Short Sales – Investing In Today’s Real Estate MRR Ebook

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Chapter 6 - Short Sale Investors

The more you understand about the short sale, the better off you will be. You can use your knowledge to convince investors to go along with you in the deal. Some investors will be willing to enter into a joint venture with you so that they can make easy money with little financial risk to themselves and not much effort.

If you have the know-how when it comes to short sales, you can find someone with cash or borrowing power and form a joint venture. A joint venture is like a partnership that is limited to a particular project. In this case, the project would be the short sale investment.

You can have an attorney draw up documents that reflect everyone’s responsibility with regards to the project. The responsibility of the financial backer will be to finance the project once the short sale is complete and the closing is set. The beauty of this type of investment that you want to stress to any investor is that no money actually has to change hands until the day of the real estate closing. Unlike buying a foreclosure, you do not have to put down a cash deposit on the property - just prove that you have the cash to close.

The only risk for the investor is if the house turns out to be worth even less than you pay for it. This is why it will be so important for you to do due diligence prior to the sale. You are going to have to show all of this information to the investor. We will discuss due diligence and title issues a following chapter.

For the most part, the investor just has to put up the money for the closing and then wait for the property to be sold at which time he gets half of the profit. Depending on what kind of deal you make, the return can be exceptional. It will be much more than the investor can get for a bank investment and much less risky than a stock investment.

The ideal short sale investor is someone who understands a bit about the real estate market but does not have the time or the inclination to negotiate the deal with the bank and the seller. This person can be an attorney, doctor or anyone who wants to make a good return on a real estate investment that can occur only in a down market.

You can divide the proceeds of the sale of the investment in any way you like. You may have more than one investor in the joint venture. If you are planning on investing in the property as a joint venture, you are going to have to have legal documents drawn up by an attorney and will have to present them to the lender as well as the closing agent so that the joint venture can take title to the property. In some states, a joint venture cannot take title. If this is the case in your state, you can simply have everyone who is involved in the joint venture take title as tenants in common. This means that everyone will get a share of the proceeds of the property. If one of the partners dies, their share will go to their estate and not to the other partners.

You can find short sale investors by joining investor clubs or talking to people who are interested in making an investment. Some people have found that pooling their money together makes for good short sale investments. Start an investment club either online or locally for those who are interested in taking advantage of the buyer’s market that we are now experiencing in the real estate industry. This can be a good way to meet others who would like to also invest in this type of real estate venture.

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