Short Sales SUCK!!
All the chatter about short sales is really wearing thin on me. Can they be a great deal? Of course. Are they the best way to invest in this market? NO.
As most of you probably know already, "short" is the worst way to describe these sales. The process is long and tedious, often drawn out for months on end. While the deal may be worth the wait monetarily, you need to be aware of the other pending issues that may and will arise during this drawn out time frame. As we know by now, short sales happen when a homeowner can no longer afford their home and need to sell below fair market value. Now ask yourself this, if the homeowner can't pay the mortgage do you think they will continue to maintain the house to the best of their ability? Of course not. Landscaping goes first, then common problems become ignored, the electricity gets turned off - no A/C breeds mold, the pool turns to a green sludge filled nightmare, the home begins to smell and termites and bugs start to move in by the thousands. All while you are waiting for the bank to get back to you with an acceptance or denial of your offer. By the time the bank does respond, the home is worth about 5-10% less then you offered at original contract. So, you tell me.... are short sales the way to go?
In reality, they can be a great investment if done right, but they should not be your main focus in this market. What should be?
New Construction!!
With the economy in the state it is currently in builders are scrambling to sell out their remaining inventory. Now keep in mind that these builders pretty much have carte blanche as to what terms they can accept. There is no wait for third party approval of your offer and many builders original lenders will actually finance you at lower then average rates just to get you in the door!
Let's also keep in mind that you are now working with new product, not just new but BRAND NEW. The builder will also often offer a warranty on the home and all appliances. That alone cuts future costs!
There is also a strong point to be made that many of the past sales in these communities have closed at much higher levels then you will be paying. Instant Equity no longer exists monetarily but in essence that is what you are receiving with many of these purchases, and for a long term hold what's better then that?
New construction units are also much easier to rent. The grounds are beautiful, the interior is brand new, and in return you can demand a stronger rental rate.
Short sales can work, they will not disappear and may offer strong returns, but in today's current market there is nothing better then snagging a new construction unit at rock bottom price.
For more information be sure to visit http://www.sflainvestments.com/
To your wealth,
Rick
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1 comment:
There are also 3rd party home warranties to cover systems and appliances on new construction homes. Most of them start one year after close of sale and last for three to four years after that. It is a nice option, especially since they can pick up where many manufacturer's warranties end. There are a few companies that offer this warranty, you might check out Old Republic Home Protection as an example. They are www.orhp.com.
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