selling distressed homes. With every investment comes risks. Real estate is no different. Caution must be used when investing in distressed homes.

Some rules you need to remember are simple. Knowing the market and understanding how to recognize good properties are two easy ones. Distressed homes can cause other problems some novice investors forget about. Things like inspections and governing laws can often be overlooked. Not understanding the laws can actually cost the investor money.

There are laws governing distressed homes and the acquisition of them. These laws can differ from region to region. Just because one area allows immediate possession at the time of purchase with no hope of re-acquisition does not mean it is legal in another region. Sometimes the seller has a grace period which allows him or her come up with money to save their distressed homes. This means if the property was offered at a sheriff's auction, the home owner has an option to refund the money as well as any fees to regain ownership.

Distressed homes also present a problem with undisclosed structural damage. Many homeowners who are desperate to sell their properties will not state all the issues distressed homes may have. You could find a wonderful property 35% under market value only to discover it is sitting in the middle of a new flood zone. There are also things like foundation problems and other structural issues you may not be able to see. This is where a professional contractor is needed. The inspections a contractor can perform will see past the cosmetics and look at the true house.

Distressed homes which have been vacant can have real problems with electrical systems, plumbing, and so forth. Furnaces and heat pumps which have not been run for several seasons may not function properly. This can add to the cost of repairs making the distressed homes a bad investment. Professional real estate agents are required to disclose any damages they know to exist. The key word is “know”. They can not tell you about something which they have no knowledge of. It is not always the agent's fault. Sometimes real estate owned (REO) distressed homes come to the agents already vacant. The only thing the agent can do is assume everything worked when the house was inhabited.

The main thing to remember when investing in distressed homes is to make sure the property is inspected. Understand the laws governing possession. Research the market to make sure it is a good investment. Determine the marketing plan of action before purchasing any distressed homes on the market. Just because you can buy the house does not always mean you should.

You are in business to make money. You can do this with distressed homes. There are so many to choose from in today's market, it would be foolish to invest in one which you would lose money on. With so many different distressed homes ranging in price you can always find the perfect property for you.