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Chad B.
  • Attorney
  • Washington, DC
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Make Money In Short-Sale Foreclosures

Chad B.
  • Attorney
  • Washington, DC
Posted Aug 3 2008, 10:48

Written by Chantel Howell Carey and Bill Carey

I'm new at this so I could be wrong on some of my points but after spending time on this website learning from it's members and then going and reading this book I am shocked that these authors are able to promote a book as so called experts when I believe that there is atleast 20 people on this site more qualified to write this book then them.

Here is two quick examples of why I don't think these authors know what they are talking about:

In Chapter 7 Titled No Equity? No Problem
They use an example of a property saying it is worth $210,000
The loan balance is $200,000 and the owner is currently behind $3,600 in mortgage payments. They go to discuss how this is the perfect property to negotiate a short sale and they suggest trying to get the property from the lender for $169,000 producing an instant equity of $41,000.

From what I've learned here that doesn't sound like such a great deal to me. Let's say you are lucky enough not to have to put any money in the property and you are able to quickly resell the property. About the best your going to do is about a $25,000 profit. Probably much less expecially if you consider Uncle Sam's take. Sound's like too much risk for too little reward in my opinion. Using the 70% of ARV discussed on this forum we should be trying to get this property for $147,000 or less.

In Chapter 3 Dealing with Owners in Financial Distress they discuss the numbers on looking at a income property. They are using an approach called Gross Rent Multiplier where they use the gross annual rent of the property to determine property value. They use an example of a property that has a gross annual rent of $120,000. They use the capitalization rate for the area to determine that the gross rent multiplier for the area is 8 so they multiplied $120,000 x 8 to come up with a value of the property at $960,000.

If you listen to the posters on this forum using the 2% rule you would come up with a target purchase price of around $500,000. That is a huge difference and it made me wonder what these authors experience in Real Estate Investments was. Reading the back jacket of the book their vast knowledge seems to have come from being RE Agents and seminar speakers. They offer no information about any investments were they actually invested any of their own money. No wonder they are willing to accept such small returns.

This was just two of many examples shown in the book where I felt the return they were suggesting were just too small to make any investments worth while.