Find out what’s happening in real estate and the economy that could impact your investment strategy, plans, and performance this year…

No Fed Interest Rate Cut Till June

Experts are now pushing back their forecast of a Fed rate cut until at least June this year. That’s not welcome news to millions who were hoping for a break from rampant inflation and high borrowing costs.

Though we could get a well timed rate cut or two before the presidential election.

For now investors need to make their plans based on where rates are at, with a cushion for even higher mortgage and loan rates as banks seek to offset risk and defaults.

The $400M Trump Fine, And The End Of NY

Former president Trump has just been hit with an almost $400M fine in NY, for boasting his properties were worth more than what the judge thinks they are worth.

This ruling has faced harsh criticism from the likes of Shark Tank investors and fund managers. This may be the final straw that has the last remaining investors pull out of NY for good.

It’s a reminder that values are always influx, they are just an opinion, and that opinion can be changed at any time.

It’s a fresh warning of what happened to many investors in the last great recession when banks began slashing credit lines and trying to force homeowners to accelerate the pay back of loans due to revised valuations.

Calls For $50 An Hour Minimum Wage

Forget $15 or $35 an hour. New calls are being made for a $50 an hour minimum wage. That’s about $100k a year. Which may really just be getting by for many households with kids these days.

In turn, it would either mean doubling or tripling inflation on goods and services to keep up with the wage increase, or companies having to lay off another 30% to 60% of their staff.

For real estate companies, it likely means consolidating with fewer team members, but of higher quality, and at higher wages.

The AT&T Outage

AT&T’s massive nationwide service outage is a fresh reminder to investors, entrepreneurs, and businesses that they cannot rely on just one connection.

For both phone service and internet, you need at least one additional back up, and remote alternatives on different providers so that you never get disconnected. You can imagine the havoc this can wreak with closings and deal flow.

These occurrences may become even more common has cyber attacks and online crime grow.

In December the Fed finally halted its economy crippling interest rate hike spree. As well as indicating three interest rate cuts could come in 2024.

What impact can real estate investors expect this reversal to have on the market and their businesses?

Lowering Interest Rates

The Fed’s recent series of rate hikes has crushed most of the economy, driven up inflation, and changed the dynamics of many household’s finances for the next decade or two.

Talking about three rate cuts in 2024, and more in 2025, and 2026 suggests that they now realize that they’ve already done immense damage that needs to be reversed quickly.

Depending on a variety of other factors, that may or may not directly lead to prompt reductions in interest rates on credit cards, auto loans, business loans, mortgages, and the interest paid on deposit accounts.

The Impact

The most obvious expectation of lower interest rates for businesses and consumers is encouraging more transaction activity. Especially in terms of real estate transactions.

It could also fuel the ongoing appreciation of property prices. Reversing any temporary dip caused by a lack of affordability.

More money floating around the economy and real estate industry again would be welcomed by many, and could help avert another depression and financial crisis.

But…

The Fed clearly knows that there is more bad news coming down the pipeline that has been published in the data for the masses yet.

While rate cuts seem quite likely in an election year, this reversal will only work if they come in time to have effect before people run out of money. The impact will also be muted by other employment challenges, like AI.

The promise of rate cuts may give many hope, though the real math is a law of physics that everyone still must grapple with in the meantime.

Thankfully, as a real estate wholesaler you can take advantage of rates as low as 1% with Best Transaction Funding right now!

Financial distress is growing across America. What’s the best way for real estate investors to approach these property owners to secure great deals?

Financial Distress Is Rising

Current monetary policy continues to try and hammer the economy into submission. We’re already seeing the effects in terms of delinquent auto and business loans, credit card debt, and nonperforming mortgage loans.

This combined with mass layoffs, inflation, and other disasters like hurricanes is only increasing the likelihood of many more commercial and residential property owners falling into despair and foreclosure.

The Best Ways To Approach Owners

Approaching these owners can be a very delicate situation. One which most investors and real estate wholesalers get wrong.

The first thing to remember is that everyone naturally gravitates away from pain, and toward pleasure.

So, showing up scaring them and acting like a vulture or another debt collector is probably not going to get you anywhere. They are already inundated with calls from creditors. None of whom end up really being helpful.

