Cash Purchases, Traditional Mortgages Become More Challenging For Real Estate Investors
Paying all cash or obtaining traditional mortgages may be becoming even tougher for real estate investors. Especially for home flippers and property wholesalers. So, what is the best way to fund your deals now?
The Traditional Mortgage Market
The mainstream mortgage market has never really fully recovered from 2008. In fact, lenders have only become tougher recently.
One of the most significant red flags recently has been Better mortgage which just laid off over 900 employees, citing issues with the mortgage market.
While non-bank lenders have grown to account for over half of mortgages again, the new breed of so called private money and hard money lenders in the market today still typically have tougher underwriting criteria than traditional banks prior to 2008.
If they incur more losses they will only toughen up further.
This makes traditional mortgage financing inefficient and a source of frustration for investors. Especially, flippers and wholesalers.
Interest rates are also only expected to go up from here.
More Scrutiny Of Cash Real Estate Purchases
This December the Treasury Department announced that it is working on even more regulation to track and dig into cash real estate purchases.
This comes after the government began tracking payments as small as $600 under the stimulus plan of early 2021 according to Airbnb. As well as the new spending bill which gives the IRS an additional $80B budget for enforcement.
Until now additional scrutiny was only focused on cash property purchases of $300k and up in a select number of metro areas. This could now apply nationwide across all price levels.
Even those doing nothing wrong just may not want to be at the top of task for and IRS lists for investigation. Creating more motivation to find other ways to fund real estate deals.
Transactional Funding
Transactional funding is still available and continues to emerge as the best way for funding wholesale deals.
It comes without all of the hassles and hoops of traditional mortgages. No credit score, appraisal, income and asset requirements. Plus, it offers 100% financing, including closing costs. All with the ability to fund deals in just a few days.
This also dramatically boosts ROI, and the scale at which real estate investors can operate.
How will you fund your deals this year?
Top Funding News
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