this is my first post on this forum. Please forgive me for posting such an elementary question but here it goes:
I'm a relatively new agent who completed the SFR course a couple of months ago. An acquiantence of mine has an investment property that is underwater. It is to a point where he very much wants to dump it as in a few months we wont be able to make the payments on this property.
my question to the forum is under what circumstances will a bank approve a short sale for a property that is an investment property, not a primary residence. I've tried to find the specific answer but could find none thus far. I have learned that short sales for investment properties have been approved and closed on other forums but the details were not provided.
If someone could help shed some light on this matter, I'd appreciate it.
it really doesn't matter at all. I am 18/18 on investor properties the last few months, all with full releases. Sellers have income and assets, so in some cases there were cash contributions ranging from $1,000 to $7,500.
You can do the short sale but they need to check on taxes consequences before. It will depend on their income. You don't pay taxes only if it is your primary residence
Hi Jerrold - I'll weigh in on this, as I just experienced this situation. Yes, if there is a hardship - like loss of a tenant - you can do a short sale on an investment property. BUT, please double check the type of loan and find out if there is mortgage insurance on it. If there is, the PMI company will likely require a seller contribution. There were a good many 90% LTV investor loans at the peak of the market, many requiring PMI.
On one investment short sale I successfully negotiated, the contribution required by the PMI (which was non-negotiable as the PMI company would've preferred paying out much later after a lengthy foreclosure) was allowed to come from anyone in the transaction. In ours, the buyer ended up paying some of it.
"under what circumstances will a bank approve a short sale for a property that is an investment property, not a primary residence."
This is simple! Under the same condtions as any other short sale when there are no goverment incentives invovled!
IE: When settling is in the best intrest of the bank!
A short sale is a privlage the bank (Not the defaulter.) has when it's a better option.