Finally landed first short sale w/ lender!!!!!
Received the approval letter from the lender yesterday. Really have to give everyone on this site a big "high-5" for the assistance to all us newbies. On a final note----I'm curious what most experienced shorters do for an exit strategy? Initially I thought about just buying the property with the lowest interest rate and then owner financing it to a buyer to make money on the front, middle and end but now I'm almost thinking it might be best to use a combination of absolute auction (to hopefully sell at a nice price and get cash in hand) and then use owner financing as a backup if it doesn't sell. Ideally I'd rather have the cash to go buy more properties but I definitely don't want to give it away. Any thoughts.
Thanks--Jim
Congrats on the deal! I sense from your words, though, that you might be getting a little...um...greedy? The power of being able to put a deal together can be intoxicating but, tempting as the 'big score' can be, it seems the best way to make money in this business is to develop a formula, some contacts, and then do it over and over again. If everybody wins in deal #1, the important connections you make will be in place for the next deal, and the next. Just a few thoughts.
Loon--
appreciate your thoughts. Actually, the investors around here want to make from $15-20K per deal or "no deal". I did speak to an absolute auctioneer who said he typically gets $85-90% of FMV, which I thought sounded great but was it truly realistic? If I went to another investor and they made $20K, the difference wouldn't be much more than I make at my fulltime boring job. I know I would make the most selling it with owner financing but I'd rather not wait 1-2 yrs to get final payoff. I'd be very thankful to sell it at a fair price----just need some direction.
I am a fair believer that greed kills and can give you some extreme cases from a 3rd person point of view.
Thanks a bunch--Jim
Would you mind detailing your process with the lender for us other newbies to help us get a better feel for your success?
How many "misses" before you got this "hit"?
What % discount of the mortgage balance did you get?
How'd you find your seller?
Thanks
Joe
Jim,
Congratulations on your first short sale!
If you wouldn't mind giving a short summary of how you accomplished this, then that would be a great source of inspiration for other newbies. Also, here are my comments on exit strategies:
1. Sell it for FMV if it doesn't need repairs.
2. Lease/Option it for two years. Take a down payment, add cash flow, and get paid in the back end.
3. Rent it. Get a nice cash flow going.
4. Flip it to an investor for a small profit, if it needs repairs and you don't want to do them.
Those are some suggestions, but it really depends on your situation. You don't need a whole lot of cash to invest in properties if you use OPM. How much did you spend putting this deal together? If you don't need a lot of money right now, then I would lease/option it. If you need all the cash, then sell it. Place an ad in the paper. Also, you may want to pick up the book called "How to Sell your Home in 5 days" by Bill Effros. It has some great tips and there is also a post about it on here somewhere. Good luck. You're one step closer to financial freedom...
Tanya [ Edited by tanya1215 on Date 05/20/2003 ]
I'd be glad to share the deal. In a nutshell the seller's boyfriend broke up with her about 7 months ago and her whole world fell apart. She moved out of the area after we had signed the contract, etc. Seller went into depression and is on meds, etc. When learning this I thought, "Better use Joe Kaiser's seller acknowledgement form!!!!!!" No problem. Seller thinks I'm a life saver for coming to her rescue.
She let the house go cosmetically. It does need inside paint and carpet which won't be much. Also needs a good cleaning outside. Aluminum siding. 3/1.5 with a full basement.
Homes with finished basements have sold between $115-125K in the neighborhood. This house has a basement that you enter through the garage so this isn't the greatest. Huge front/backyard.
In terms of finances, she owed $78K with no liens. Taxes paid up, etc. Now---many of you will cuss at me but she owed her kids $4K that she morally wanted to payoff. Since she was taking her oven with her she said for me to buy a new oven and deduct it from the $4K--I thought wow that's fair. I think the house would definitely sell for $100K+ after cleaned, carpet, paint, etc. The bank (Fairbanks) agreed to $68,123.
I've gone through this process 4 times and finally landed the first one. However, I did lose some $$$$$ on the others and learned what/what not to do so I'm feeling like a Million bucks right now to finally have acomplished one. Oh yeah, I put down the recommended $5.00 deposit.
Thanks again for everyone's help!!!!! Let me know if there are any other questions--Jim
Jim,
I'd love to know where you got your materials / info to get you started... I'm working my first deal right now and trying to read all I can and learn all I can... I took the LeGrand 1 day course but I'm hungry for info. You can even email me with the steps you took, if it's not too much time!
Congrats to you... I too just short saled with fairbanks...I also just complete Sharon and Dwan short sale secrets, and I am ready to get more short sale business...
Complete Newby observation for exiting. In reading DeRoos' real estate book, he advocated never selling properties. His rhetorical question was something like this: why sell a perfectly good, appreciating asset when one can extract cash from it via financing the equity to buy other properties.
If the property appraises at a higher value, one should be able to refi that extra value. All this assumes, of course, that you'd want to continue to own this property. But if you really got a good deal, you should be able to afford a property management company to handle the dirty stuff.
Congratulations, you're putting a fire under my butt to get moving!!
[addsig]