"EXIT STRATEGIES"

   Ahhh, exit strategies,even thought it might not sound important, some exits could be the most most important verbiage in a contract. Determining what your exit will be before hand can be a factor when trying to deal with time.One thing to keep in mind is that creative R.E. deals have different exits for different venues(short sales,rehabs,wholesaling,lease options,etc..).Refinancing,selling,and giving the deed back to the bank can be some options to look at when dealing with your transactions.

Exit Strategies can range from lease optioning,traditional sale,renting,and even wholesaling the deal.Remembering that things happen and having a exit strategy when something happens will allow you to preform when other wise you could not.In Real Estate, inserting a subject to clause means that your your offer is contingent upon other factors,such as appraisals/inspections that are acceptable,funding, finding a tenant buyer to buy property,partners approval or other things that may happen, and allowing to you back away if you have to,even after a offer has been written.I f you do your due diligence correct and feel comfortable enough, you can can pass on the property.

Disclosure's in your contracts with contengencies should be written in so your exit strategy is in place.
These are some exit's that may help you write your contract with protection.

• Subject to buyers approval of contractors estimate.
• Inspection clause
• funding clause
• agreements not met on contract
• offer is subject to the approval of buyers partner
• offer is contingent upon buyer finding financing from lenders
• 
  

"The Life of a Short Sale"

When it comes to the life and times of a shortsale, sometimes their not short meaning they can take some time to complete but are short when it comes to price. Short Sales : is a sale where the lender allows a property that is secured by a mortgage or deed of trust loan can be sold short(less than existing loan balance)with factors and stipulations involved.Short Sales are sometimes the last resort for lenders before proceeding with foreclosure and can be few and far in between.Borrowers who are looking to short sale must qualify, and experiencing financial hardships.

  After finding short sale candidates and contacting them, you have them agree to proceed with the s.s.,you will then start to accumulate paperwork to help the approval rate.Starting with the last bank communication statement so you can confirm what sellers have told you is in fact the truth and is accurate.You can start doing "due diligence" at this time to search for liens and anything that might cloud the process. You can then determine(if any liens,etc...are found)  if you would like to continue with the process and you can then have the seller contact the bank and ask for a short sale forms (third party authorization) package which will allow you to try and work with these creditors to have them release(remove) the liens.

 Your package will arrive and you can have the sellers fill out their paperwork as you will fill out the third party authorization which will give you authorization to speak with the banks personnel(loss mitigation dept.) that is assigned to the case.The bank sometimes very helpful and can inform on what and how the forms should be submitted.Reserving the right to do a full property inspection if the offer is accepted and negotiating can begin.Remember that a short sale will  avoid the foreclosure process which can be an advantage,one being credit record .There are disadvantages as well as advantages when doing short sales, we will cover these on a later article. The banks are in the lending industry not home selling industry, so they are at times looking to help if you ask.

Once the bank agrees to your offer, after you have prepared a case for them so that they know what the property worth might be, along with anything detrimental that will state why you could not and will not pay full price for the property.There are many things that will help your case when sending information to the bank and asking them to accept your low offer. Job loss,crime,major repairs,hardship,bk's,bad neighborhoods,etc.. can be just some of the information you can send the bank so they can consider or accept the offer. The more reasons the better.
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 You are then ready to submit the info to the loss mitigation dept. and you may have yourself a short sale accepted.Remember that building a case will require to prove the homeowners hardship,damage to property and comps for the area will support your submissions to the bank and they will help make a decision on the offer.Short Sales are growing and allow investors to submit a few documents and work out a compromise with the banks L.M.D. and purchase a home at a discounted price.

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Top 15 Worst Investments – Part 1

Top 15 Worst Investments – Part 1

REO's

Real Estate Owned : Is a property that goes back to the lending company if the foreclosure process was unsuccessful. Buying reo's are not always a great deal, and again remember that term "due diligence" I talk about it so much,well it will have to be done for REO's ,before making an offer.Make sure the price you offer is comparable to properties in the area. Staying within a 3/4 radius for comps can give you a idea on what has sold in the last few days to the last 6 months.

Make sure and consider the repair cost, how long it will take for all the repairs etc... Contacting contractors, sometimes will benefit you,  they can give you their evaluation for the work that is going to be needed, sometimes a handyman, Realtor comps of recently sold properties can give you idea as to what materials were used to repair or replace certain items. Remember that REO;s can be a tremendous  investment opportunity or it can be costly and  trouble. Make your offer and make it easy for the bank to accept.


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"Quit Claims"

     If a person gives you a claim to any property, he is "quit claiming" the property to you. Quit Claims do not guarantee that the person quit claiming the property has any stake in the property at all, but does transfer all interest to the grantee.The quit claim deed is usually to protect a person's interest in the property.

Quit Claims can be risky, so ( some damn good due diligence will be needed) because once the deed is quit claimed in a since,it  relieves the grantor of any future turn ups; such as liens and other legal recourse.

Warranty Deeds

       A real estate deed is a legal document that conveys and assigns title to property. Warranty Deeds have similiar characteristics to a foreclosure,meaning they both are distressed properties.And that the borrower/s are defaulting on the loan. Warranty Deeds are sold by the lender after the repossession of the property.And can be pretty nice investments for investors.They also protect the buyer, they have four warranties(promise) in favor of the buyer.Always seek professional legal  advice when dealing and writing warranty deeds.

Warranty Deeds guarantee that the person selling the property is the owner(and alive,some stipulations on being alive) and has the right to sell. Its comes with no liens attached,and this means no taxes and other fees to be paid by the buyer. Sometimes it takes the edge off things knowing that

•  the seller indeed owns the title
• holder has the right to sell and has not been sold
• the property is free of claims, debts and liens ,unless otherwise stated on the deed.
• the owner carry the repair responsibilities and any problems with the property lay on the seller

     I suggest, if you plan looking into Warranty Deeds call around and locate the attorney's who can help you with the writings of W.D's. Even though they carry nice warranties, they still come with stipulations, but can be     done with some effort and a little bit of savvy.    

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This Weeks Topic: "ESTIMATING YOUR COST"

This week we write about " Property Estimating" ,Current Market Value (CMV) & After Repair Value (ARV). Finding the cost can be tricky and sometimes harder than you might think. Here are a few tips to help make this process a little easier and less pain staking . With a little help from our friends around the Investing World we gathered
some ways that will bring you closer to a price that is a win-win for everyone involved.

• Visuals
• Internet Estimators
• Contractors
• Appraisers
• Comps
• Property Inspectors
• Kelly Blue Book- Just Kidding. no blue books here.
• County's Assessor's
• Estimating Programs
• * Experience-- after completing one or two you will get the scope of things.
• Materials List / market cost for mat'l varies from county to county, Ask your material stores for skews w/ pricing list. some offer these valuable list for FREE.

 Nothing is king in estimating more than actually doing some of these projects yourself, as a Builder it comes with time and time is experience and exp. turns estimating into second nature. But for those who don't have the exp.in residential building, remodeling ,rehabbing or any other residential and property fix ups, do not fear, you have plenty of ways to accumulate estimates. If you have your doubts about anything in need of repairs or replacement, look at the cost involved for replacing and repairing. If you have any questions regarding this area ,feel free to submit your questions. We will post more on this subject down the line, so get out and start estimating your properties to profits.

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                                                                        Gregory Hernandez