Cash Flow more than $500 a month buying Short Sales

The New Exit Strategy for Short Sales -Keeping as a Rental with $500+ a month in cashflow

Short Sale’s, as you already know is my favorite way to acquire deals at a bigger discount than any other method.  Our exit strategy on most of these deals has been to fix and flip these houses.  We have also started to keep some of our short sales as rental properties.  We have found a strategy to buy short sales as keepers without being out of pocket any money.  Our average cash flow on a keeper property is$500 or more.  We buy these properties cash and then in 90 days we do a refinance to keep the property.  As long as the refinance is not more than 70%of the ARV you will be able to get a conventional 30 year loan for 5% interest with no money out of pocket.  Since we are getting these short sales at huge discounts we are cash flowing like crazy and we have a keeper property with 30% or more equity.

Let me give you 2 current deals we are currently doing as a keeper:

Deal #1 example

 

3/1/1 with ARV of $105k in today’s market
Purchase Price from bank is $59,000
Repairs for rental is $5,100
Hard Money Costs $5000
Refi Costs $4,339
Total Loan Amount $73,439

Monthly Payment according to lender will be $508.48

We will get one of our homeowners we are currently working with on a short sale into this new home on a RENT TO OWN.  They are currently saving up money as well as getting money from the government to put down on the Rent to Own.  Let’s say the average amount will be $3,000down (non refundable).

The Rent to Own rental amount is $1050

That leaves us a monthly cashflow of $541.52 (minus vacancy and expenses, the $3,000 will go towards this account)

This also leaves us with a property with $31,500 in equity in today’s market.

 

Deal Example #2

4/2/1 with ARV of $135,000 in today’s market
Purchase Price from bank is $75,000
Repairs for rental is $5,000
Hard Money Costs $5,000
Refi Costs $4500
Total Loan Amount $90,000

Approx monthly payment to lender is $600

Rent to Own rental amount $1150 with $3k down

This leaves us with a monthly cash flow of $550 (minus vacancy and expenses, the $3,000 will go towards this account)

This also leaves us with a property with $45,000 in equity in today’s market.

As you can see from the examples above, short sales are a great way to acquire great keeper properties,

1.      with no money out of pocket

2.      Cash flow with $500 or more

3.      And 30% equity or more

We are currently seeking credit partners for these two deals.  If you are interested, please email me.  Or if you are interested in doing these types of deals yourself, send me an email.