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2012 has been dubbed by some as ‘Year of the Short Sale’, with even more short sales expected to be completed than last year. However, are they really a smart move for investors or is investing in distressed property notes a better way to go?

There has been a lot of buzz in the last few weeks about mortgage institutions cutting down on the time it takes to process short sales. Fannie Mae and Freddie Mac have announced new guidelines requiring loan servicers to now make decisions on short sales within 30 to 60 days. While Bank of America has sliced its short sale processing time back to 20 days from 45 or much, much longer via their new, improved online platform.

However, while short sales may be a great deal for sellers and even offer the feeling of nice discounts for those buying new residences or investing in the odd property here and there, they do pose some issues for full-time or more active investors. Let’s take a look…

5 Reasons Distressed Property Notes are better than Short Sales

1. Short Sale Fraud

Banks angry at real estate investors profiting while they take a hit by reducing and writing off principal balance debt have engineered flipping houses which are short sales for profit into becoming ‘short sale fraud’. Whether you agree with it or not, the disclosures and affidavits now required for those involved in short sales pretty much makes it illegal to immediately turn them around for profit. Considering the number of tasks forces and regulators hunting down real estate fraudsters (when they’re not partying it up in Cartagena, Colombia or Las Vegas) it just isn’t worth the risk to even be accused of such a thing.

2. Buying Notes Eliminates Hassles

Buying distressed property notes gets rid of a lot of hassle that comes with acquiring short sales. Besides the bizarre and trying upfront paperwork and negotiations short sales can come with big property management headaches and even tougher problems for those buying into the new fantasy breed of REOs to rentals on offer.

3. Reducing Costs & Risks

Investing in distressed property notes means slicing out soaring costs associated with closings, financing and points and rehabbing. Then there are the huge liabilities that can come with these properties as a direct owner which can threaten your investments including personal injury.

4. Resales

Distressed property notes can actually be a lot easier to sell and cash out in any market. A little seasoning and you can pump up their value and if you like cash out just a portion of the payments while retaining the note.

5. Better Bargains

There are good deals to be found among short sales. They may not all be turning in profits but buying a home that was once sold for $6 million for just $2 million can feel great. However, commercial and construction distressed property notes currently often offer even better discounts and bargains as there may be even more of these being held by banks than single family residences. Plus there is far less competition for them.

It's no secret that my operations have moved into the Hotel business again, however, this time it's hotel real estate and operations. I'd like to share with everyone why I've decided to focus on hotels.

I've always had a heart for hospitality. From being in the front lines at McDonald's learning their "fool-proof" system, to mid-size hotel operations and financial accounting, my spot was in Hotels. I also loved real estate. When I was working for a hotel, I managed to study and get a real estate license. I loved both industries.

My father, also a real estate broker in New York, has a heart for hotels as well. He was more of an owner/operator. He loved how it changed his life when he first bought his first motel and ran it himself and decided that real estate was his passion as well. He now works with me in California.

So why now, after these years of REO's and BPO's in the residential field?

Our opportunity now comes in a form of a private group from China with LARGE sums of cash. We are talking 9 digits dollar figures and they want flagged properties with existing management operations. We must not let this opportunity go past us!

This group is mainly from overseas looking for USA opportunities and moving their currency from the undervalued markets in Asia.

Quite an interesting thought here because when they move the money to the US, then the valuation of their currency stablizes (most likely in a few years), they are going to make a ton of money when they sell their properties. In the meantime, they will bank on US dollars with the cash flow of the hotel operations each year until they liquidate! What an amazing concept!

Our perspective, since our initial contact with the buyer-client, we are sure that there will be smaller groups that will come around and seek our expertise and help and in return alleviate the distressed hotel market that the nation is experiencing. (Currently over 200+ NPN and/or defaulted hotel properties in the SF Bay Area alone!!).

We consult and advise any new owners how to run a hotel operation, large or small.

If you have any hotel NPN and/or assets you need help with, please look to us. We can bring buyers in with agressive action without compromising operations.

We are Legacy Hotel Group

http://www.legacyhotelgrp.com