For The Foreclosure Investor, Are Short Sales Worth The Hassle?

I have been asked many times why I like working short sale transactions. My answer to this question is easy: It is the easiest of the real estate models to set-up and duplicate (local and out of area) and it requires no money of your own or maybe no private money. Done correctly, you do not risk any money. If you are double-close flipping, you'll most likely need the so-called 24-hr flash cash--it is plentiful. However, I am always looking for any transaction that adds to my bottom line. We have done many types of transactions. Below, I'll lay out a few techniques with the pros and cons. Short Sale Pros rnNo personal Money rnNo Private Money (maybe) rnCan be No Risk rnEasiest to duplicate rnVarious exit strategies: Debt Negotiation Service Fee; Double Close Paper Flip; Buy, Fix and Flip; Buy, Fix and Hold Cons rnDealing with Banks rnDealing with various State laws rnTurbulence in Market rnLow Time Intensity rnMay need Flash cash on Flips Subject-To Pros rnEasy to Get rnLots of Sellers Cons rnEasy Transaction A free deal costs about $5000 rnAlmost Never Equity rnNegative Cash Flow rnLots of Short Sales come from Sub-tos rnRisk to own rnLow Time intensity rnNeed Private Money Fix and Flip Pros rnLots of REO properties rnCan be overall Good Values rnEasier to buy than Short Sales Cons rnA lot of investor competition rnNeed hard and private money rnRisk to own rnLow retail sales price rnVery hard to build system rnVery Time Intensive rnMay turn into rental Wholesale Flip Pros rnLots of REO Properties rnCan be overall good values rnEasier than to buy than Short Sales Cons rnMay have to risk $1000 per offer rnNot supposed to flip REOs rnLots of time involved to analyze property and bid Free and Clear Pros rnCan be Big Paydays rnAlmost no competition rnNo Banks Cons rnUnmotivated Sellers--Typically seniors who are not interested in selling rnExpensive marketing rnSlow to attract and very slow to cash out--years rnNeed lots of long term private money So if you are a beginning investor and like the idea of risking nothing and getting paid at the close, short sales can be very good. If you are a seasoned investor and you would like another income stream without doing the mitigation yourself, check out our site. We mitigate many deals for other investors. The key point is to understand that we have to be ever more diligent on calculating the offer. Note, formulas used to calculate offers on long-term hold real estate are not at all related to fix and flip formulas, and these deals are normally disastrous for the unsuspecting investor. We talk much more about this in the What2offer mentoring program. After years of doing these calculations by hand, my partner and I have developed an online real estate software to make our lives much easier. We can now crank out offers and determine the exit strategy in seconds. To Your Success, rnTom & Svein