3 Benefits of Buying Short Sale Properties

What is a short sale?

A short sale refers to the transaction where the bank allows the homeowner sell a house at an amount that is less than what is owed. The borrower has to hire a real estate agent and advertise the home in order to attract more potential buyers. In such a situation, if the home sells as expected, the bank or lender will be able to recover the amount the homeowner owes. Many buyers take advantage of short sales due to the fact that it offers them a likely bargain. The benefit of this trend is that real estate property will appreciate with time, especially if the real estate market condition gets better.

Here are the 3 Benefits of Short Sale:

Low Pricing

Short sales favor buyers. However, it can cause detrimental effects on other people directly or indirectly. The lucky buyer will be the new owner of the house, but the lower amount paid is inserted in real estate databases. Unfortunately this may lead to a decrease in the Fair Market Value (FMC) of similar properties. This can also affect the buyers if they are trying to flip the house because the value will be lower due to the short sale. In such a situation, it is prudent for buyers to refrain from selling their property quickly while the market prices are still low. When the market fully recovers, they can go ahead and sell their property with a better return on investment.

Fair Financing Terms

Despite the fact that short sales have to be approved by the bank in order to allow for the sale of the property at a price less than what is owed, it is still one of the most cost effective ways for the bank. In most cases, the current homeowner is not in a position to repay the outstanding loan. The bank has two options; foreclosure or to consider a short sale as the best alternative to recoup the amount it owes. Many banks offer potential clients favorable financing terms to attract them. For instance, the lender may consider offering low interest rates to a likely buyer to avoid additional expenses by selling the property quickly.

Protects Credit

It is worth noting that the lender does not want to lose money at all and will therefore look for a way to recover the portion of the property or mortgage loan than incur loss. Banks prefers short sale, which allows the homeowner and the bank to reach a fair deal. However, the main concern of the homeowner is whether the lender will take legal action against him or her in an attempt to recoup the total amount of the loan after a short sale as in the case of foreclosure. However, this procedure is costly and time consuming. In this scenario, the lender will cut its losses with the homeowner who fails to repay his or her mortgages due to hardships like loss of income or even divorce. Reduction of the amount owed will not only alleviate the burden, but also protects homeowner’s credit.

A Better Alternative

Whenever possible a short sale should be pursued as an option for both the homeowner and the buyer. However, the homeowner must have a substantial amount of equity in the home for the bank to consider a short sale. Banks are not in the business to lose money, but they also understand the value of cutting losses short instead of incurring additional liabilities and cost. If you have questions feel free to contact us.

Things To Keep In Mind When Looking For REO-Real Estate Owned Opportunities

REO_exampleAs a result of the housing crisis that hit various regions particularly hard, a large number of REO-Real Estate Owned opportunities surfaced in the market. It is now increasingly common to find these “bank-owned” real estate properties. If you are in the process of investing in a real estate property and shopping for a home, you should keep the following all of the following in mind before you buy this type of a property.

What Is An REO Real Estate Property?

REO or bank owned real estate properties are basically properties that have undergone foreclosure and now the lender owns them. This means that the property is being sold by an intuition like a bank that had lent it to the former owner.

Everything You Need To Know About Investing In An REO Property

Budget appropriately: Most lenders sell REO real estate properties “as is,” so the costs of repair and/or renovation as well as the time required for the completion of those tasks should be considered. Usually, when a property is foreclosed, it is properly maintained and necessary repairs are made by the bank or the lending institution, but some repairs and/or renovation is still required.

Be prepared: If you are serious about investing in an REO real estate property, you should act upon this real estate transaction as quickly as you can, especially if a lender has approved you for financing. If you manage to find an REO property worth investing in, then it will be better for you to make the offer as soon as possible. REO real estate properties tend to attract lots of investors and most of them tend to move fast.

Inspect the property: As with any real estate transaction, another important step that you will have to take is to get the real estate property inspected. Since REO properties have often been vacation for a considerable period of time, inspecting the property becomes even more important.

Know the market: If you are interested in investing in a REO real estate property, finding a “deal” will not be difficult. However, it is more important the price you offer is comparable with other similar properties in the neighborhood. Negotiating is a common tactic that is utilized by most banks and other lending institutions, but they ultimately need to sell the property at or close to the current fair market value. You can seek guidance from a real estate agent.