Often this means that avoiding any letters, emails, and phone calls often becomes the least stressful option for them. At least until they are evicted.

If you are going to win them over, you have to show that you are going to offer them a real solution, and a better solution that is more pleasurable, and is worth their effort.

A part of this is also giving them a viable and dignified exit.

Some are so scared of having nowhere to go, or just can’t stomach losing that they will be frozen into inaction.

Can you offer them enough cash in the deal to move into somewhere that they can uphold their lifestyle for their families?

 

Then there is establishing a sense of urgency.

Many of these owners may not seem very motivated to sell. This is often because they believe random help from the president or the sky will provide them a golden bailout and free pass to stay. Or that it may take many years before they are foreclosed on and evicted.

You may have to carefully educate them on the likely timeline and their options. Which is a good opportunity to lay out your own offers. Which may include two or three choices, for a limited period of time. After which they go down.

Then it is all about maintaining the relationship. Being there, top of mind as a trusted advisor when they are motivated enough to take action.

Finance Your Deals From 1%

Be sure to take advantage of our MEGA rate sale, with interest rates as low as 1%. Check out the details here.

The president has been making a big and very vocal push to end ‘junk fees’, and to pressure companies into providing all in upfront pricing quotes. How is this being applied in the real estate and finance space? What may it mean for investors?

The Push To End Junk Fees

A recent press conference led by the president heralded some of the brands that have reportedly been shifting away from layers of fragmented fees, to single pricing models. Also called ‘all in upfront pricing’.

There are certainly some sneaky fees and charges that should be done away with, and which really seem to be predatory and victimize those that can least afford it.

Of course, the claim that this change will save American consumers $5B in spending, may be a huge stretch. It is more likely that in many cases fees are just lumped together, and prices may even go up.

The Irony

There appears to be one huge hole and ironic exception to this plan. Which is not including taxes in these so called all in upfront price quotes.

This really destroys the whole concept. It’s an American quirk that you don’t have in other countries, and which may well have inspired all of these other junk fees and fragmented pricing, due to top down leadership examples.

Until this is fixed we won’t have real upfront pricing, all in pricing, or a good customer experience.

We’ve already seen some industries being disrupted by innovative companies that did this on their own, and actually provided less expensive options, for superior customer service and deals. Like MetroPCS in the mobile phone service space. It may be this street level peer pressure which is really most effective in bringing change, and reshaping the players in all industries.

How It’s Being Applied

Some examples of how this trend is showing up may include:

Airbnb’s shift to offering all in nightly pricing options

Banks eliminating overdraft and service fees (though not on mortgages yet)

Simplified pricing on event tickets

Elimination of renter security deposits in favor of monthly fees or higher rents

Summary

Simplified pricing is just common sense. It provides a better user experience, and a more efficient experience, with higher lead conversion potential for businesses. It can also be a fantastic way to disrupt your space, and stand out from the competition. It would just be nice if this also applied to taxes.

This is changing the competitive landscape, and you should be considering your pricing strategy and revenue streams to stay ahead of it.

New data from ATTOM and Bloomberg shows that 50% of home purchases are now being made by cash buyers in some cities.

Why are there so many cash buyers in the market right now? Why should you be connecting with more of them to fuel your investing? How do you do it?

The Rising Percentage Of Cash Buyers

New data reveals that cash home buyers now make up 50% or more of all transactions in at least 13 major cities. Including Atlanta.

Recently the media has spun a lot of negativity about the economy. Which may or may not be accurate. Though it may make it surprising that so many cash buyers are showing up to purchase homes.

However, in this next phase of the market when traditional retail mortgages can become harder and more expensive to get, cash buyers certainly do rule.

They are certainly the preferred choice for real estate wholesalers looking to turn their deals fast, with certainty, and the fewest risks of falling apart before closing.

Who Are They?

ATTOM poses that institutional investors have actually pulled back a little, with regular retail home buyers jumping in as these cash buyers.

This is great for wholesalers who can find well priced deals, and still sell at retail, and close to top of the market prices.

Of course, many institutional investors have been working on liquidating old inventory, and are preparing to make more acquisitions as the market balances out.

This may be a great time to jump in while there is less competition and find more profitable deals.

