Non-Conventional Mortgage Loans Are Making a Comeback…
What We Know:
What We Know:
It’s easy to think that with the COVID-19 shutdowns, stay-at-home orders, and lasting economic uncertainty that now is an okay time to sit idle and just see what happens in the real estate investment world.
And that would be your first mistake.
By many standards, there’s never been a better time to go all-in for your real estate investment business. Mortgage rates are low, making previously out-of-reach properties insanely affordable. Showings are still under a good deal of restrictions and safety precautions. But this just means the buyer pool is limited to the extremely serious. Great news for fix-and-flip investors looking to turn a quick profit!
It’s true, the banks have been saying no, but that doesn’t mean the game is over. We’re here to tell you that there are other ways to play besides begging the banks to fund your deals.
Put your future in your hands: Make the switch to OPM (Other People’s Money) funding and stop waiting on the bank. When the deals start popping up (and they will,) you’ll be able to buy the properties you want when you want, and for what you want to pay.
Instead of sitting on the bench, you can be actively working to build that dream life, even in times of uncertainty.
Questions on how to go about making this transition? Luckily for you, we’re hosting an Intro to OPM Webinar where we’ll be covering all the critical details of how to make this crucial switch for your investment business!
The financial side of real estate has been stalled on many fronts these past few months due to the economic lockdown.
Offices are closing, and would-be buyers are losing their jobs. Appraisers aren’t allowed into properties, title companies are limiting closings. There are also complications of safely converting everyone’s office jobs to work-from-home positions. This influx of rapid-fire changes puts a strain on the mortgage process and adds stress to closing on properties.
But, things are improving. We are beginning to see some positive changes thanks to the introduction of remote and online closings.
For starters, buyers and sellers are no longer required to physically drive across town at a prescribed hour that works for everyone and suit up with masks and gloves for a closing.
Systems are now in place for closings to happen 100% from the comfort of home or office ( or really, anywhere you need to be.) Remote closings are real and they’re happening, along with simple remote notarizations. These simple adaptations eliminate so many hurdles to the closing process and help speed things along, especially in these unique times.
Fidelity, one of the largest title companies in the industry, is all-in with the remote advancements and allowing clients to choose how they close.
We could be heading for a time when remote appraisals are standard and virtual showings become the norm. It’s not as far-fetched as it sounds. We’re inching closer to that reality by the day.
Just imagine the mortgage process taking place in a week or two, and not months!
Of course, this is good news for investors selling SFR properties and/or refinancing. Landlords owning commercial properties may see values drop. After all, more people are working from home without having to physically come into an office.
On the rate front, we’re seeing very stable numbers. However, we’re still staring at a wall when it comes to refinancing.
As states open up and lift restrictions, let’s hope people run out and get back to work and start spending like we are all used to.
History is repeating itself. Banks and lenders are closed up and running away from loans for the investment community. They’re backing out of deals just minutes from the closing of a loan, without the courtesy of so much as a “Sorry.”
Right now, the majority of real estate investors (95%) rely on banks and traditional lenders as a means to fund their deals. That means when the banks decide to stop lending money, they stop you from succeeding.
Let’s change that!
Now, more than ever is the perfect time to take back control of your financial future.
How? By partnering up with people who have money ready to invest! Mom, your bestie, neighbor, gym buddy—anyone with cash to invest has the ability to help fund your investment deals. It doesn’t HAVE to be a bank or traditional lender.
Be a power player and join the 5% who don’t sweat economic disasters.
Want to dip your toes into the world of OPM (Other People’s Money) funding, but not sure where to start? Sign up for our Into to OPM Webinar! We’ll be going over the basics and answering your most pressing questions about how to secure financial freedom for your investment business, EVEN when the banks are saying “No.”
Just remember: Keep it legal, keep it safe, keep it honest.
According to March’s economic report by MarketWatch, new-build housing starts and permits have fallen to their slowest pace since last July.
Builders started construction on new homes in the U.S. at a pace of 1.22 million in March, representing a 22% decrease from a revised 1.56 million in February. However, even with this decrease, the figures were still 1.4% higher than a year ago.
It’s the largest decline we’ve seen since March 1984.
Permitting activity, however, had a little less dramatic of a slowdown. Privately-owned housing unit permits were authorized at a seasonally-adjusted rate of 1.35 million. That was 6.8% below the revised pace of 1.45 million set in February, but still 5% above last year’s rate.
Some states have started to allow the gradual re-opening of businesses as stay-at-home orders begin to relax around the country. What effect will this have on mortgages, rates, and availability of lending to investors?
What We Know:
Here’s what we think is reasonable to expect as we return to our new version of “normal”:
As businesses start opening up, there will be an influx of people employed and able to make their rent and mortgage payments.
The majority of the traditional lenders left investors out to dry over concerns of rents being paid. Government officials haven’t helped the matter with proposals to postpone or forego rent payments. If tenant rents are not paid, how will investors react? Will they still be able to make their payments? Will it affect those with larger portfolios to a greater degree than those with smaller ones?
These serious (and unanswered) questions are the main reason we have little to no funding options at the moment.
The only way we put these concerns to rest is by people going back to work (if they’re able.) Feeling out the new “normal” flow of payments will help bring certainty to the lenders so that they can decide whether to open lending back up (at a limited pace and with tighter guidelines,) or keep it as-is (little to no options.)
The fate of the traditional lending world will hinge on payments: Those made by renters as they return to the workforce, and subsequently, those made by their landlords.