How To Buy & Invest In An REO Real Estate Property?

The process of buying an REO property is quite similar to that of buying any other home. Of course, the buying process includes and additional addendum and disclosures, and a real estate agent can provide guidance to get through them.

Earn approval or pre-approval: When it comes to real estate transactions, this step tends to be quite critical. By taking time step, you will be able to budget appropriately and find a property you can afford to buy, while sellers will realize that you are a serious buyer.

Make an offer: You will be able to determine a fair price with the help of your real estate professional and once you have, you can make an offer.


If you want to invest in a property that will be free of title liens or any other claims, then you should definitely go looking for REO-Real Estate Owned opportunities. Moreover, since the lending institution has already taken care of the eviction process in the case of these properties, investing in an REO property will save you a significant amount of energy and time.

Look At What The Experts Are Doing

negotiation-winwinWe have always felt that buying and selling real estate is one of those investment opportunities that will be around forever and will remain lucrative for those who know what they are doing. If you are unsure about how to approach this investment opportunity in your area, it is a good idea to take a look at what the experts are doing. Here are a few tips that should go a long way in making sure your investments are fruitful right from the get go. They were key for us!

One Percent Per Month Return

When you are looking at a rental property, you might want to know about the monthly return you are going to get on the investment. You will want to be sure about what you are getting. The general consensus is that you should only go with a property that is going to at least yield 1% return on the sales price on a monthly basis. This would mean a home that is worth $200,000 should ideally be driving in $2000 worth of rent a month. Of course this needs to be adjusted depending on what the rental market in the area dictates. However, using this formula for your planning will help you make smart choices with your rent and hold game plan.

Locate Area Not Just Property

What does this mean? When you are looking at a new property that you are going to be investing in, you can’t just buy it in a vacuum. This means, you have to look at the area and what the benefits are for someone that might reside here for a long time. Is it worth living in? Are there enough schools nearby? What about shopping centers? These are all questions that have to be looked at before making the investment and going all the way.

Always Negotiate!

It might be the best deal that you have ever come across, but there is always wiggle room. You have to make sure you squeeze as much as you can out of the deal and negotiate. Feel comfortable with this process and that energy will be felt across the table or phone call.

If you are not negotiating, you are potentially paying a lot more than you actually would have had to with a bit of negotiating. Whether you are the seller or the buyer, you have to get the best possible deal. Even if that means, you are sometimes shooting for the moon because that is going to bring a greater return on your investment in the end.

If you are uneasy about negotiating or just feel that you are not good at it, you can always rely on your real estate agent. The reason I say this is because I have direct experience with this. We tried to do our first deal by ourselves and really shot ourselves in the foot. On all of our subsequent deals we have handed the deal making to our capable agents. They have consistently saved us thousands of dollars and sometimes even five-figure savings in the negotiations. Our agents at New Era deserve a lot of credit and I’m sure you can find someone like them in your area to fight for you when the deals get tense! You will be glad you did.  :-)

These are some of most important factors that have led to massive gains for us over the years. Pay attention to them during your ventures and we hope you have great success build your net worth.

Rent and Hold or Fix and Flip

Home-for-rentOne of the best investments that you can make today is real estate. While purchasing your own home is certainly a laudable and beneficial way to invest your funds, many have discovered that buying properties to rent or fix up and sell can be a fabulous way to make significant profit.

Buy Where There is Demand and Rent It Out

However, you should be aware that real estate investing is not without risks. There may be times when you do not have a tenant or find yourself with one who ends up costing you through damages or refusal to pay. Additionally, you need to be certain that you purchase property in an area that has a low vacancy rate. Otherwise, you may end up with a piece of property that is very difficult to rent.

To minimize your risk with real estate investments, it is often worthwhile to work with a real estate investment group. This will allow you to buy into a property that is maintained by a management company. They handle the day to day operations of the rentals for a percentage of the collected rents. This will cut into your cash flow a little each month but the alternative of having a vacant property can potentially derail your investment. As a resource, here are some real estate investment analysis spreadsheets which will help you make key decisions with your venture.

The Fix and Flip Method

One way to gain profit through real estate is by flipping properties. This is a common method for many who understand how to find and resale properties quickly. There are a couple of methods that people usually employ when flipping land and buildings like this.

