Is A Short Sale A Waste Of Time In Real Estate Investing?

Negotiating with a mortgage lender to buy a house for less than is owed is called a short sale.In other words, the lender accepts less that is owed on the mortgage and lets you buy a property at a discount. A loan qualifies for a short sale is the home owner is at least two payments behind. You as the real estate investor identifies motivated sellers who qualify for a short sale and you negotiate with lenders. These factors are important for the success of short sales. 1)  Pre-screen your properties properly Not all properties qualify for a short sale. Selecting the wrong properties for short sale will be a waste of your time. A home owner must be behind on their mortgage at least two months. You must consider the mortgage balance. If there is only one mortgage, then you need a discount as little as 10-20% for the deal to be profitable. If there are two or more mortgages, negotiating all of them can produce a lot of profits. You can get as much as 80-90% discount on a second mortgage. Properties with more than one mortgage are likely to be your best candidates for short sale. Of course if repairs are needed, you must factor all the costs. 2)  Short sales take time A short sale takes 3-6 months or more. If you are new to real estate investing, you must consider this waiting period before adopting short sales. You must have some good capital that will sustain you through months of not making a profit. . Otherwise adopt short sales as a part-time model in your reale state investing business. 3)Be prepared for failure Your short sale application can be rejected for any reason. They can still say no even when it looks like an obvious candidate. Be prepared for rejection. Having more than one short sale will help you. Expect a 60-70% success rate if your candidates are selected well. 4)  Time is of the essence If a property is about to go into foreclosure auction, you might not have enough time to stop foreclosure. . Select properties that allow you time to negotiate with a lender. 5)  Have an acceptable exit strategy A lender will not accept certain types of transactions for short sale deals. For example, you cannot wholesale the property with "and or assigns" in the contract. You must close as soon as your short sale is approved. Most banks will give you about 30 days. 6)  Enjoy some big profits Some deals will make you good money. Once you have them well qualified, you can expect some good pay days for the ones that succeed. Simon Macharia is a real estate investor in Dallas, Texas. He has done a lot of short sales among other transactions. His business is run and automated by real estate investor website from http://www.realestateinvestorswebsites.net