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| Title: Is Short Sale A Viable Business Model In Real Estate Investing? |
| Date Added: January 11, 2011 09:34:52 AM |
| Author: Simon Macharia |
| Category: Real Estate : Consulting |
| Negotiating with a mortgage lender to buy a house for less than is owed is called a short sale. In other words, the lender accepts less that is owed on the mortgage and lets you buy a property at a discount. Of course, a home owner must be behind on their mortgage for the loan to qualify for a short sale. As a real estate investor, you identify good candidates for short sale and you negotiate with the lender. Here are importand factors to consider before doing short sales. 1) Qualify your properties properly All properties are not short sale candidates. Your efforts are likely to be wasted if you try to do short sales on the wrong properties. A mortgage must be at least two months behind to qualify for a short sale. The mortgage balance is an important factor to consider. If there is only one mortgage, then you need a discount as little as 10-20% for the deal to be profitable. If there are two or more mortgages, then discounting all the mortgages can produce a lot of equity and profits. A second mortgage can be discounted by as much as 80% or more. The best short sale properties are the ones with more than one mortgage. Of course you must consider all the costs such as repairs.2) Be prepared to wait A short sale takes 3-6 months or more. If you are new to real estate investing, you must consider this waiting period before adopting short sales. You must have enough money to cushion you during the long waiting periods. . Otherwise adopt short sales as a part-time model in your reale state investing business.3) Be prepared for rejection Your short sale application can be rejected for any reason. Even when the deal looks obvious, they can still say no. Be prepared for rejection. Having more than one short sale will help you. Expect a 60-70% success rate if your candidates are selected well.4) Time is of the essence You might not have enough time to stop foreclosure if a property is about to be foreclosed.. Select properties that allow you time to negotiate with a lender.5) Have an acceptable exit strategy A lender will not accept certain types of transactions for short sale deals. For example, you cannot wholesale the property with "and or assigns" in the contract. You must be able to close after the short sale is approved. You will get about 30 days from most banks.6) Enjoy some big profitsSome properties will produce big pay days for you. As long as you can qualify them properly it can be a source of big profits for you. Simon Macharia is a real estate investor in Dallas, Texas. He has done a lot of short sales among other transactions. His business is run and automated by real estate investor website from http://www.realestateinvestorswebsites.net |