The first is finding a property that needs no repair. It should be priced too low or in a market that is really hot at the time. Both of these allow for a quick return to the market at a marked up price.

Alternatively, if you have the skills, you may want to purchase residential or commercial space that may need some minor adjustments. Simple things like remodeling the kitchen can increase the value of it. However, before you make alterations, you need to determine the impact on property value compared to the money and time you are putting into the changes. You want to choose the changes that will provide you the greatest return on your investment.

Real estate investing is something that many have found quite profitable. If you have limited funds or are uncertain about the idea, you may want to join an investment group. However, you may be more comfortable with employing one of the flipping methods. No matter what you decide, do your research and you will learn how to turn a profit.

The Different Types Of Real Estate Investing

Renovated HouseWhen you say “real estate investing”, most people think it’s all about buying a property and renting it out as a landlord. However, the truth is that there are other forms of real estate investment that you can venture into.

House flipping

House flipping was very popular at the turn of this century. How does it work? You buy a property for cheap and sell it for high. The key to making a lot of money with this venture is to find a rundown property that you can buy at a really cheap price, like $50,000, and sell it for at least $150,000 after renovation and repairs. If you buy a house for $50,000 and sell it for only $55,000, it’s better to just go and find a job — if that is the case, see REITs below :-)

House flipping is expensive and time-consuming. While it’s obvious you need to have the money to buy a property, you need to have a keen eye for picking the right property at the right location and at the right price. Also, in order to make a great profit, you need to have so-called sweat equity.

The people who can make the most money from flipping houses are carpenters, plumbers and professional builders. As a matter of fact, many of these skilled professionals flipped houses on the side at the height of house flipping’s popularity. If you need to hire a professional to do repairs, it’s going to reduce your margin of profit.

Real Estate Investment Trust (REIT)

REITs are the mutual funds of real estate property. If you own REIT shares, you own property but you don’t need to deal with the problems and challenges of being a landlord. The company offering the REIT buys or builds some apartment blocks and other real estate property, after which they allow traders to purchase shares, thus sharing the ownership. You as the investor are part owner to a property, but it’s the company offering the REIT that handles the maintenance of the property as well as its sales marketing. In addition, the company also manages the tenants

You will find several types of REITs, however, in the traditional model, the lease contract is in the name of the investor title. The quality of an REIT depends on the quality of the company offering it. Theoretically, REIT is a safe method of investing in real estate, however, REIT companies are susceptible to exactly the same costs that haunt the mutual fund industry.

The Biggest Investment of Most of Our Lives

home investmentWhen you think about it, buying real estate is the most high priced item that most of us purchase in a lifetime. The beauty is we can do it by leveraging a small amount of investment capital (especially with foreclosures) to multiply the performance of the investment. Let’s not get ahead of ourselves — real estate is a dog-eat-dog world and you need a sound strategy and the best resources in your arsenal to be successful. This website strives to provide that go to source and insights to help you become a real estate star.

Why Choose Real Estate As An Investment Vehicle?

Whether it be straight up investment properties or searching for home that you will be living in, real estate offers a great opportunity to grow your net worth. For many of us saving money is difficult, especially as everything gets more expensive while our salaries remain flat. So why not take a necessary expense and transform it into an investment? Creating a forced savings system with great upside potential is great when it is money you would have spent anyway on rent.

Not A Sure Thing But With The Right Knowledge…

Real estate is by no means a guarantee as certain areas of the country has been hit hard. However for those that live in areas that are appreciating or ready for a upturn, this website will be most helpful. We will cover topics such as investment properties, how to search for a home the right way, and what to do at each step of the buying-selling process. Understanding everything from how appraisals can affect the sale of the house, to making sure your home inspector covers your bases, will be a huge asset to you as you move forward.

The School of Hard Knocks

You maybe wondering what makes us qualified to provide this information? Well the truth is we have failed many times, enough times to learn all the ins-and-outs and pitfalls of this kind of investing. We just hope that by sharing this information we can help you to not make the same mistakes that we made. If you have an open mind you will be able to leap ahead, save yourself time and get the most out of every heartbeat you put into your real estate venture.

Thanks for your interest and check back soon to see our latest entries.