After the real estate crash, short sale properties have become a new
and powerful source of income for investors. For real estate investors
who are just venturing into these troubled waters there are 5
vital things that you must know about short sales before
investing in them.
Whether for single family homes or larger rental properties, short sale
transactions, have some significant hurdles to cross. From my years of
working as a real estate agent and helping many sellers and investors
through them, I have developed this list of points that I educate my
investors on before they go head first into the deep end.
Short Sales Can Take Forever. By now you
have probably heard all the horror stories about banks taking six
months to prove short sales and let me tell you that while that is not
always the case, it does occur from time to time. The government keeps
putting pressures on banks to streamline the process and get short
sales done but talk is about all that has happened.
If you are going to invest in short sales you may want to consider
having multiple offers in limbo at any one time waiting for
approval. This way you will not waste six months waiting for approval
from bank only to find out that they took someone else's offer or have
declined your short sale.
Banks Won't Look at Stupid Offers. There are lots of
deals out there with short sale properties. However, don't take this to
mean that the banks will let you walk in and rape them on the price. To
get a great deal you need to justify your offering price. Don't get
greedy, make reasonable and justified offers and you will make money.
Bank Owned Homes are Always As-Is. Out here in the
real world sellers have to disclose defects and we can negotiate for
repairs. But in the land of banks, all bets are off. Whatever might be
wrong with the property you are looking at is your issue in their eyes.
Be aware of that and factor it in to your offer!
Have Your Exit Strategies In Place. The biggest
mistake I see investors do is not have multiple exit
strategies in place for purchasing a home. We all hope the real estate
market will start gaining ground again, but as an investor you need to
have a strategy in place for if it stays flat or declines further.
Have a plan B and C. Some good options include turning the property
into a rental, or turning around and selling your short sale home on a
lease purchase. Whatever the case may be have backup plans in place!
Work With Agents That Know Their Stuff. I know your
cousin may have just got their real estate license, your
sister-in-law's mom might do a couple deals a year, but this is the big
leagues. Knowing what to get to the bank, how to present your offer and
how to make deals work takes skill and is just part of what needs to
happen to make money investing in these properties. Short sale
investing isn't the land where you want to be using a part-time or
inexperienced agent!
and powerful source of income for investors. For real estate investors
who are just venturing into these troubled waters there are 5
vital things that you must know about short sales before
investing in them.
Whether for single family homes or larger rental properties, short sale
transactions, have some significant hurdles to cross. From my years of
working as a real estate agent and helping many sellers and investors
through them, I have developed this list of points that I educate my
investors on before they go head first into the deep end.
Short Sales Can Take Forever. By now you
have probably heard all the horror stories about banks taking six
months to prove short sales and let me tell you that while that is not
always the case, it does occur from time to time. The government keeps
putting pressures on banks to streamline the process and get short
sales done but talk is about all that has happened.
If you are going to invest in short sales you may want to consider
having multiple offers in limbo at any one time waiting for
approval. This way you will not waste six months waiting for approval
from bank only to find out that they took someone else's offer or have
declined your short sale.
Banks Won't Look at Stupid Offers. There are lots of
deals out there with short sale properties. However, don't take this to
mean that the banks will let you walk in and rape them on the price. To
get a great deal you need to justify your offering price. Don't get
greedy, make reasonable and justified offers and you will make money.
Bank Owned Homes are Always As-Is. Out here in the
real world sellers have to disclose defects and we can negotiate for
repairs. But in the land of banks, all bets are off. Whatever might be
wrong with the property you are looking at is your issue in their eyes.
Be aware of that and factor it in to your offer!
Have Your Exit Strategies In Place. The biggest
mistake I see investors do is not have multiple exit
strategies in place for purchasing a home. We all hope the real estate
market will start gaining ground again, but as an investor you need to
have a strategy in place for if it stays flat or declines further.
Have a plan B and C. Some good options include turning the property
into a rental, or turning around and selling your short sale home on a
lease purchase. Whatever the case may be have backup plans in place!
Work With Agents That Know Their Stuff. I know your
cousin may have just got their real estate license, your
sister-in-law's mom might do a couple deals a year, but this is the big
leagues. Knowing what to get to the bank, how to present your offer and
how to make deals work takes skill and is just part of what needs to
happen to make money investing in these properties. Short sale
investing isn't the land where you want to be using a part-time or
inexperienced agent!
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