Many of these retail buyers may include those selling homes with lots of equity and looking for new destinations to live in. As well as those relocating to more affordable areas. And those cashing out poorly performing retirement accounts, and looking for something more solid to put their money into.

How To Build Your Cash Buyers List Now

This next phase of the real estate cycle is one in which cash buyers are always extremely important.

In many cases traditional retail mortgages become very elusive. Cash buyers are the most reliable end buyers to wholesale your deals too. Those who control the most qualified buyers will be those that win the most. So, how do you line up more of them?

SEO, and publishing blogs and articles is still the highest ROI way of attracting real estate leads today. According to Whatconverts, it can be 3x or more profitable than other forms of online marketing.

However, the same data set shows that by adding a little PPC to your marketing mix can actually exponentially drive up the results of your SEO and content campaigns.

With all the new technology and noise out there, human connection, relationships, and better customer service have also only become more important and valued. So, also look for opportunities to build an offline community and network to build those real connections with those who are likely to be cash buyers.

 

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?

 

Check out these evolving trends in real estate…

Understand how these changes are influencing the market, creating opportunities, and how you can invest to benefit from them.

Taxes, Taxes, Taxes

We already seem to be in a year of unprecedented tax hikes, the addition of new taxes, the stripping away of long used breaks and deductions, and proposed taxes.

One of the most notable of these new tax proposals has been the targeting of tax saving retirement accounts, including IRAs. Now, despite saying it won’t cost anything to pay for the new $3.5T spending bill, the government is proposing a new tax on unrealized gains.

That means you would pay taxes each year on the increased value of assets. While the ruling is still very cloudy, that would take away the interest or advantage into holding onto homes, retirement savings invested in long term hold real estate, stocks and even precious metals.

It may mean more cash being spent in the economy in the short term. Further supporting price growth. If you are going to pay the taxes each year anyway, then turning around house flips fast for lump sum gains just seems to make more sense.

Extreme Inflation

Hyper inflation seems unlikely to subside anytime soon. This certainly applies to construction materials and labor. Materials are costing even more due to shortages, increased delivery costs, and gas prices. Hyper inflation in gas and daily living expenses means construction workers need to get paid a lot more to justify going to work every day too.

This means the market favors real estate wholesalers far more than rehab flippers and house builders.

Soaring House Prices & Deep Discounts

If you haven’t noticed, the real estate market is in a really weird place too. In some cases house prices are up almost 100% year over year. In others oversupply means desperate owners and builders who are offering extreme discounts. Even though rents there may also be rising by 70% or more each year.

Financial Leverage

Real estate investment businesses and funds are trying to leverage even more capital now to take advantage of all of the opportunities out there, and to benefit from extremely low interest rates. Traditional mortgages may be virtually dead right now, but there is a ton of investment capital ready to be deployed.

Many real estate investors seem to be trying to create ‘pitch decks’ to raise capital like they see tech startups doing. Yet, few really understand what a modern pitch deck should look like, and how a good fundraising process is run.

With transactional funding wholesalers can skip all the hassles of borrowing and raising capital, optimize their leverage fast, and sell for cash quickly to those that have it.

 

With new foreclosure and eviction bans being put in place, how can you continue to win as a real estate investor?

For a moment it looked like these moratoriums were over, and lenders and landlords could rush back into the market to load up on inventory. Now these bans are being extended into next year.

While some may be fearful or uncertain about the future, others continue to enjoy their best years in real estate ever, and keep on growing. How can you best navigate these times?

New Foreclosure Moratoriums

Together the FHFA and CFPB have issued new rules for mortgage servicers. They effectively prevent many foreclosures being filed until at least 2022.

They also put new pressure on servicers to grant certain terms in loan modifications.

However, note that there are exceptions. Private mortgage loans are not subject to these rules and bans. Nor are vacant properties, or those on which borrowers have defaulted during trial loan modifications.

Overall CoreLogic has been reporting that mortgage defaults have been declining since April anyway. With default rates less than a quarter of than in 2005-2008. Suggesting these moratoriums may not be necessary at all anyway.

New Eviction Bans

At the beginning of August 2021, and despite previous bans being ruled unconstitutional, the Biden administration worked with the CDC to create a new eviction ban.

