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Today’s Bonus Tip:
SHORT SALES FOR INVESTMENT PROPERTIES
In the past, banks weren’t as excited to work with investors losing properties as much as they are today. The banks figured it was an investment property, not a primary residence, and there was no reason to short sale it. With bankruptcies at an all-time high, banks are more inclined to work with investors. If the properties were bought in the name of a legal entity – corporation, LLC, and so on – the investor can file Chapter 11 and liquidate assets. Chapters 7 and 13 are for personal use. Investors know how to work the bankruptcy process, as well as homeowners, do. Banks are painfully aware of this.
When putting together the short sale package for investment properties, send the same items a homeowner would send. The only difference would be to write a different type of hardship letter.
Something like this:
SAMPLE INVESTOR HARDSHIP LETTER
Dear Loss Mitigation,
I am writing to explain the hardships I have been facing in recent months. I bought four properties several years ago to keep as rentals. My plan was to rent them, pay the mortgages off, and use them to subsidize my retirement. Unfortunately, with the housing crisis, rents have fallen in this area. I now have four rentals that I can’t collect enough rent from to cover the mortgage payments. I have no personal money to subsidize the monthly shortages. I have borrowed money from four different banks, so I am contacting each of you asking for help.
I am now three payments behind and facing foreclosure on each of my rentals. I would like to sell these properties instead of losing them in a foreclosure. I have spoken to several other investors in town who have agreed to buy one or more of them but not for what I owe. I am asking you to please accept __________ as payment in full for my property.
I understand that your bank does short sales. I have prepared some financial information to show you proof that I am in trouble. Even though these are not my primary residence, please consider the short sale. I am losing everything, I can’t sleep at night, my spouse and I are fighting, I am considering bankruptcy to get a fresh start. My attorney says I can file a Chapter 7 for my personal residence and a Chapter 11 for my business. The thought of this makes me feel ill, but I have to do something. I am at my wit’s end and need help. Because of the loss of rents, I can’t keep up with the taxes or insurance. I just pray that no one gets hurt on my property.
Please look over the enclosed information and consider my offer. The person willing to buy these properties from me can close in two weeks.
Investor in Distress
As you can see, this letter is not that different from what a homeowner would write. The point is to show the bank why you can’t afford the property. Banks will short sale investment properties as well as residential. We did a short sale on a commercial building from $300,000 dollars to $75,000 dollars and paid cash. The property is now worth $800,000 and paid for. You can short sale anything.