Should You Adopt Short Sales As A Real Estate Investor?

Negotiating for a discount on the mortgage with a lender is called a shrot sale. The leander allows you to buy the property for less than the mortgage balance.

A loan qualifies for a short sale is the home owner is at least two payments behind.

You as the real estate investor identifies motivated sellers who qualify for a short sale and you negotiate with lenders.
These factors are important for the success of short sales.

1) Qualify your properties properly
Not all properties are short sale candidates. Selecting the wrong properties for short sale will be a waste of your time.

To qualify for a short sale, the home owner must be at least two payments behind. You must consider the mortgage balance. 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. You can get as much as 80-90% discount on a second mortgage.

Properties with more than one mortgage are likely to be your best candidates for short sale.

Of course if repairs are needed, you must factor all the costs.

2) Short sales take time
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 some good capital that will sustain you through months of not making a profit. . 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. They can still say no even when it looks like an obvious candidate. Be prepared for rejection.

Obviously, having several short sales at a time helps. 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 exit strategy that is acceptable
Some transations are not acceptable to lenders for short sales. For instance, lenders will not accept wholesale dels with "and or assigns".

You must be able to close after the short sale is approved. Most banks will give you about 30 days.

6) Enjoy some big profits
Some 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

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