What You Can Do:
Be optimistic for more certainty over the coming weeks. As individual states’ economies reopen, let’s remain hopeful that jobs are still there, people want to go back to work, and that they are able to keep up with their payments.
Lastly, also let’s encourage government officials to stop putting out the idea that renters can “forgo” their rents. This helps no one currently holding a mortgage (unless you want votes.)
Want to stay in the loop with the latest assessments of the lending climate, and ideas on how to keep your real estate investments funded in these trying times?
If you’ve been watching the mortgage industry reports over the past few weeks, it shouldn’t come as a shock to you that the banks are quickly closing their doors to investors. In fact, if you run an investment property business and have relied solely on traditional funding, it’s practically impossible to find money to close your deals the old-fashioned way.
But don’t give up hope just yet. We’d like the chance to introduce you to your new funding partner: Cash money.
If you need funds to close your deals, the quickest way to secure it in these unprecedented times to STOP relying on banks and traditional financing options. Believe it or not, there are tons of other sources of investment capital out there, and they just so happen to already be in your phone’s contact list.
When it comes time to fund your next deal, instead of turning to the bank and patiently waiting to be shot down, why not place a call to a potentially willing partner instead? Whether it be a grandparent, a fellow real estate investor, your golfing buddy, or your next-door neighbor, chances are you already know someone who might be looking to make their savings balance work a little harder for them (and therefore, you!)
Asking acquaintances or friends for funds can be a tricky subject, but with the right approach, it’s perfectly possible to do so while keeping it legal, safe, and honest – not to mention PROFITABLE – for all parties involved.
Don’t be beholden to banks. Money is king, so take back control of your financial future and put yourself where the money is.
We can help you start the conversation with our Guide to OPM Funding Webinar series! Get more info and signed up here >>>>
Are you aware that over the course of the past few weeks, almost all lending for the investment community has dried up? Not only that, but it’s uncertain how long it will be before these products become available again.
Why should banks control us and our financial future? If they choose to close their doors and refuse to lend money to investors, then so be it. It’s time to change how the lending world works.
Just because the economy takes an unexpected nosedive doesn’t mean our investments need to. When the banks say no, we can remain in control of our financial futures by turning to personal funding partners.
OPM- or, Other People’s Money – funding is one of the best ways to gain and keep control over your finances as an investor and gives you the freedom to continue your business, even as the banks batten down the hatches.
Want more info on how to make the switch to funding your deals using OPM? Join us for our next weekly webinar! Whether you’ve dabbled with this way of doing business before, or you’re on the fence about how and when to get started, we’ll make sure you’ve got the information YOU need to thrive during these uncertain times.
Just remember: Keep it legal, keep it safe, keep it honest.
With conventional/standard loans as the only lending option available for rental investors, lenders went and changed the rules…and not in the investor’s favor.
As of this week, the new underwriting criteria has hit 90% + of the market for investor loans on rental properties. Plus, most lenders now require a minimum of 6 months reserves (and, a lot of times, up to 12 months) for every rental property that has a loan on it. That’s right. If you have four rental properties, you now need at least 6 months of payment reserves on each property. That adds up quickly.
That may not even be the worst of it.
In addition, most lenders are not allowing borrowers to use the rental income from their properties to qualify. If they do, they might only allow a very low percentage of the rent (like 50% of gross rent). That means if you have rent coming into a property at $2K, they may only count 50%, or $1K, of that towards your expenses (if they allow you to use it at all). In this example, if the rental property has expenses at or above $1K (and most will) the underwriters will expect you to cover the shortage with other non-rental cash flow.
So, if you don’t have great credit (lenders have raised the threshold here, too) and other income to qualify for a new loan, you will be out of luck…for now.
We don’t know how long this will last. It might be weeks, but more likely months. Nobody will know until banks and lenders figure out how current stay at home orders will affect the markets.
So, why exactly is this happening?
Once the lenders get the data, they will adjust. Let’s cross our fingers that rents are being paid and, likewise, mortgages are kept up. This flow of money will help bring lenders and loan choices back to our market.
Remember the loans and rates will come back. When they do, be prepared to take advantage.
If you have a credit score at or above 760, and have ability to income qualify, then your rate estimates this week for conventional loans look like the following:
If you want to know where you stand and what you can do, schedule a time to discuss your lending needs with us today by emailing email@example.com.
Did you hear the lending markets just explode/implode in on the investor market? What felt like overnight (within mere weeks,) the traditional funding faucet was virtually turned off. Lenders across the country are pumping the brakes on loans for investment properties due to COVID19-related closures, job losses, and resulting economic uncertainty.
What does this mean for folks who rely on that normally steady stream of capital for investment real estate funding? The existing and would-be landlords? The fix-and-flippers? The fix-and-holders? The short answer: Without credit or funding, investing in properties becomes problematic. Therefore, MAKING money becomes much tougher.
Notice that we said ‘tougher,’ and not ‘impossible?’ There IS another way…
“What does that even mean,” you may find yourself asking? It means finding PEOPLE, not banks, with money—money that they would be willing to invest. This could be your mom, your best friend, your neighbor, or anyone else who has some extra funds that they want to put to work for their future financial benefit.
Don’t allow the banks to socially distance you from your investment income! Learn how to keep your business running steady now and in the future by having a consistent stream of OPM- or Other People’s Money- funding.
Join us for our next weekly Webinar, where we’ll be going over market updates and the basics of how to transition your lending stream from traditional lenders to OPM funds, all while keeping it legal, keeping it safe, and keeping it honest for you AND your funding partners!
Get signed up here >>>>