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"What Is A Short Sale - And How Can A 'Normal' Person Put $100,000 or More In Their Pocket During The Next 12 Months Using A Step-by-Step Blueprint?"
We recently closed on a property with no money out of our pocket. We also didn't get a mortgage or use a private lender. Yet we still made a profit of over $28,000 on the deal. How did we do it?
The home owner was a couple who was getting a divorce and both had relocated out of town. They were willing to do whatever it took to keep the house from foreclosure. I started the negotiations with the bank at $120,000 dollars on a property where the bank had a mortgage against the property for $170,000. My offer was $50,000 less than the debt against the property. And that's what short sales are all about - convincing a bank to take less money than they're actually owed against a property, so that the lender doesn't have to complete the foreclosure, rehab and resale process themselves.
The lender countered at $158,000. Even that would have been a discount of $12,000 off of the debt that they were owed, but ultimately I got an approval letter at $145,000 - which was a full $25,000 discount off of their mortgage.
And in less than a week thereafter, we bought the house, resold it, and put a check in the bank for more than $28,000. We didn't spend a dime on the property. We didn't cut the grass, pay a light bill, or make any repairs (even though the property needed some fix-up). This means that the cash-on-cash return was INFINITE. No money invested, but $28,000 realized as profit. Not a bad return rate, wouldn't you say?
What is a Short Sale? A Short Sale is a program the banks have created to satisfy a need for them to liquidate their assets to increase their lending power. They do this by accepting less than the full amount owed on some mortgages which have fallen into default.
Short Sales can be wildly profitable. Our first year in this business, even with mistakes and all, we experienced over $400,000 in profit from short sales alone. It's a very lucrative business.
I know what your thinking - “That is a once in a lifetime deal and it cannot be repeated over and over.” I used to think this too. I used to say “He is in a better market,” “She has a better system than we do,” “This does not work where I live”.
LISTEN, LISTEN, LISTEN. I am living proof that $100,000 in a year is more than attainable for the average person. That is about a ¼ of what we made our first 12 months in the business!
The saying goes “If you believe you can or cannot you are probably right.”