This new ban is said to last until November 2021. Effectively, ensuring no tenants will be evicted until sometime in 2022 at best.

This ban is said to be selective and not apply to every county in the US. The Realtors association has already reportedly filed a lawsuit against it. Many more lawsuits are likely to follow. Though, with the government already ignoring judge’s rulings which have deemed them illegal and unconstitutional, it’s unclear how much good they will do, even if they win again.

For Landlords

Some landlords are certainly speaking out against these bans. Especially, when tenants are choosing not to pay the rent, and are spending the money on boats, new trucks and even bigger TVs instead.

However, most landlords, especially those with bigger portfolios appear to be reporting strong performance levels, with few defaults.

Of course, those that are getting the rent paid by the government in one way or another are doing just fine, even if tenants are not paying themselves.

Though perhaps one of the biggest concerns may be how to manage out of state income properties if new travel bans are reinstated as well.

Real Estate Wholesaling

Real estate wholesaling certainly seems to still be the lowest risk, and most profitable strategy among all of this.

Using transactional funding wholesalers have almost no risk in making offers and flipping properties. So, line up your funding, and find sources of properties which you can flip. Including vacant property.

As for who to wholesale deals to, you may focus on rehabbers, retail, and landlords experiencing good performance, and may be using Section 8 or short term rentals instead of old annual leases.

Despite all the talk about distress, mortgages in forbearance programs, unemployment, and businesses being locked down, the wealthy have not only survived unscathed, but have been enjoying great gains.

How are they doing it? How can individual investors and small real estate businesses make this their best year ever too?

Banking Billions

Data from Business Insider and The Guardian shows that America’s billionaires have only been enjoying more gains and wealth creation through the COVID pandemic and other chaos happening in 2020.

Within just 23 days of the first lock downs they added just short of an additional $300B to their net worth. By the summer they doubled that again to over $600B in new gains, adding almost $5B a day in profits.

Finding A Sweet Spot In Real Estate

One of the most notable trends we’ve seen since the beginning of the coronavirus pandemic is a growth in house prices.

Some data does show that there are a significant number of households that have been lagging in paying their mortgages and rent. Yet, House prices keep on heading up. Partially in response to a major shift in where people want to live and the types of housing that are needed now. As well as an enormous amount of capital fleeing other scary and more volatile and risky investments.

We’ve continued to see the likes of Jeff Bezos adding to their big real estate portfolios.

House Flipping

More and more celebrities and business icons seem to be increasingly relying on real estate to protect and build their wealth.

Given the recent disruption in the retail industry you can bet that Tommy Hilfiger has been honing his skills at flipping houses over the past few years. He is now reportedly on his eighth house flip. His recently listed house in Greenwich, CT is asking $47.5M. Over $16M than he paid for it.

In the Hamptons, one luxury home flipper has just relisted a 6.7 acre compound for $72M. That’s a potential $27M gross profit on a property purchased in the middle of the pandemic in April 2020.

Scaling Your Own Wealth

You don’t already have to be a billionaire or a fashion celebrity to make this kind of money, or to make this the best year for your finances yet.

• Set really BIG goals

• Try joint ventures with new partners

• Use transactional funding for financial leverage

• Look to undervalued areas where the most people are moving

 

Since the beginning of the Covid-19 crisis, small businesses around the country were forced to shut down. As the national economy finally reopens, several are struggling to remain afloat. The resurgence of the Paycheck Protection Program might change things.

The Payroll Protection Program emerged earlier this spring as part of Congress’ CARES Act—which devotes $650B to aid Americans in light of the national climate—and has been extended until August 8, 2020. PPP loans are subsidized by the U.S. Small Business Administration (SBA) and are meant to help small businesses cover costs like payroll, mortgages and utilities. PPP loan applicants can receive forgiveness depending on the business’ adherence to guidelines.

Some have doubted the credibility of the program and demanded transparency from both the SBA and the Department of the Treasury. The SBA’s July 6 press release shared the application information of over 650,000 successful borrowers. This was only a fraction of the over 4.4 million businesses which applied for PPP loans, a number comparable to the thousand loans given by the SBA annually.

