Dec

15

Should You Let A House Go To Foreclosure?

Filed Under Real Estate Investing, foreclosure | 6 Comments

Should You Let A House Go To Foreclosure?

Last week I had lunch with a good friend of mine who is a successful real estate investor and in the last several years he’s bought, sold, flipped, rehabbed and rented countless houses.

But the times have changed and he now finds himself owning several houses that he does not want.

With the values dropping/correcting he owes more than the houses are worth plus he has negative cash flow. Let’s just say with all the houses he owes 500K more than the houses are worth.

Financially he’s doing very well and has plenty of cash. His credit score is in the 700’s.

There is no bailout for him nor should there be. Nobody forced him to do anything. Nobody expected values to drop so fast or hard. It is what it is.

He asked me what he should do and my answer may surprise you.

I told him to make a business decision and asked him the following question…

Would it be worth 500K to trash your credit?

The answer should be obvious.

The challenge for many is pride and ego. The truth is when the loans were taken out the agreement was if the loan was not paid the lender could foreclose and the borrower will lose the property. As much as I am against losing a home to foreclosure tough decisions must be based on an intelligent decision and not emotion.

The markets have changed. If you are carrying negative equity you should consider making the best business decision available and this may include letting a house go to foreclosure. You could literally owe 200K today and buy back the same house or one like it for 100K as a foreclosure or REO on the same street.

Donald Trump has had companies file for bankruptcy several times and even the Governor of Texas filed for bankruptcy while they were governor.

These are changing times and even though my friend is well off financially he has to decide if it is worth 500K or more to lose several houses to foreclosure and rebuild his credit. The alternative is to keep losing more and more money every month.

What would you do?

Please post a response in the blog below.

Author: Gerald Romine

Dec

4

4 Keys To Short Sale Success

Filed Under Real Estate Investing, foreclosure | 1 Comment

A real estate investor buddy of mine is doing a short sale where Countrywide has a 30K second and the property is overfinanced. The offer to Countrywide was 3K which is a very generous offer for a junk second that will be wiped off at the upcoming foreclosure sale.

Their response is unbelievable. “Insufficient Offer.”

But it gets better. Countrywide said they would prefer to write off the entire amount than take 3K on a short sale!

It makes no sense and it is no wonder the financial institutions of America are begging for handouts.

My friend called me up and asked what I thought. My answer was as soon as they sait they wanted to write off the entir amount I would have said “DEAL! I’m amending my offer to nothing for you and will submit it right away.”

I’m not joking.

Aside from changing the offer to zero I would remain calm and follow up as the foreclosure date approaches because the closer to sale date the more willing the lenders.

Short sales continue to be VERY LUCRATIVE.

The 4 keys to short sale success:

  1. Followup.
  2. Be non chalauent with an almost “who cares” attitude.
  3. Be working several short sale deals at a time.
  4. Play the short sale game.

If you need more information on short sales check out a totally free resource at www.kickassshortsales.com.

Author: Gerald Romine