Ok so I think I just came up with an ultimate strategy if everyone and everything goes according to plan, but I want to share it with yall to see if this seems right and if I can get my questions answered in the end of this. My strategy is to not use any of my own money. First, I'll lay out the Step by Step Plan. Then, I'll finish with questions that I truely need answered so I know if this is right and I'm not just crazy for thinking it. Here it goes: NOTE: This is just an example, and you tell me if I'm right.
I do Matt's Strategy: 1 out of 30 gets accepted as a low offer.
Property's FMV $250,000(current comps around area)
Property is Listed @ $200,000(since it's a short sale)
My Accepted Low Offer is $175,000(under contract)
I go out and look for a hard money lender:
I ask Hard Lender for $213,500 and accepts in return that he gets his $213,500(Offer $175,000 + $38,500 from 2% Closing Cost, 20% down, comission) + half of what I profit.
*WIN for lender, he gets his money back + half of my profit.
So that's $250,000(FMV) - $213,500(hard lend) = $36,500(Instant Equity/my profit).
Seller gets his $175,000, Bank gets there money, Agent gets commision. WIN WIN WIN for Seller, Bank, Agent.
Since I paid for the property in Full Cash $213,500(for offer+closing+down+commision)
Now, I can go to the bank and 100% Refinance for appraised value of $250,000(comps in area)
Pay back the hard lender his $213,500 + $18,250(half of what I make/equity from Refinance)
So let's Recap and See everyone's conclusion:
*Seller gets his money.
*Bank gets their money.
*Agent makes commision.
*Hard Money/Private Lender get his money back + half of my profit.
*I used none of my money, profited $18,250 from 1/2 of equity from Refinancing and splitting w/ Hard Lender, and now have a property with tenants and a +200 CashFlow.
Here's where the questions come in play, since I don't know how and who profits from a short sale as far as the bank and the seller goes.
*Can I 100% Refinance the property through the bank since I paid everything in Cash?
*Do I have to hold the property for a certain amount of time before i can have the option to refinance even though I paid Cash?
*Which type of loan (i.e Conventional, FHA, VA) should I choose to Refinance by or is their an exact one I can only choose from if I want to 100% Refinance this property?
*Would a Hard Money Lender be willing to compromise such agreement? (Even though, I know I'll be able to pay him back + half of my profit before end of month so his % in his contract wont effect me)
*Can I do this strategy with Bank-Owned Properties, Short Sales, FSBO, REOs in general?
FYI: I would love every bit of feedback whether it's negative or positive, I just need to know if this is even correct or wrong? Remember I don't know much. My mind just happened to day dream and this came out haha..