Real Estate Investing Business Models - Short Sales, Reos Or Motivated Sellers?
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Real Estate Investing Business Models - Short Sales, Reos Or Motivated Sellers?
| Date Added: January 14, 2011 09:09:12 PM |
| Author: shakir@resellerservers.net |
| Category: Real estate & Construction |
| In a real estate market with so many deals lying on the market, most real estate investors get confused where to get the best investment deals. Should you get bank REOs? Do you do short sales to buy the houses for less than the mortgage balance? Or do you stick to buying houses directly from motivated sellers? We will analyze these 3 situations here. Each method has its good and bad sides; let's look at each one: 1) Buying bank foreclosed REOs Banks have too many foreclosed properties and they increase in number every day. As oon as they get them, they try to sell them. These properties can take a long time to sell; there are few buyers in this market. Banks can therefore discount them especially if they need repairs. Real estate investors should shop carefully because not all of them are profitable. 2) Short Sales If a home owner is behind on their mortgage, the bank eventually forecloses on those homes. Banks prefer to take less than the mortgage balance than to foreclose if your offer looks good. This is called a short sale. First a bank has to do an appraisal to find out the true market value. They will then discount the mortgage if the numbers look right. The holder of a first mortgage is less willing to negotiate, offering usually not more than 20% discount. The holder of a second mortgage can lose all their money in a foreclosure, so are more willing to negotiate. You can get 80-90% discount on the mortgage. It therefore makes a lot of sense to do a short sale on a property with more than one mortgage. Short sales can also take a long time, usually 3 to 6 months. You must therefore have enough patience and capital to last you through such long waiting periods. Banks can also turn down your request even when all numbers look good. Be prepared for rejection. Lastly as in REOs, you must close fast as soon as your short sale is approved. Creative financing is not acceptable to banks. When all is said and done, you can create a lot of equity and profits as long as you select the right deals, have patience to wait for a long time, can take rejection and you can close fast. 3) Motivated sellers You can employ a wide variety of techniques to buy houses from motivated sellers. This includes creative financing. If the mortgage balance allows, you can also negotiate with flexibility directly with the motivated seller. And you can be as flexible as you need when closing, e.g. you can wholesale a deal right from a motivated seller to a wholesale buyer. As long as you can target people who need to sell their houses, this is the best way to buy investment properties. Successful real estate investing must be driven by a ready supply of private cash available from private money lenders. Targeting these lenders requires you convince them that their money is safely invested in your deals. Learn how you can attract investing cash through a private money website from http://www.realestateinvestorswebsites.net/website-types/private-money-website.php |
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