The report included everything from businesses’ names and loan amounts, to their NAICS codes and the amount of jobs retained. Some borrowers have acknowledged mistakes in the reports—particularly concerning employee numbers—but these are likely the fault of fast paced lending and borrowing. These details imply that borrowing businesses will be held accountable by the press for how they use funds.

Regarding loan forgiveness, the Paycheck Protection Program Flexibility Act—approved on June 3—gives borrowers more time to apply.. Borrowers who are hoping for loan forgiveness still have to apply on or before the maturity date of the loan.

The August 8 extension allows potential borrows to apply for a part of the remaining $130B. For those who miss the deadline, Congress is working on the proposal of an additional COVID relief service.

 

This year’s historic events have driven more interest in real estate investing and need to switch investment strategies than we’ve seen in at least 12 years. Where can you find the money to keep going or get started?

If anything real estate has only become stronger and has headed up faster as a result of recent events. More people are on the move than ever. Everyone from individuals to investment funds are looking for the safety and perks of real estate.

However, even those who were doing very well in real estate pre-COVID are switching up their strategies. Everyone wants to protect their capital, and needs more income. Many flippers and landlords are switching to real estate wholesaling. It is also the perfect strategy for those who are just starting out and may have lost jobs.

Of course, common wisdom says “it takes money to make money.” It doesn’t necessarily have to be yours though. So, where do you get it from?

IRAs & 401ks

New CARES Act rules and other changes due to COVID-19 are allowing individuals to tap even more of their retirement savings to move it to safety in other investments, or borrow against it. Those with 401k plans can now reportedly borrow up to 100% of their account balance, or $100k. This money can be used to invest in real estate. You may also have a couple more weeks to contribute to these plans and reduce your taxes, while improving your income. If this money is currently in the stock market, it is still exposed to some serious potential volatility.

If the Dow Jones just drops back to 2015-2016 levels, it could lose another 7,000 to 10,000 points. Or close to half of your portfolio value.

Partners

Partnering up is a common way to get started or grow in real estate. A few people can pool their money together and split the rewards. Or course, right now, many people are trying to preserve cash and may be leaner on savings than they have been in a while.

Traditional Mortgages

Traditional mortgages and even hard money loans could be a way to fund a move into real estate. Unfortunately, major banks have tightened up their criteria. Some have stopped home equity lending. It is noticeably more difficult to borrow from these sources than at the beginning of 2020. Though interest rates are extremely attractive if you can borrow.

Transactional Funding

In contrast, transactional funding is still plentiful. The best transactional funding lenders are still offering 100% financing, and credit and appraisals or lost jobs aren’t a problem. It’s a super easy way to fund your deals, while minimizing risk, and maximizing upside potential and returns.

Get in touch today to find out more about getting your approval, proof of funds letters and VODs to get more of your house offers accepted.

Plus check out our referral program that pays you when you share this great resource with others.

 

 

2020 is looking like another fantastic year for most real estate investors. If you have even bigger goals for deal volume and profits this year, here are the financing options that can help you achieve them.

1. Transactional Funding

Wholesaling is about speed and volume. Conventional mortgages and types of funding just don’t work when you need to go fast. Yet, with the right leverage, you can be working a virtually infinite number of deals at the same time, skyrocket your cash on cash ROI, and lower your risk at the same time.

Transactional funding is the optimal solution for this. Get 100% financing for your deals, without any of the hassle of other funding channels.

2. VA Home Loans

While many real estate wholesalers focus on flipping to other investors, selling retail has huge advantages in this market too. You can get a lot more for your properties. A recent change in mortgage lending could really help open up this opportunity even more.

VA home loans have been great for veterans and their families. They provide 100% financing with no down payment, and the ability to financing in closing costs. All with pretty lenient underwriting.

Finally, the VA has just removed their loan limits. That means no cap on how much veterans can finance on 1-4 unit properties. So, they can be used for 100% financing on small multifamily properties for $1M and up. This will also help many veterans start getting into real estate investing.

3. Personal Loans

Many wholesale properties are so cheap that the problem is no end buyers can find a mortgage loan small enough to finance them. Banks don’t want to do mortgages that small. Though they might be just out of range for an all cash purchase.

Fortunately, many banks, lenders and credit unions are being very aggressive with unsecured personal loans. In many cases buyers can go get a $20,000 or $40,000 or more personal loan and pay cash for a property.

