Hello All,
Please I would like to know how much an investor can realistically expect to make on a Short Sale. How much are you guys averaging on your shorts? I have heard that banks are only discounting to about 83% of FMV. I have also heard that it is wise NOT to buy any property that has less than 30 - 35 % equity esp in this declining market.
Therefore, does it make sense to buy a short that is only discounted by 17% ?
Thank you!
Erewa
Welcome to the Forums! We look forward to your involvement!
Thank you sir! I hope to learn from all the experts here as well as give back to the forum.
It is really much more a function of what you can resell the property for (if you plan on flipping it) than how much you can get a discount for. I have had properties discounted 70% and some only 15%. Usually I like to see at least a 15% discount and I am fine with that if the property is in an area that is desirable and I can resell quickly.
As far as profit, I don’t turn down a good short sale possibility just because I am not making a certain quota. I like to make at least $3,000-$4,000 per deal, just to make my time in the process worth while, but I like to aim for at least $10,000 per deal.
Also be selective on what properties you will be doing short sales on: you are going to spend a lot of time processing a short sale, so you want to make sure it is a property that you know you can resell quickly and make some money on. There is nothing worse that spending a lot of time on a short sale and then not being able to resell it and lose it at the end.
Anything over 3k I’m happy with if it doesn’t take too much effort.
Im in the New Jersey market and Im averaging 10k-24k per deal. The only time Ive made less, 3-5k, is when Im stepping out of the deal (A-C transaction). Secondly, the bank is discounting the BPO, which may or may not be FMV. Normally, I meet the realtor performing the BPO and provide them with low end comps and/or a BPO. The lender will get my repair estimate too as a basis of accepting my low offer.
There are many factors in determining if a deal is a deal. Are you wholesaling? Fix and flip? Are you wholesaling to an investor or to a retail buyer? Will the property cash flow if you purchased it to add to your rental portfolio? You should have the end or exit strategy in mind on every deal.
Lastly, there is no get rich scheme in real estate. You have to put in some work negotiating and closing short sales. Good luck.