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Investor Mortgage Report 5.5.2020

 

 

Refinancing may have just become more expensive for both rate and lower LTVs.

 

Wow, what is this? The powers that be are still messing with our beautiful lending world. It’s not a shock that government officials seem more focused on getting votes at the cost of property owners and mortgage companies, encouraging tenants not to pay rents and not lending a hand with evictions.

 

What We Know:

Mortgage rates are so low right now (in the mid 2’s for owner-occupied, and low 3’s for investors) that still-employed buyers should be running out and buying homes left and right.  After all, the number one reason buyers purchase is that they can fit the payment into their monthly budget. We should be seeing mortgage companies throwing money out to everyone. We should see buyers buying and investors refinancing (increasing that cashflow without adding more properties.)

 

 

So why isn’t that happening?

 

In short- our government is hard at work wreaking havoc in the lending markets, making it harder for all of us to get a loan, especially refinances.

 

Sure, it sounds good in theory: Allow anyone who wants to defer a payment or 4 during an economic crisis to do so, without proving any reason based on financial hardship.

 

How does this impact us all?  Glad you asked.

 

If a lender helps someone out and refinances them and they decided to go directly into forbearance, (yes, people WERE doing cash-out refinances with the plan of deferring payments to take advantage of the government’s kindness,) that lender cannot sell or move that loan off of their books to those that service FHA, VA, Conventional loans, etc, unless they want to take pay a huge fee. So, they decide to hold the loans, thus filling up their lending bucket.

 

So what happens next?  The lenders don’t want to take a chance that a percentage of people are going to take advantage of this opportunity, so they raise the cost of refinancing for everyone.  On top of that, they will start lowering the LTVs (loan-to-value ratios,) making the box for traditional financing harder for all.

 

Yes, obviously those that need mortgage forbearance should be able to use it, but it’s the ones who are not in financial need that are making these numbers grow, creating more costly financing for us all.

 

Let’s look at the numbers from an article from MBA.com from the end of April:

 

Key findings of MBA’s Forbearance and Call Volume Survey – April 13-19, 2020

  • Total loans in forbearance grew relative to the previous week (from 5.95% to 6.99%.) In comparison, only 0.25% of all loans were in forbearance for the week of March 2.
    • By investor type, Ginnie Mae loans grew the most relative to the prior week: from 8.26% to 9.73%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance increased relative to the prior week: from 4.64% to 5.46%.
    • The share of other loans (e.g. private-label securities and portfolio loans) in forbearance increased relative to the prior week: from 6.43% to 7.52%.
  • Forbearance requests as a percent of servicing portfolio volume (#) dropped relative to the prior week: from 1.79% to 1.14%.

What You Can Do:

Keep up with your payments if you’re able. The more of us that are paying on time and in full, the quicker the lenders will start to relax and start loaning again. Everyone wins.

New Build Construction is Slowing Down. Here’s Why That’s Not Necessarily A Bad Thing.

New-home construction sees its largest monthly decline since March 1984, as COVID closures take a toll.

 

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.

This news isn’t all doom and gloom, however.
Yes, housing starts are down and inventory is very low, but these conditions create some interesting market conditions.  With the lockdown and the rise in unemployment, one would start to think we may have a housing crash on our hands (and it’s still possible if closures and stay-at-home orders continue much longer.)
For now, with mortgage rates so low (buyers still mainly purchase on payments they can afford) and inventory shrinking, it is keeping home prices high. There’s not enough inventory to meet buyer demand, and therefore, prices remain stable.
What this means for the future will all come down to how long our economy is closed.

Investor Mortgage Report 4.28.2020

 

States are slowly opening back up into an uncharted post-COVID19 closure world, but how does this affect the lending markets?

 

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?

Sign up for our weekly industry newsletter and upcoming OPM webinar series here >>>

 

Introducing Your New Partner: Money

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 >>>>

 

Investor mortgage report

Investor Mortgage Report 4.21.2020

The going is still tough out there for real estate investors looking for traditional financing.

 

 

What We Know:

This week doesn’t bring much (if any) relief to the mortgage markets.  The Feds have slowed down buying mortgage back securities and closings are still tough.

 

We are seeing the majority of our payoffs being delayed 2-3 weeks as mortgage companies push loans through these uncertain times.