4. Business Lines Of Credit

If you are wholesaling to other investors who have a lot of their capital tied up in other deals, you might want to let them know about merchant cash advances and working capital loans. If they’ve been doing business and flowing money through their accounts, they could get tens of thousands of dollars or over $100k to act as a cash buyer.

The more you help your end buyers get financed, the more deals you can sell, and the more of an indispensable partner you become.

 

Wholesaling is pitched as one of the easiest and fastest ways to get into real estate and get paid. Finding deals and finding buyers in this market may not be too difficult. If the price is right, the property will sell. That just leaves the question of how you’ll fund your deals.

More and more investors are finding that sellers and buyers try to cut them out when they attempt to assign contracts, and aren’t closing on the buy side first. Here are five ways to finance your wholesale deals, and some of the pros and cons of each options.

Cash

You can use your own cash to finance deals like this. It can be extra cash on hand, retirement savings in a self-directed IRA, etc. It may be the cheapest option. The downsides of this are you’ll never be able to fulfill your full potential. You will be limited on the number of deals you can do at a time. You are bearing all of the risk or getting stuck with a deal. You won’t be maximizing your full ROI potential by using leverage.

Conventional Mortgages

If you’ve got awesome credit, plenty of assets, and a perfect income profile, there’s a chance you can walk into a bank or mortgage lender and get a conventional type loan. The problem is that few will close fast enough for you. It may take 30 to 60 days to close. Far more than the 1-2 weeks most sellers will expect. You are also going to need appraisals and maybe an inspection. Repairs and low loan amounts can quickly trample your loan application. Not to mention the high closing costs.

Hard Money Loans

Hard money is great for house flippers and distressed properties. It’s typically fast. Though you’ll still need skin in the game with your own cash, and likely the money on hand to prove you can afford the rehab. It’s expensive money, though that may not matter too much if you are in and out before the first payment is due.

Private Money

Private money is highly desired by real estate investors. True private money (not hard money lenders advertising ‘private money’) can offer great fluidity and flexibility in funding deals on the fly and on great terms. Once you start doing great at wholesaling, you’ll eventually find these people wanting to fund you and put their money to work to share in your profits. Just be wary of taking the long detours and getting distracted with trying to raise money instead of getting right into investing.

Partners

There are many potential benefits of partnering up with others, especially if they are bringing all the capital. Just be sure you get everything in contracts and writing to minimize the damage of future partnership breakups. Do the math carefully on your returns and how that compares to other options. Having a partner who will fund 100% of your deal is great. Though, if you’re giving up 50% of your profits, that may be far more expensive and less profitable for you than financing it.

Transactional Funding

Transactional funding provides 100% financing for real estate wholesalers. All with no appraisals or any of the underwriting hoops you’ll find with hard money lenders or conventional bank loans. It can be a lot cheaper than you think too. While giving you the ability to close in just a few days. That means you’ll be able to beat the competition with better offers, and keep all the profit.

Get in touch with Best Transaction Funding today and get your free proof of funds letter to make your next offer...

These new real estate loans could help house flippers do more deals…

Capital sources are once again innovating and bringing out new loan programs. Some may be used directly by real estate wholesalers and house flippers. Others can be introduced to retail buyers and end investors to increase their ability to absorb new inventory.

Transactional Funding

Transactional funding has been publicly available to a broader range of real estate investors since around 2008. Yet, it is still seriously underutilized. Many investors are sitting on the sidelines, or are doing a fraction of the deals they could be, due to liquidity challenges. Transactional funding offers easy and fast access to 100% financing for wholesale deals.

Stated Income Loans

While transactional funding may provide the easiest qualifying of all loan products on the market today, it is short term money. A new variety of stated income real estate loans are emerging that could be ideal for helping experienced investors to get back in the game, and to enable active investors to expand their capacity and portfolios. These loans do not require tax returns or W2s, allowing for a faster and lower hassle approval process. Wholesalers should be connecting their end buyers to these financing providers to create more win-wins, and to scale deal flow.

