HOW TO FIND SUCCESS (AND AVOID FAILURE) IN SHORT SALE INVESTING

By Mark Kosin

In the world of real estate investing, a short sale can often be a phenomenal way to make a an investment profit and provide you with equity for future opportunities. However, the process can be complicated, involve a maddening amount of waiting, and be laden with hazards you'll want to avoid. Understanding what you’re signing up for with a short sale, while working with a dependable real estate investment company, is the best way to guarantee a level of short sale success.

What Is A Short Sale?

A home is put on the market as a short sale when a homeowner finds themselves unable to pay their home costs—mortgage payments, property taxes, etc.—and decides to sell the home for less than what they owe on it. This provides the seller with a financial lifeboat to help them avoid foreclosure, while giving savvy investors an opportunity to buy a home at a bargain price. 

There are many advantages to short sales from an investment standpoint. Short sale homes are usually in much better condition than foreclosure properties, which can fall into disrepair or become vandalized by the time an investor has an opportunity to buy. However, short sales are by no means an easy process. They take time, patience, and a thorough understanding of the short sale procedure. 

Keys To Success

Patience is a virtue. A critical starting point for investing your time and money into a short sale is planning to take part in a process that can be long and complicated. While some can be completed in two months time, other short sales may take up to a year to get lender approval and offer acceptance.    

Secure the package. Before the short sale process can truly begin, the homeowner must provide a short sale package to prove that they are indeed in dire financial straits. This is a thorough process that includes bank statements, financial records, pay stubs, and tax returns. If you are planning to work directly with a seller, make sure they have indeed defaulted on their loans (some will put up for a short sale before they have actually defaulted).

Work with an expert. Because short sales involve the lending bank losing money, the process is deliberately slow and complex, meaning a single missed document can delay your sale for weeks. By working with an agent who has experience in short sales you will have a trusted partner to guide you through this sometimes tangled procedure.

Pitfalls to Avoid

Missing major issues. When buying a short sale home, you are purchasing the property “as is.” That means any major property issues discovered after the sale—foundational cracks, toxic mold, termite infestation—fall solely to the buyer to handle. Having to make these repairs could significantly reduce your profit potential. Make sure to get a professional inspector, or even multiple inspectors, to review the home before making your investment.

Trust without verifying. Everyone hopes that people are open and forthcoming when involved in a sale but that will not always be the case. Sellers may sometimes advertise their home as a short sale without getting approval from their bank first. There may also be critical details left off the disclosure form, such as home issues or illegal renovations, that could end up costing you money. Check, double-check, and triple-check everything a seller tells you to ensure you don’t end up on the wrong side of a bad deal.

Offer acceptance is not a given. Banks involved in short sales will do their best to avoid losing money on the home you’re looking to buy. That means delays, red tape, and the potential that a bank could refuse your offer at the last minute. It is critical to be prepared for these realities and work with an experienced broker who can let you know if your offer is in jeopardy of being rejected.

Win Your Short Sale

While there are complications and pitfalls to be aware of when pursuing a short sale, the process is still an incredible opportunity for investors with the time, equity, and determination to make a profit. In a short sale, the conditions are still ripe for you to purchase a good quality home at a cost far below market value which can then be flipped for a terrific return on investment. Short sale success is more than attainable for those with the right position and know-how.

WINNERS AND LOSERS FOR RENTING IN BIG CITIES IN 2017

By Mark Kosin

In America's biggest cities this summer, many will be entering into an apartment search in hopes of finding that perfect new address. But "search" is far too soft a word for the conflict and downright anarchy that reigns when renting season hits its high point. A far more appropriate term would be an apartment battle. Because in a battle, there are winners and losers.

Below are who looks to be winning and losing in 2017 around the country.

NEW YORK CITY

Winners: Renters

Coming to a borough near you this summer: it's The Revenge of the Renter! According to the New York Times, renters have the extremely rare upper hand across the city this year. A glut of new higher-end offerings are having a ripple effect across the entire city. Now this is still New York and rent prices remain close to the highest in the country, but what it does mean is that anybody who is looking for an apartment and takes the first (or second) deal offered is pretty much throwing money off the Williamsburg Bridge. From the Times:

Even novice renters are getting deals, like Brandon Kline and Abigale Koppa, a couple who moved from Long Island to Queens last month. They looked at a handful of apartments before settling on a $2,150 one-bedroom in Sunnyside. Their broker, Michael Sargent, a salesman for Citi Habitats, noticed that the apartment had been on the market for seven weeks and asked the landlord for a concession. The landlord offered a month of free rent.

Deals such as the above are expected to play out all over the city this summer. Though renters should keep in mind that concessions are usually an at-signing, one-time thing. Those savings will last a year or two at most, and then you'll be back at the full price or may even face increases. 

Nevertheless, renters of New York are enjoying a beautiful Margot Robbie-esque moment. 

Soak it in.

LOS ANGELES

Losers: Renters

It is a good thing that Los Angeles wins big when it comes to nice weather, Mexican food, and classic hip hop radio stations, because this summer L.A. renters are going to be big L-A-OSERS.

Rents are expected to rise to an average of $2,095 per month by the end of 2017 according to Curbed. That comes out to an increase of 5.4% for a city that is already suffering from an acute housing squeeze / crisis.

