Commercial real estate repossessed by a lender due to a borrower’s default on a mortgage is often categorized as distressed property. This can encompass a wide range of property types, from office buildings and retail spaces to industrial warehouses and mixed-use developments. An example might be a restaurant that defaults on its loan and subsequently reverts to the bank’s ownership.
Acquiring such assets can present significant opportunities for investors seeking below-market-value acquisitions. Historically, economic downturns have led to an increase in these types of properties, creating potential for substantial returns for those prepared to navigate the complexities of the acquisition process. This distressed market segment can contribute to market stabilization by returning unproductive properties to active use, generating economic activity, and providing opportunities for revitalization.