Equity Sharing Mortgages

Lenders have gotten smarter. They may prefer the easy of lending and debt investing versus owning and managing physical assets. However, they also don’t want to miss out and leave money on the table. So, with equity sharing mortgages they are able to provide great financing terms, and get a piece of the equity appreciation as well. These loans may offer more attractive terms to investors, and can give them advantages of having an experienced and connected ‘partner’. Just be clear about the fine print.

Lines of Credit

More and more lending channels are ramping up their offerings of unsecured lines of credit. Lenders and private investors have trillions in capital to deploy this year, and they want it out there working. Unsecured lines of credit are ideal for rehabbers who may need more working capital, as well as the liquidity to jump on new deals while completing projects already in the pipeline. Again, the better wholesalers do at connecting their end buyers with these real estate financing sources, they more valuable they become, and the more business volume they can do.

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.

Winning big in wholesaling houses is increasingly becoming about having the buyers. So where are they, and how can real estate investors harvest vast amounts of end buyers for their deals?

At the peak of the last housing boom some wholesalers were pocketing $1M a month flipping houses. Homes could literally be picked up on the open market and turned for $50,000 to $100,000 spreads without lifting a hammer to any DIY work. Those that made the most were those that had the buyers lined up.

While end buyers may be a little savvier, informed and demanding today, and asset prices are rising again, there will be no shortage of deal volume for those with significant pools of ready and qualified buyers.

Some housing markets have continued to see foreclosures increase for the two years through mid-2014. Even strongholds like Southern California which had reported default activity slowing, was revealed to have seen a new uptick in foreclosures in the summer, according to RealtyTrac. There are still plenty of deals from HUD, auctions, in bulk from other investors, and even the MLS, many just coming online after sitting vacant for years. However, even as these prized distressed property types fade, robust appreciation and demand will keep wholesalers flush with inventory and potential deals.

News this week from one of the new conduit lenders providing blanket mortgages for single family rentals, that it is slashing underwriting requirements on multifamily loans is likely a trend which will continue to spill over to the residential home loan market. Giving the green light to borrowers with charge offs, bankruptcies, foreclosures, and credit scores as low as 600, we are definitely approaching subprime underwriting territory again. This will open the flood gates for both first time and returning home buyers.

With easy access to unlimited flash funding for wholesaling from BestTransactionFunding.com the only obstacle between investors and their goals is having buyers in place.

So where are the buyers? How can wholesalers continue to compete as brokerages consolidate and strengthen branding, and Zillow begins rolling out its strategy in the wake of the Trulia buyout?

LIVE EVENTS

While many investors have retreated to their own caves, in front of giant monitors, and settled for webinars in recent years, live events continue to provide fertile ground for deal making. Attendees get pumped up by other speakers and are in the optimal zone to take action, while many are already flying in with blank checks to write for attractive acquisitions.

GROOMING RENTERS

Big thinking, forward thinking property investors shouldn’t ignore renters. The competition you envy for the business they are doing today, is often a result of years of planting seeds and fertilizing. Take note. Get ahead, and start grooming entire complexes of renters to become home buyers over the next 24 months. Reaching out through simple mediums such as door hangers and home buyer education seminars can do wonders.

TAP THE REAL ESTATE GURUS

Many real estate investing ‘gurus’ have gone to all the trouble of developing education programs, creating seminar materials, writing books, and going on the speaking circuit just to build massive deal funnels. Of course, very few of their students will be top producers. So stepping in with a silver platter of good wholesale deals could be just what they ordered. Plus, they may have incredible resources for buying future deals.

SHAKE UP YOUR ONLINE MARKETING

To win in online real estate marketing today, you’ve got to be willing to be different, and flexible. Facebook has officially snubbed real estate marketers, and Google will constantly change its search algorithms and rankings. Forget all the rules (well most of them), and ‘must-haves’ and just focus on solving problems, being interesting, and being unique. You can always bulk up your inflow of buyer leads on-demand, at any time with Google Adwords.

GET HYPER-LOCAL

The irony of the internet, and the billions being spent on online real estate marketing development, is that it is essentially all trying to take us full circle back to being local and personally connected. Online marketing is great, often can produce the best ROI, and can be essential when working long distance. But, if investors got out a little more, left their devices at home and had more conversations, engaged in more community activities, and even just had more people over for dinner or to weekend BBQs and pool parties, they might find they are able to develop masses of new relationships with local buyers, and create bonds so strong no internet company is going to break, regardless of how big it is.