While Los Angeles renters were spared the disaster that could have been the passage of Measure S earlier this spring, the rent pain is very real and shows no sign of abating anytime soon. L.A. is still among one of the worst cities for renters in the country, with vacancy hovering under 3%, continually rising rents, and more than 1/3 of each resident's income going towards rent payments. 

CHICAGO

Losers: Landlords

As Chicago's skyline takes on the appearance of a boomtown with 52 different high-rises under construction, landlords are feeling busted with occupancy for high-end downtown apartment buildings dropping to their lowest levels since 2009. A recent Crain's report states that after a long sustained stream of tenants towards the city, the supply for apartments near downtown may finally be outweighing the demand. 

To renters, the power shift will be a bigger relief than a cool breeze off Lake Michigan on a hot August day. It seems likely that those looking for an apartment this summer will be able to push landlords for major concessions-- two or more free months-- as the many, many new apartment buildings that have gone up over the past five years gives them a number of options to choose from.

SAN FRANCISCO

Losers: Everyone

Rents appear to be dropping in some of the most expensive neighborhoods of San Francisco, but that doesn't mean SF tenants can expect to save in their apartment hunting this summer. A report from Zumper shows that even while rents have largely plateaued in much of the city, certain neighborhoods like Presidio Heights and the Outer Mission/Excelsior have seen rents go up.

So landlords have seen their rents flatten out, while San Francisco tenants are still paying the highest rents in the country (and maybe even the world).

Just like a backyard wrestling match: there are no winners here.

DALLAS-FORT WORTH

Draw: Renters and Landlords

While the rents in Big D have never been the priciest among the nation’s big cities, renters are taking a big hit this 2017 as the area is seeing one of the largest rent increases in the country. It’s a jump of nearly 6%, pushing the average D-FW rent to $1,057 per month, according to Dallas News.

The fact that rents are rising faster than the mercury on a West Texas thermometer is especially surprising considering the more than fifty thousand apartments currently being built in the area, with roughly thirty thousand apartments getting on the market this year. Even with all the new units, vacancy remains very low-- hovering at less than 5%. 

But, even with the rent jump, Dallas is far outside the top ten most expensive cities in the U.S. for renters... so one can't really dub Dallas renters "losers" just because they're taking it on the chin a bit in 2017. 

BUY A HOUSE THIS SUMMER LIKE A DAMN SUPERHERO

By Mark Kosin

Summer can be a perilous time if you’re hunting for a new home. It is among the most popular times to go house hunting because of the nice weather, but inventories and schedules can be thrown into disarray by summer’s sometime unwieldy schedule of vacations, BBQs, and holiday weekends. Follow these tips to ensure your home buying adventure becomes a summer blockbuster.  

1. BE PATIENT, BUT ALSO READY TO STRIKE

Summer is going to see higher prices overall than in slower times like fall and winter, but that doesn’t mean you need to pay more than you’ve planned for. While others whip themselves into a feeding frenzy, keep your cool in spite of the summer heat. Don’t fall victim to feeling pressure from sellers and be willing to take your search into the dog days of August when people will be more eager to sell. But be prepared! If the right house comes along at right price you should know it and make your move. The limited inventory compared to spring and the seasonal popularity make summer very competitive. You don’t want to miss the perfect opportunity because you weren’t able to recognize it or weren’t pre-approved for the right loan.

2. GET THE ATTENTION YOU DESERVE 

Spring is usually the busiest time to buy (and 2017 was no exception) and it is likely agents will have less inventory to move than they did in the spring. Take advantage of your realtor’s less hectic schedule by seeing more homes and getting better informed. If you’re working with someone who had a great spring and wants to kick back this summer you can go ahead and let them stay by the pool without your commission. Find yourself an agent who is excited to spend their summer days with you.

3. DO THE RESEARCH AND YOU’LL HAVE PERFECT TIMING

A good bit of summer housing inventory are homes that did not sell when listed in the spring. That doesn’t mean these houses aren’t worth your time: in fact it's quite the opposite. Homes that have been on the market for for than 60 days are ripe for the picking. Overlook any cosmetic issues that may have scared away spring buyers and see what kind of a deal you can squeeze out of these overripe offerings. Someone who listed their home in the spring likely has no desire to let it sit until August, let alone the fall. Seeking out older listings will help you end up with a tall, cool glass of savings.

4.  REMEMBER: YOU’RE GETTING PEAK NEIGHBORHOOD

Part of what makes summer such a popular time is that it’s when neighborhoods and homes look most inviting: green leafy trees, flowers in bloom, and the smell of charcoal wafting in the air. This is great because it lets you envision you spending your own perfect summers there. But don’t let the majesty of a warm summer’s evening cloud your judgement— unless you’re in California or the Southwest that perfect weather won’t last forever and you’ll need to worry about rain, cold and snow. Keep a critical eye out for potential drafty rooms, troublesome flood areas, and prices jacked up as high as those July temperatures. 

5. MOVE WITH AN EASY BREEZY SCHEDULE AND SAVE MONEY

Summer is a hugely popular moving time for renters as well and, as a result, moving rates are higher than usual. But if your schedule allows for some flexibility—like, say, a Wednesday moving day—you can net even more savings as you make that road trip to a new home (even if it’s just around the block).