RealEstateInvestor.com Suggests Investing in Short Sales

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RealEstateInvestor.com (REI) is announcing to investors that the "seamless short sale" concept is the way to go for those looking for steady and safe returns, as well as helping financially-stressed homeowners remain in their properties.

RealEstateInvestor.com (REI) is announcing to investors that the "seamless short sale" concept is the way to go for those looking for steady and safe returns, as well as helping financially-stressed homeowners remain in their properties.

The "seamless short sale" concept was created by a Coldwell Banker associate broker based in San Diego, Al Hackman and short-sale specialist, Troy Huerta, who is a broker and owner of Real Estate Insight in San Diego.

The idea works by allowing the homeowners to remain in their property, even after a short sale to an investor, and having them rent it back on a triple-net basis for less than they were paying per month to the bank.

It's a win-win situation for both. The homeowners get to stay in their property, and investors get tenants who will undoubtedly take care of the rental property as if it is their own.

Investors will generally receive annual internal rates of return of 7 to 8 percent, plus a gain, ultimately on the resale.

According to a July 17, 2009 article for Realty Times, Hackman gives a real example of the "seamless short sale." Owners bought a house in 2005 for $725,000 with 20 percent down. They remodeled the property with their own funds, then took out an equity line of $72,500 in 2006.

The article goes on to state that the owners' current debt on the house totals $652,000 but the property only appraises around $500,000, so they are in debt by $152,000. They would like to do a short sale, but prefer staying in the house.

The solution, according to the article: following negotiations with the primary and secondary lenders, the homeowners sell the house for $500,000 to one of Hackman's investors, then lease it back for $25,000 a year, triple net, which means they pay for taxes, insurance, utilities, and they get the right to buy the house from the investor in three years for $550,000.

As a result, the investor receives a 5 percent cash-on-cash return from the lease, plus if the owners repurchase at $550,000, Hackman calculates the internal rate of return over the three years at 8.1 percent, again as attributed by the Realty Times article.

"This is exactly why we encourage investors to look into short sales," RealEstateInvestor.com CEO, Colin Egbert states. "They offer you a great return on a low-risk investment."

http://www.realestateinvestor.com/

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Tiffany Walton

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