Real Estate Investing Facts

Shortsale Investing – Does it Really Work?

I have recently put a few shortsale offers in due to the shortage of REO (real estate owned)/bank owned properties on the market. What I have found interesting is there is not nearly the competition from other investors. For instance, with all bank owned deals that are any good, they all seem to go to “highest and best”. Highest and best means each person has 1 time to come back and put their best offer in. Then the bank usually selects one of those highest and best offers. It becomes very competitive and hard to guess what to offer.

Recently I put have put in 4 shortsale offers. They all got accepted as is, and there were no other offers. Now I understand I might not get them all, but that is ok. If I get half of them, I will be happy. It is like putting a few deals in my pipeline for the future.

A few tips I would like to share when making a shortsale offer:

1) Try to make your inspection for AFTER the bank approves the shortsale, otherwise you could be spending money on a deal that doesn’t ever go through.

2) Try to make your earnest deposit either very low or not to be deposited until the bank approves the shortsale offer.

These two things have really helped make my shortsale offers easy and risk free. Now, I will say that a few agents won’t allow these, but because I am a real estate agent and know many agents in my area, this has really helped me get these through. It might be something you have to work through over time to create a proven track record, and you might want to consider getting a real estate license. What is my exit strategy? For the most part, I am using a lease option for 1-2 years and then converting to a land contract (seller financing) if they can’t get a mortgage. I could flip some of them or go straight to a land contract, however, I don’t want short term or “dealer” status with the IRS. I want to keep the majority of the profit in my pocket and not Uncle Sams.

I have spent some time recently talking to shortsale negotiators and they have shared that 80-90% of their deals are getting approved now. So is it worth it? I think so. Consider shortsale investing.

Wendy Patton is the nation’s leading author and trainer in ?lease options, rent-to-owns and subject-to deals.

Seven-Steps to Mastering Foreclosures

Build an insane buyers or sellers list List Building webinar.

Foreclosure Investing

Copyright © 2011 Foreclosures.com.
This article is available for free distribution under the following terms:
a) You may not edit, delete or add any content to this article.
b) You must maintain all links to Foreclosures.com.
c) This article must be distributed free of charge.
d) This Resource Box must stay intact.

Subscribe in a reader

Lease Option Questions:

(I am assuming this is for a Sandwich lease option vs. a Cooperative or Wholesale lease option.)

1) What are some good ways to qualify the potential of a property so we aren’t spending a lot of time driving and looking at properties? For example, when making first contact do you ask what their mortgage balance is, what their current mortgage payment PITI is, etc.?

Answer:

If you have the time to go out and meet sellers, you should do so. It will give you experience and knowledge of the area. If you do not have the time, you can do much, if not all of your research online. See how much they borrowed and still owe. I usually do not discuss what they owe on the first call. Think about it: you are calling usually about a “for rent” ad and now you are asking how much they owe? it might be a bit personal for the first call. This may come up but usually too personal at first. Maybe later down the road or on the next call.

2) At what point in the discussion do we bring up that we will be assigning the agreement, sub-leasing the property or finding a lease option buyer?

Answer: I would never call it that or refer to me finding someone as “assigning or subletting.” Those usually are not positive words or a way to describe what we do. Sometimes it is as easy as “I am looking to help a local family find a nice home in a nice area. Is your home a nice home in a nice area?” Now you have told them YOU are not going to live there, but you didn’t use any negative words. You have also directed the question back to them on something else. It is now about their home and neighborhood and not you and what you are doing.

3) What assurances can we offer the seller that makes it advantageous for them to do a lease option with us vs. doing a lease option deal with an end buyer?

Answer: most haven’t even thought about doing this technique with an end buyer, but the rent is coming from you. You have experience to manage it, etc.

Wendy Patton is the nation’s leading author and trainer in ?lease options, rent-to-owns and subject-to deals. For more information on Wendy Patton visit her website at www.WendyPatton.com.

Simply the best List Building webinar ever.