 

Unfortunately, this means–once again–the real estate investor doesn’t rank high on their list of loans to close (or close fast).

 

The good news? There are still lending options for Real Estate Investors.  You just need to know where to find them.

 

Even though most traditional lending options are currently off the table, there is still one source that is interested in lending to real estate investors (at least in some markets):

Credit unions.

 

 

According to our market research, there are still a couple of credit unions maintaining business as usual. Better yet, they are still lending with good terms on rental properties.

 

Why do they seem less impacted than the rest of the lending world?  The answer is heavily based on their loan mix. Unlike banks, credit unions do not have a heavy investment in all these small businesses that have closed down. (Remember, the closure of small businesses impacts banks via deposits and bad loans. Bad loans create a need for banks to slow down on all lending.) Secondly, a good deal of their mortgages are kept inside the credit union, and don’t rely on secondary markets to keep lending.

 

So, if they can make a good loan on a piece of real estate, they will.

 

What You Can Do:

Of course, not every credit union lends on rental properties. You will need to call around in your market to find out which ones offer this service.  

 

 

Also consider that the ones who are doing these loans will be BUSY, and you’ll need to be patient.  It took us 2 days just to get a call-back…that is just reality in the strange times we’re living in.

 

Want to stay on top of what’s happening in the market, as well as what you can do to help your investor business thrive in a post-pandemic lending world? Get signed up for our weekly webinar series and join our mailing list for info, insights, and action items geared toward helping you take the guesswork out of your funding.

 

Sign up here >>>>

 

It’s Time to Change the Game.

Now isn’t the time to improve anything. It’s time to change everything.

 

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.

But this doesn’t mean the end of the road for investment-based businesses who rely on funding to complete their deals.

 

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.

 

Get signed up here! >>>

 

Just remember: Keep it legal, keep it safe, keep it honest.

What to Do When the Bank Says, “No.”

Don’t be controlled by banks. It’s time for you to take control!

That noise you just heard? That was the sound of conventional lenders across the country slamming the door and walking away from the lending on investment properties. For those of us who make our living through fix and flips, fix and holds, and other real estate investments, it’s not exactly a GREAT sound.

But if you listen carefully, you might also be able to hear the rumblings of coming change. Just because the banks are currently the bearers of bad news, doesn’t mean it’s time to give up. Take back control of your financial future by disrupting the chain and breaking the bank’s monopoly. And the good news?  It’s actually easier than it sounds.

How, you ask? Simple. Start funding your own deals with 100% OPM – Other People’s Money. Cash from your mom, your neighbors, your golfing buddy—really, this source of capital can come from anyone who has money and is looking to invest it. 

This easier-than-it-seems solution really can help you thrive now during a period of economic uncertainty, as well as far into the future. No matter the economy, you’ll never have to worry about being controlled by what the banks have to say. If they shut the door to funding on you, you’ll have a way to keep investing and continue turning a profit for you AND your lending partners. 

 

Want to see just how easy it can be to transition your current real estate investment business model? Join us for our next informative webinar session!

Just remember: Keep it legal, keep it safe, keep it honest. 

 

Establishing trust is KEY in this funding model. When you’re dealing with other people’s cash to fuel your investments, it’s critical to stay transparent and protect everyone’s best interests.

 

Want to know more? Sign up here for our next session. >>>>

The Lending Faucet Has Been Shut Off. What Happens Now?

Everyone knows that you kill a business by cutting off their credit/finance. Once the credit is cut off, we are all in trouble.

 

Or, ARE we?

 

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…

 

Now is the perfect opportunity to create your very own banking system.

 

“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 >>>>

Friday Fun: Down Payment

With our two-step loan program, Quick to Buy, Quick to Refi, you don’t need to spend months or years saving up for a down payment. You can start your investment journey today. Our team is ready to show you how. Contact us today!

Buying a Duplex – What NOT To Do

Whether you’re getting ready to invest in your first rental units, or you’ve been renting for years, it’s always a good idea to learn from other people’s mistakes. In this video, Chandler David Smith tells us about the lessons he’s learned and what NOT to do as an investor. Check it out!

Ready to start investing? Need some guidance? Then contact our team. We’re ready to show you how to invest and invest right!