As capital flows get interrupted and shut down, and borrowing becomes much more expensive, what options are left to fund your real estate deals and business?

Capital Markets Face New Tightening Again

It appears to be that time in the cycle again when capital and credit tightens up, and becomes much more expensive.

Capital markets and especially venture capital for tech startups appears to be contracting. Which will likely prove to be a downward spiral as more of those businesses implode, and their investors become even more fearful.

Failing banks mean fewer options for traditional commercial loans and home mortgages. With higher interest rates making borrowing more expensive through these and other working capital channels.

New regulations to tackle the above may in turn give banks even less liquidity to lend.

So, what are some of the ways that you can continue to fund your real estate business and deals?

Private Funds

Some private funds may still have capital they need to deploy. Or cash from recent exits that they need to put back to work in real estate and mortgage loans.

Friends & Family

Many of the people in your life are currently also eagerly and urgently looking for ways to protect their money from failing banks, a declining stock market, and poorly performing retirement accounts. All while trying to find ways to avoid recent tax hikes and new taxes, while trying to keep up with extreme inflation.

You can help them by putting their money to work, and giving them strong returns.

Grants & Awards

If you are interested in interest free and non-dilutive capital then look around at the various grant programs and competitions available.

You may find additional funds that don’t have to be paid back. Which can also help build your credibility.

Transactional Funding

Perhaps easiest and most efficient of all is transactional funding for your wholesale real estate deals.

Best Transaction Funding can provide 100% financing for your deals, at low rates, and keep your business and income flowing smoothly during these times.

There are likely to be many more distressed properties ready to buy very soon. How do you make sure that you are ready to fully capitalize on this opportunity as a real estate investor?

Distress And Defaults Are Mounting

The latest bank and mortgage debt data released by DistressedPro shows that mortgage loan performance reversed trend in the last three months of last year.

Defaults and nonperforming loans are on the rise again. This appears widespread, across almost all sectors. Including commercial mortgage loans, residential home loans, and even multifamily mortgages. The only exception which seems to remain healthy is in farmland and agricultural loans.

Many of the improvements of the past two years have been erased. With many newly defaulting loans, as well as those now being deemed non accrual stage loans by banks.

Although REOs haven’t piled up yet, it is an important metric to watch in terms of overall bank and market health.

Defaults on auto loans and consumer credit card debts have also hit a new high, signaling many mortgage borrowers are barely hanging on. With more likely to fall late on their home loans and who will need to sell their homes.

So, how do you prepare to capitalize on this moment as an investor?

Have Your Funds Ready

There are going to be a lot more distressed properties and motivated sellers to buy from soon. Don’t get caught short, and beat out to the best deals because you aren’t ready to move fast with your offers and closings.

Pool your capital together now. Get your POF (Proof Of Funds) from your lender, and be ready to make fast cash offers.

Have A Strong Team

Those with the strongest teams will win.  Find the best talent, and when you’ve got them, don’t let them go.

Get familiar with working in a remote environment if you haven’t already. Ask around for referrals if you can. Unfortunately, platforms like Upwork which used to be good have now stripped away all of their customer support and have been burning their best talent. While scammers like Amurra Spices, and their fake Airbnb have taken over and aren’t paying freelancers for their work. As a result you may now find the best outsourced help freelancing for themselves.

Have Your Marketing Prepped In Advance

You should have your marketing mapped out and materials created weeks in advance to avoid rushing out junk. If you need to have a new marketing strategy plan created for this new phase of the market.

Focus On Providing Solutions

Focus less on price, and more on finding opportunities, and solving the problem and needs. This applies to both your sellers and end buyers. Focus on what’s most important to them.

Where can real estate investors find the money to flip houses this year?

The US real estate market is surging again. Home sales hit a new 10 year record in January 2017 according to NAR and Inman. Yet, it still takes money to make money. So, where can investors find the capital to get started, expand, and make the most of the opportunities?

Lines of Credit & Personal Loans

Despite all of the gurus proclaiming the ability to flip houses with no money and no credit, investors will find they run into expenses. They may find 100% financing for property deals, but there is still due diligence, gas money, and marketing. Personal or small business loans and lines of credit can provide essential working capital, and the flexibility to use it for everything from launching a real estate startup to rehabbing homes. Do expect lenders to demand a reasonable credit score, and normally an existing LLC or business entity to have already been set up for those seeking commercial funding.

Blanket Mortgages

For those who already own portfolios of income properties free and clear, or with significant equity a blanket mortgage can help. These mortgage loans can be used to leverage equity from part or all of a portfolio to bridge out and acquire more property. It provides liquidity to act as a cash buyer, with the simplicity of one set of loan documents.

Commercial Conduit Lenders

A new breed of mortgage brokers and conduits are setting up shop, and are aggressively marketing themselves to investors. They may offer lines of credit, blanket loans, and short-term fixed rate mortgages for rehabbing properties. Many now offer stated income loans. Most still expect significant skin in the game from investors, and often want to see a recent track record of successful acquisitions and exits.

Transactional Funding

Transactional funding lenders provide short-term funding for real estate wholesalers. This is typically 100% financing for back to back house flips. Often no appraisals, credit, or income verification is required. It’s fast and easy to get, and rates can be lower than hard money.

 

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

Several new regulations are set to hit the mortgage and property industry in the summer of 2015. So what are they, and how will they impact real estate investors and entrepreneurs?

New Mortgage Forms

On August 1^st, 2015 the mortgage industry will get two new forms. The Lending Estimate (LE) will combine and replace the old Truth in Lending and Good Faith Estimate. The HUD 1 Settlement Statement and final TIL will be replaced by the Closing Disclosure (CD). We’ll have to wait and see whether these documents really simplify things for home buyers and benefit them, or just add more confusion. What is perhaps more notable about these new mortgage forms being instituted by the Consumer Financial Protection Bureau (CFPB) is the new 72 hour rule. The CD must be provided to consumers 3 full days before closing. This could throw some real estate wholesalers off. But wholesalers can still use Best Transaction Funding for rapid flips.

New Foreclosures and REO Sales

Ongoing roll outs of financial industry regulations are putting increased pressure on US banks to shed delinquent mortgage loans and REO properties. We’ve already seen a massive surge in foreclosure filings in early 2015. And that trend ought to continue through the summer as lenders expedite the foreclosure process. This will create opportunities for wholesaling among motivated homeowners, at auctions, and from banks. These spikes in deal flow are already being seen from coast to coast; from Orange County, CA to Maryland, to Florida.

New Regulation A+

The SEC’s new Regulation A+ kicks in this summer too. This is the ruling which enables fundraisers to raise funds from non-accredited investors, and file new mini-IPOs with ease. This can help real estate investment firms crowdfund capital to use in conjunction with hard money loans for acquisitions. It is also expected to kick off a series of IPOs which will create wealth and liquidity which many tech entrepreneurs will in turn use to invest in real estate.

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.