Short sale discount & exit strategies - Help!
Good afternoon all!
I understand the basics of doing a short sale but have a couple of nagging questions on the end results.
1. What type of discount do you normally get from the lenders (20%, 50%, 60%, 80%, Etc.) for a first and/or a second mortgage? This leads into my next question...
2. What is your typical exit strategy on a short sale? Do you flip them? Get a hard money loan to keep them? Fix them up? Etc?
Thanks!
Tom
Tom,
Welcome to TCI!
In answer to your questions:
1. What type of discount do you normally get from the lenders (20%, 50%, 60%, 80%, Etc.) for a first and/or a second mortgage? This leads into my next question...
It depends on what the lender, what your initial price to short sell is, and how well you created the proposal to back up all the numbers. The only ones you have to worry about are FHA loans, they only short sale 82% of the "as-is" value.
2. What is your typical exit strategy on a short sale? Do you flip them? Get a hard money loan to keep them? Fix them up? Etc?
That is why you need to create an entrance and exit strategy for each deal. You need to decide what the best strategy is. For example, if the home is in need of repairs and you don't have the capital or time, then you can flip it to a rehabber for a little cash. If you can repair it yourself, then fix it and sell it. If you want cash flow, then rent it by purchasing it with a conventional loan. It all depends on what you want to do with the property.
Tanya