I have guy that I know that relocated from washington to florida to take a job and he states that he have a piece of property that he owns that he is extremely upside dow :help on and is in the process of talking with the bank to do a short sale.
I am wondering if there is a way for me to take the loan at the short sale price before it goes to the listings.
The guy is highly motivated to sell is property as well. He states that he is even considering foreclosure as an option.
He states that he bought the property at 200,000 and now it is only worth 60k. How can I buy this property and a long and make it my rental property.
(Note: I am very very very new to the real estate investments. I
currently and have never owned any rental property.)
I have hear several webinars and read many books but am still not sure of what to do. Or should I just wait till it hits the MLS? The guys property is in a prime locations in washington but he states that the rental market is extremely heavy there. He would keep the property as a rental but he states that he is losing $300 every month because his morgage payment is higher then the rent he is able to charge. :banghead
The answer to your question is Yes. You can buy the property at short sale price. However, it may (and most likely) not be at the $60k price.
First thing you need to do is get a real value of the property. Have a Realtor do a comparable (Comps) sales analysis on the property to determine what its current fair market value. Before a bank accepts a short sale they order a BPO (Brokers Price Opinion) which is just a different term for doing Comps analysis.
Next find out from the owner everything about his mortgage. How many mortgages he has on the property (1 or 2); which banks; Exact loan balances; was it an FHA loan?
Then do an inspection of the property do determine any repairs the is required. Bring a contractor and have him give you an itemized list.
Once you have this information, you can then formulate an offer that you can submit to the his mortgage lenders. Let’s say the property’s FMV comes in at $120k; You determine the house needs about $15k in repairs; You have additional costs of $10k for closing, etc… so your offer would look like this:
$120K - $15k repairs - $10k add’l costs = $95k
You go into contract with the owner for this amount and submit this offer to his bank for approval. When the bank asks you to explain your offer, you can back it up with the Comps and Repair lists.
This is a quick summary and there are some more steps I left out but this is how it usually works.
Okay cool good to know. Thank you for your very prompt help and answering my question. I’m just looking at all my options at this moment for this property. The only problem is that I live in Orlando FL and not in Washington. But I’m sure a short flight wouldn’t be out of the question.
Speaking of me living in Orlando, FL I am guessing that I would want to invest in property in my area. I was looking at the MLS list and have seen serveral deals that look pretty good to me. The problem would be Long term Capital I think. I have listened to most all of the pod casts on hard money and also the private lender options. But I want to go long on the houses that I buy. I don’t have the support or confidence or experince to do any flips. I would rather short with steady income from rental property for now.
I would love to have a mentor here or someone that I could ask questions to to get guidance. But every where I go someone is always trying to sell me a program. IE the Rich Dad Poor Dad coaching, and others. I don’t have the funds to attend these classes and then use up my funds to buy homes, close, repairs, and etc…
How can I make this happen? I am very new as I stated before and have only really gotten interested in investing since attending a Rich Dad Poor Dad conference last wensday 9/24/2012. Now I’m motivated to learn and get started but I want to make sure I understand everything that I need to know that I don’t know.
I will move this conversation to the Beginners Forum soon.
But in the mean time any guidance would be totally awesome.
Nosaji, there are bird dogs out there knocking on doors and finding those properties before they go to foreclosure or short sale. You can do that, too and then there are websites that you can find out everything about the owner and how many loans were on the home. Owners very rarely tell you the full story so you usually have to get the story from websites or realtors. It is so important to know all of the history because when you are educated about the home, you can get great deals.