Foreclosure sales are the best-known ways to acquire a property that can be sold for a quick “flip” profit without any repairs, but for many banks, which are trying to eliminate non-performing assets from their books, a “short sale” can be a faster and more appealing way to dispose of property. A short sale occurs when the bank gains possession of a property due to delinquent loan payments, and then sells that property to an investor for a lower price than the original loan’s amount. Although the bank loses money by selling the property for less than the amount it loaned to the original homeowner, it can quickly reinvest that money into its other streams of income.
For investors, the key point is that the bank is motivated to sell you the property. A repossessed property (which is classified as a “non-performing asset” because it isn’t generating income for the bank) looks very unattractive in the bank’s reviews, so the lender will want to sell to you if the price is right.
Call your local bank and tell them you’re a real estate investor looking to purchase properties. Ask if they’d be interested in a short sale in order to rid themselves of non-performing assets. As always, there is likely to be competition, and aiming for a pure “flip” (as opposed to a rehab flip) may not be feasible. However, if some other profit strategy, such as rehabbing or renting out the property, can be used, purchasing as part of a short sale can add a considerable amount to your profit margin.
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