Why do the most sophisticated real estate investors continue to buy pricey properties in the hottest property markets?

While some newer investors are wondering if the market and competition is getting too hot, funds, fund managers, and notable individual investors appear to be on an all-out buying spree. They may be selling and restructuring portfolios too, but they are buying big.

In the last few months, just in NYC multiple price records have been set for condos, apartments, and development sites. In March 2016 Property Shark reports multiple transactions flipping for tens and hundreds of millions more than they were bought for in the last four years. This includes firms like Howard Hughes, and individual fund managers, while celebrities, and sons of celebrity real estate moguls are buying prime Manhattan homes and Brooklyn properties for redevelopment.

We all know the market is constantly fluctuating. So why don’t these pros care? What do they know that newer investors don’t? What’s the key to doing more deals in hot markets, with confidence?

They know that prices always come back up. There may be dips, but look at any historical graph of property values and rents, and they have consistently marched higher. The dips are used to shake the newbies out of the market, and for pros to grab good deals before selling them back at a premium later.

The experts also know that before real estate dips, other investments will crumble first, and that only boosts the demand for real estate, and its cash flow, yields, and asset protection.

The keys to profitably and safely investing in times like this can include:

Having end buyers lined up

The ability and funding to redevelop or remarket the property

Cash flowing assets that will pay for themselves till resold

Finding the Funding

Leverage is vital in these conditions. More and more big buyers are partnering up to take down bigger deals and spread risk. Many are finding capital from banks like Santander and Ocean for developing projects. All that others need is access to a great hard money lender or transactional funding. And you don’t need great credit, or mountains of assets to access these sources of capital.

 

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.

Every real estate agent and home buyer needs to have a hard money and transactional lender in their pocket…

Even at the best of times, the best looking real estate deals can fall apart. Mortgage financing issues are usually the culprit. At last count Forbes and Zillow have stated that one third of real estate contracts fail to close, even years after the pit of the crisis. When deals fall apart it can seriously disrupt the finances of real estate professionals and businesses. It can impact their reputations, and even turn clients off to the market. For their home buyer and investor clients it can be financially catastrophic, not to mention incredibly stressful. Having a backup financing source can help save deals, and dramatically cut down fall out ratios.

When to Bring Out Your Secret Lending Weapon

Simply walking away when deals get shaky isn’t the answer. It is never easy. But it is those that keep pushing forward and that find solutions where others give up that are the success stories.

When lender issues come up, attempting just to scoot sideways and to shop around with other conventional mortgage lenders and banks is unlikely to make a difference. In spite of the upfront promises most of these lenders all have the same criteria and underwriting requirements. In order to bring deals back from the brink, save buyers from major financial loss, protect them from lawsuits for breach of contract, and to create ongoing win-wins it can be wise to have alternative lenders to refer them to.

While every deal may not be saved in exactly the way it was originally written a hard money lender or transactional lender can preserve deposits, and profits by offering the funds required to close, and fast.

While these loans can be closed in days, especially if you already have title, appraisals, and inspections done, the sooner the switch is made the better.

Alternative Loan Solutions

In many cases a hard money loan may be used to close quickly and save the deal. The terms may not be as attractive as original options, but do the math, and with a refinance in the near future it will often be the best option.

This is certainly true for those flipping houses. Transactional funding may also be used to wholesale these properties. In many cases the profit margins may be just as good for clients as if they had gone through the process of holding and renovating a property.

So when deals start experiencing issues – don’t panic; turn to your alternative lender quickly and pull off a great deal for everyone.

 

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.