Learn to Wholesale

* Search Foreclosures in Your Neighborhood, FREE 7-Day Foreclosure Lists Trial

Copyright © 2011 Foreclosures.com.
This article is available for free distribution under the following terms:
a) You may not edit, delete or add any content to this article.
b) You must maintain all links to Foreclosures.com.
c) This article must be distributed free of charge.
d) This Resource Box must stay intact.

Subscribe in a reader

Question:

“Insurance for Lease Options.” What does this clause mean? From page 109 in my Lease Options book: “Seller agrees to change their homeowner’s insurance policy to a non-owner occupied policy and to name the purchaser as an additional insured within three days of purchaser taking possession of the home.”

Are you talking about the agreement between me and the seller, not me and the buyer/tenant, right? How do you get the owner to not try to do this themselves after you present it to them?

Answer:

This clause is for the protection of the owner mostly. It insures they have the right type of insurance for their lease option on their home. If they don’t change their insurance and they have the wrong insurance, they might not be insured if something were to happen. You get them to do this by letting them know they NEED to do this to protect their home. Have them talk to their insurance agent to get the right type of insurance for their lease option home. Usually the expense for insurance on a lease option to the owner is minimal if anything, but it is crucial for their property protection.

Question:

I am a real estate agent and how would I get paid because I am not sure where the money would go to. Would it got to my broker?

Answer:

Any commission always goes to your broker, but not the profit on the deal as an investor.

Question:

How do you make sure that the owner/tenants are really going to be able to get qualified for a mortgage? Do you get that information up front from a mortgage company about what is needed for them to get a loan. Then put it in their contract that they need to take steps to secure?

Answer:

You never know if anyone will be able to buy or not on an option but if you are talking about a Sandwich Lease Option then you are in the middle. This means they are somewhat “sheltered” from the tenant anyway. Get much longer with the seller then you will need for most buyers. For instance, right now many buyers need 2-3 years so get 5 years from a seller. This gives you the time to put a second buyer in if the first does not exercise. If you are doing a cooperative lease option then the seller will be cooperating with you to select and finalize the tenant buyer.

Wendy Patton is the nation’s leading author and trainer in ?lease options, rent-to-owns and subject-to deals. For more information on Wendy Patton visit her website at www.WendyPatton.com.

Virtual Short Sale investing

Foreclosue List

Foreclosure Investing

>p>
Foreclosure Investor Seminar

Copyright © 2010 Foreclosures.com.
This article is available for free distribution under the following terms:
a) You may not edit, delete or add any content to this article.
b) You must maintain all links to Foreclosures.com.
c) This article must be distributed free of charge.
d) This Resource Box must stay intact.

Subscribe in a reader

Is this a good lease option or wholesale lease option? This is from one of my lease option coaching students:

Question:
I spoke with a prospect this morning. I have had several conversations with her and she and her husband both really like the idea of lease optioning with me. It is my goal to find the right person as quickly as possible. She is very excited.

Now the numbers. She worked for the county where the house is (and where she lives) and helped develop their website. So, they looked at numbers there are trying to find out what neighbors have sold their houses for. I have run the comps for the area. Only one house within a 1/2 mile has sold recently and it is only 16yrs. old, as opposed to hers which is 36 yrs old. Within 1 mile, houses within her age range have averaged to $174K. I think she is looking at getting $170K. Her monthly PITI is $1375. I have attached the Profitability Worksheet I used for this to determine if I could give them what they want. If the terms are right for both of us, I think the deal could be really good. I have put in the worksheet a $500 rent credit for myself because they have owned the house for over 12 years, so they have some equity to work with.

One question: does the Tenant Buyer usually get rent credit? I had been told from someone I could not give rent credits to the tenant buyer because they would want to be building equity in the house and because they did not own it, they couldn’t. Is that true? Do you give your tenant buyers rent credits?

