All week I’ve been showing you excerpts from a letter I received that was written by a lawyer advising her client (the homeowner/seller) not to enter into a Short Sale with one of my real estate investors. Short Sales are THE best way to make BIG money in the current real estate market, but let’s face it, most people (including many pros) don’t understand them.
So if you really want to GET what Short Sales are all about, make sure you attend my Short Sale Breakthrough 09 event in Orlando on July 27-29.
Anyway, back to the letter… This is a great chance for potential investors to learn more about Short Sales, so I’m replying to the lawyer point-by-point. (Go here to start at Part 1 if you haven’t already read the full letter.) Here’s the fourth excerpt:
4. In the cases we’ve seen, the investor has not put any of his own money into the transaction, and uses the new lender’s money to fund the entire deal.
No! Here you’re wrong. Using money from the end-buyer’s lender to fund the investor’s acquisition is not a common practice today and is something I always strongly caution against.
While the structure that you’re referring to WAS the way many real estate investors attempted to do simultaneous closings in years past, that’s just not the way we do it today.
Nowadays trained, experiened investors (like those who’ve attended our Short Sale Breakthrough events) understand how to fund their acquisitions with independent funding that is completely seperate from the buyer’s funds. Our students have access to transactional funding. That means their deals are structured so that the investor’s purchase from the seller is a completely distinct and sperate transaction from any that might follow when the property is sold to a retail buyer.
