Fed Rate Hike Spree To Put Real Estate Wholesaling In The Spotlight

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on Dec 03 in BestTransactionFunding

As interest rates start soaring wholesaling real estate likely to become top investment choice.

The Fed’s pending rate hike spree could come far faster and harder than most expect. One analyst has forecast a 1.5% and done raise in December. Others anticipate interest rates up 2% by 2017. They will double before they get back to previous territory in the last housing boom. As more aggressive loan programs are rolled out if shouldn’t be surprising to see many property owners with double digit mortgage rates again, at least within a few years.

Side Effects of a Rising Rate Environment

Wall Street has already been wincing and contracting, just at the thought of a rate hike. Higher rates can be bad for some stocks and may result in more investors pulling their cash out, and putting it into real estate.

This activity, along with higher remodeling and building costs could create faster price growth in the housing market.

Yet, easier access to lending, a raging appetite for real estate as an asset class, and rapidly rising prices, along with higher rates can bring other challenges. Competition and thinner cash flow levels are two of these.

It’s also important to note that many investors have already recently tied up the bulk of their cash in startups, equities, and rental properties. So there will be great opportunities for wholesaling houses, but the cost and sources of money can change some of the dynamics in the market.

Funding Your Real Estate Deals in 2016 and Beyond

Buy and hold investors, and rehabbers that are tight on cash may be able to turn to credit lines and even reverse mortgages. But they must stay alert to the potential for negative cash flow if using high loan to value purchase loans.

End buyers made up of regular home buyers armed with access to more aggressive high LTV loan programs could be among the most active in the market.

This means great opportunities for wholesaling using short term mortgage financing. Many rehabbers and landlords may see wholesaling as their new best strategy to get in, out, and paid without holding onto the debt. Even if rates nudge higher this will be barely noticeable to those using transactional funding and hard money loans to quickly flip properties in a matter of days.

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.

 

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