(Get all the investment tips you need from Alexis’ 7 Step System designed to show you how to cull the right foreclosure leads, make the right calls, and do the right math, so you can buy foreclosures for 30-50% off today’s already low market value – using none of your own cash or credit. http://www.foreclosures.com/pages/mastering_deals.asp)

By the way, I told you on the phone yesterday that I have had a great time developing a relationship with her very quickly. I told her up front that I was helping a friend find a home, but this home was too much for her, and it is. But I asked her if she would still be interested in Leasing it to me with an option. I explained to her that you are a fellow investor and are teaching me about Lease Options, so if I can’t answer a question, I will ask you for help. She is a very nice, hard working woman and I have to laugh. She thinks this is such a great idea, she said, once I learn it, she might want me to teach her how to do this!

Answer:
Yes you can give your tenant buyer option credits. I do with sandwich lease options or my own properties that I sell on a lease option.

I think if you can do very long term and make the numbers work with the $500 credit a month, then maybe a sandwich lease option would work, but I would like to see you get a contract in place with her for the 174-175k and keep 4-5k which would still net her what she wants to make (170k). Take your profit of the 4-5k now, since you shared with me you need the cash now!

Wendy Patton is the nation’s leading author and trainer in ?lease options, rent-to-owns and subject-to deals. For more information on Wendy Patton visit her website at www.WendyPatton.com.

Learn To Wholesale

Foreclosure Investing

Foreclosure List

Foreclosure Investor Seminar

Copyright © 2010 Foreclosures.com.
This article is available for free distribution under the following terms:
a) You may not edit, delete or add any content to this article.
b) You must maintain all links to Foreclosures.com.
c) This article must be distributed free of charge.
d) This Resource Box must stay intact.

Subscribe in a reader

Question:

Can you use lease options to get properties that need repairs? Or should you not use lease options for that?

Answer:

Yes you can but I would be very careful if you are going to do the repairs. You really don’t want to put money into properties you don’t own (or very rarely). I have done this but it is an unusual situation when it happens. A thought, let the tenant buyer do the repairs. In other words, do a handyman special when you do your ad to find a tenant buyer.

Question

Can you use it to get vacant residential land?

Answer:

Oh yes and for commercial and multi-family also. Lease Options are very flexible and creative.

(Learn from the industry experts! Get invaluable investment tips and from Alexis’ proven 7 Step System designed to show you how to cull the right foreclosure leads, make the right calls, and do the right math, so you can buy foreclosures for 30-50% off today’s already low market value – using none of your own cash or credit. http://www.foreclosures.com/training/home-study-course)

Question:

I am not having much luck on craigslist but I have seen a lot of homes that are listed with agents on the MLS but I am not sure how to deal with the agents (especially being a new agent myself)

Answer:

Use the “Working with Realtor” Course to help you with the scripts, proposals and putting thins into the agents language. Also, call me with any coaching questions so we can discuss these directly.

Question:

Silly question but how much should a person owe on their home to consider them or a lease option or would the profit worksheet help us with that?

Answer:

Yes the profitability worksheet in the “Buying with Lease Options” course.

Question:

Where do you find the appreciation rate from for a particular area could I get it from my local NAR where I am a member?

Answer:
On the NAR site or in your local paper. I doubt there is much appreciation going on right now, but there might be depreciation. Either way you just need to know so you can figure out your profitability correctly.

Question:

I feel like I am analyzing till I am paralyzed with fear, I want to do this and know I can but I just cannot find something that seems right. The right area, condition, how much they owe, etc. Is there a simple place you suggest I should start with to get my feet wet you could say.I will end it here for now and I will keep on reading, searching and listening to your CDs. Thanks again.

Answer:

Remember, you don’t start paying the seller until you find someone to rent from you. Also, if you are really afraid consider doing the cooperative lease option and wholesale it before you do a sandwich lease option. This way you can flip it quickly for cash.

Taking the first step of action (which you did) is HUGE! Congratulations!

Wendy Patton is the nation’s leading author and trainer in ?lease options, rent-to-owns and subject-to deals. For more information on Wendy Patton visit her website at www.WendyPatton.com

Foreclosure Investor Seminar

Subscribe in a reader