Are you on top of the 5 factors which are going to determine your level of success in real estate investing in 2013?

These 5 elements are what will control the game in the next 12 months, and if you are on top of your game you can crush it and dominate…

1. The Rebound

The U.S. housing market has come a long way in 2012 and is expected to post even better improvements in 2013. We might not be rolling from recovery to boom just yet. It is still an uneven recovery with even the best performing markets having another 30% to go up before hitting the baseline to launch another boom era.

Still, it is time to be aggressive and confident. Don’t speculate but do make big moves based on facts and cycles so that you control the largest percentage of market share you can.

2. Marketing Trends

We’ve all heard and are pretty well aware that mobile marketing is the hot ticket for real estate from here on out.

However, new tests launched by Facebook this week which aim to charge marketers $1 per message sent to anyone outside of an investor’s direct network put another nail in the social networks’ coffin and perhaps Silicon Valley’s startup nation, even if they don’t realize it yet.

So stay on your tech game but don’t count on social platforms for free marketing in 2013.

3. Foreclosures Move into Overdrive

Foreclosure sales are already speeding up in many hot areas on higher profits and prices being achieved by lenders. Expect this to continue during the next 12 months.

Don’t worry there are plenty of distressed properties to be had for the flipping too. It was just revealed that Bank of America alone is holding $64 billion in mortgages which are more than 6 months delinquent and haven’t even received a foreclosure notice yet. That puts far more distressed property out there than any private equity fund or even billionaire Carlos Slim can take down.

However, investors who want to be first in line to get the sweetest discounts on these deals need to be more innovative. Think pooling funds to buy in bulk, taking down properties as non-performing mortgage notes and checking out credit unions and asset managers as sources instead of banks.

4. Foreign Buyer Surge

While foreign buyers and investors have been a sizable force in the real estate market for the last few years we have just had a glimpse of the tip of the iceberg of what is to come in 2013.

The death of old havens like western European capitals, central London, Hong Kong and Canada has placed the U.S. as the top destination for global real estate investment in 2013.

These buyers want protection for wealth but most of all they crave high yields and regular income.

5. Mortgages

Mortgages will sadly remain the missing part of the real estate recovery puzzle for most during 2013. Lenders want to loan and hope to lend more but they are also afraid and hampered by regulations.

So get your transactional funding here for fuel all of your acquisitions and flips and get your deals in front of qualified cash buyers and REITs to smoke the competition and reel in huge revenues in the New Year!

‘Shadow inventory’ is a term being thrown around more and more in the news. Is it something that real estate investors should be worried about or is it just more scaremongering?

Shadow inventory are the properties that banks have foreclosed on or which are being foreclosed on and are not currently actively listed for sale. Some have come out in the news proclaiming that this additional inventory potentially threatens to further damage the housing market and weaken home values due to over supply.

Currently there are around 3.5 million properties for sale in the US and we are on track to see approximately 5 million units sold this year. Not a bad ratio at all. This puts us at about 9 months worth of inventory or 3 months more than were we would like to be at in a healthy real estate market.

Right now we are on the right path but the worry is that more homes coming on the market could skew the picture. Some have thrown out numbers as high as an additional 3.5 million properties which could come up for sale. However, when you actually dig into these numbers they are based on a lot of assumptions and not what is likely to happen. The banks certainly are holding a lot of additional inventory which is slowly making its way on to the market. This is actually smart for them to do strategically and will be great for real estate investors as controlled release will keep values up yet continue to provide bargain priced wholesale properties for several years.

However, many of these news articles are trying to count homes which have just fallen delinquent on their mortgages or have just received a notice of default. Note that this can happen on properties which are just 30 days late on their loans, leaving plenty of time for homeowners to catch up on their payments. Many more of these homeowners are likely strategically defaulting in order to motivate lenders to grant them loan modifications and have no intention of letting their homes go. Others will sell quickly as short sales especially with banks like Wells Fargo no openly offering $10,000 to $20,000 to homeowners to hand in their keys amicably.

So the bottom line for real estate investors is that there will continue be many deals to be done and that ‘shadow inventory’ is probably not as big a threat as some sensational headlines would like to make out.