How to obtain and pay for a short sale... Help pls

Question

I have decided  move to the area Id like to fix and flip. I found a short sale that will accomodate my family. Ive never completed a short sale purchase. Can someone help me with this? I have a dp the house has been reduced to 65000.... But not sure how to secure the funding or a bank approval.... Ty in advance

Mindy Jensen · Answer

@Michell Garner , one thing that has not yet been addressed is the length of time it can take to close a short sale.

A short sale is when the bank accepts less than what they are owed for a property. This requires the bank approval, and they are under no obligation to do this within any particular timeframe.

Speak to a lender about getting preapproved. Then make an offer on the home and hope they respond. The closer to asking price you make your offer, the higher your chance of acceptance.

But even that isn't a guarantee. These deals can literally take months to close. So make sure you have another place to live while you're waiting for this to happen.

Michell Garner · Answer

thank you so very much and I am perfectly okay with the long post including the making yourself a real person by telling me some of your history. There are many distressed multi units and single family units in this area and to live near them would be abig plus... This house has a separate area for an office until i get big enough to off site it. I will take a closer look at all you have offered for advice and will check out the you tube stuff when kids are in school monday. I have a business plan for fix and flip of single and multiunits and one geared for single and multi units for renting... Im very ambitious was a regional phi theta kappa vice president for 2 years of college with a 3.85gpa and am lucky to be able to have access to many who know all types of construction, flooring plumbing roofing...etc... My close friend owns a law firm that will do the legal part and my oldest daughter is an accountant so I luck out with these. Again ty...and I hope we can converse when I need some advice.

Michael Lee · Answer

Hello and welcome to BP!  They have changed the Daily List mostly from Newbies.  I am having a little tough time using that.  I agree with getting pre-approved from a lender plus their loan letter that you can get and included (a copy of) with your offers to give the owner more confidence in your ability to close and how long it will take to close your loan.  Thank the Lord that your forum post, which stood out from the titles that have been used/recognized by others with the statement "pls help" that I identified and/or your letter that I identified with yours.

One of the best ways to finance a deal is owner financing after you have built a relationship and your problem solving ability.  The next who to borrow from a bank that will give you possibly the lowest interest rate.  Of course that is the same place to do "house hacking" loans because it is regulated by the FHA and they typically are involved with a bank.  The next ways to find a loyal portfolio bank that is typically local and the next place to get financing by Private Lenders that are typically more about the project and not you than a bank would treat a loan more about you personally.

There are people that offer 100% homes and the rehab/repair money but I have seen a few of those providers make money of of your loans but do not state that and mostly talk about themselves and do not tell you about their charge to do that, so be careful of them and others that make sales based on your emotion.  I am 60 years old and I found BP about 21 months ago and leaning towards rental units.

In case you have YouTube it can be a good place to learn.  On it I started listening to a guy named Grant Cardone who owns about 4,000 units and he only believes in apartment investing.  He is kind of pushy in his style but he does have some interesting things to say.  There are a couple of other guys I listen to a couple other people but they are not into real estate but also have interesting things to say.

The bulk of my business was into the constrict business even after I had a degree from a college.  I did have a real estate broker license that I kept active for about 30 years but I never did that full time.  I have been in the construction business since I was 17 including those college years.  I have only done one investment in real estate.  Since I graduated I have been more into management (since 1980). CI even owned my own business when I had that brain anuerism and stroke in the end of 2010.

In some ways I have been and felt lucky since then.  It has not been a totally negative incident.  My wife has been good at helping to take care of me, especially since I cannot walk yet.  My wife and I had a daughter about 20 years ago and she is finishing her 3rd year at the University of Arkansas.  Since she is about 6 hours away we only see her is when she is on vacation.  I am really proud of her.  She has a boyfriend from Arkansas and he is really nice.

Now, eventhough I have much more to write about I will make the rest of this letter about real estate.  Being organized and planning are two of the most important keys you can have.  There are a few things you should do before you start some investing and after you have selected your real estate niche and market area.  One of those things to consider is to having some type of a corporation or a LLC.  You might want a lawyer and/or a CPA, and/or a tax consultant to advise you on the way to go.  This should help you keep your business be seperate from personal things separate in case there is a law suit against one of them and that will keep your personal things  out of reach in case you have your business has a legal problem.

Another thing you might want to consider is having your your financing figured out before you start investing.   Like I said before you should get a loan letter that states their average number of days to close that type of loan and the maximum amount you qualified for.  The final item that I will bring up is your new office location that is both convenient and has a minimum of distraction.  You can locate that new office in your own living place but I would recommend you be able to close it off and has a minimum of distractions, especially from personal situations.

To discuss "short sales" is to tell you that the name is a little on the longer to close a deal.  The mortgage holder is usually a mortgage company to get an upside reason to get something off their books.  You can get a good deal done it just take longer to close and typically requires a bunch of paperwork and patience.  You can typically treat it as any other investor loan and be able to show it is a good loan to make.  Just ask the current financer and your lender what all they need in the way of paperwork and put it together well organized.  Make their work as easy with your paperwork.

Try to stay in control of everything you are responsible for.  Do not assume anything will happen the way you thought about it.  Always remember to do a math analysis and try to look at prospect properties of yours before making an offer or at least have a clause in thechatract that gives you some upfront time.  (about 10 days) to makea detailed inspection on the subject property and possibly back out off the deal without a penalty that will hurt you too much.  They tend to take a longer time looking and you are sounding like you know what you know about real estate.

Having knowledgable and local Team members that will help you get things done is a plus.  By experienced, I mean experienced at what you are doing.   Hopefully, they turn into the kind of people you can trust eventually.  The primary Team members are Attornies/Lawyers, real estae Agents/Brokers, CPA's (or accounts you know and trust), Inspectors, Property Managers (that do not work directly fot you), General Contractors (you trust), and Handymen.

I am sorry this is so long but I have much to say and I am opinionated.  Keep track of all of your income and expenses on projects you are held responsible for in written report form and review that regularly with a couple of people you trust and understand your goals.  By doing that, hopefully you can figure out how to lower expenses and increase the income.  Do not try to do everything yourself.

If you think I can help you out, please contact me through this site.  I am typically on it 7 days a week.  Do not cut corners to make something look better on paper but does not actually happen that way.  I forgot to tell you that I have lived most of my life in Dallas County Texas.

Good luck to you!