If you own and rent just one piece of property you are consider alandlord. Property owners have the potential to make money and a lot of it, especially when the right cards are played. Are you making money now from your rental properties? Would you like to make more? You can with foreclosureshort sales.
Short sales are an alternative to foreclosure. The decision to offer the property in the form of a short sale is made by both the borrower and the lender. Everyone needs to be in agreement because less than the outstanding mortgage amount is sought. For example, if a borrower owes $20,000 on a $45,000 home, the property may be listed for sale at $15,000. Some lenders try to get as much of their money as possible, while others want to unload the property as quickly as possible. This means there is always the potential to make money.
So, why should you, as a landlord, closely examine foreclosure short sales?
The poor economy has everyone in a pinch. With a high rate of unemployment and a troubling economy, many homeowners are unable to make their mortgage payments. Soon their debt is spinning out of control.
Right now, you may be running a profitable rental business, but not all landlords are. Due to non-paying tenants, empty units, and poor financial choices, some landlords are finding themselves in or nearing foreclosure.
This means you will find a wide range of properties for sale in the pre foreclosure stages, often available as short sale properties. All of these properties, including single-family homes, can be purchased, renovated, and rented.
2 – Get a Good Deal
As previously stated, short sales are alternatives to foreclosure. They involve selling a property for less than the outstanding mortgage amount due. Why do borrowers and lenders agree to short sales? Because it is much better than foreclosure. Borrowers do not suffer damaging consequences to their credit and most are able to avoid bankruptcy. Mortgage lenders get their money faster, even though they do accept a lower amount. They also avoid lengthy and costly foreclosure proceedings.
Since both mortgage lenders and borrowers are willing to accept less money for the home, there is the potential to get a good deal. By looking in the right places and bargaining with all lenders directly, you can get an amazing deal on any type of property.
Foreclosure short sales often result in a good deal, but always proceed with caution. Homes do depreciate in value in a poor market. Ensure the short sale price is significantly below the home’s appraised value.
Most buyers of foreclosure short sale properties are first time homeowners or investors. These investors buy a home and resell it. You do have this option, but use your experience as a landlord to make a profit. Consider the long-term aspect. By finding a low-priced short sale property, you can turn a profit in no time at all. For example, if you are able to purchase a 2-family home for $20,000 and rent out those two rental units for $800 a month each, the rental units pay for themselves in just 13 months. After that, you profit.
If you are a successful landlord who is already making a profit or in good financial standing due to your rental properties, you may want more. Unfortunately, the poor real estate market makes that difficult. Many homeowners try to sell their home as soon as they notice a problem. They know that foreclosure may be months away. Unfortunately, most of these property owners have unrealistic expectations. They not only want to get out from their current mortgage, but make a profit. In most cases, that will not happen. You and all buyers know, the less you spend the more money you make.
For landlords, foreclosure short sales are an easy and affordable way to expand a rental property business.
If you are like most Americans, you may need financing to purchase a short sale property. Since you are an established landlord, you are at an advantage. Not only should you have decent credit and adequate cash flow, but you have bargaining power. Not only approach lenders about buying a short sale property, but financing the mortgage directly through them! This is a win win situation. Sell yourself. You have experience buying properties, making repairs, finding quality tenants, and paying your bills on time. Remember, mortgage lenders want to avoid foreclosure proceedings at all costs. This leaves you with the power to bargain.