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Inflation Is The Biggest Factor Influencing Real Estate This Year

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on Saturday, 17 February 2024
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Inflation only seems to be warming up this year. Expect it to be the main factor driving all trends in the real estate space throughout 2024.


Real Inflation Could Be About To Soar


In contrast to official numbers in the headlines, real inflation is what consumers experience on a daily basis.


This inflation certainly doesn’t appear to have reversed course yet. In fact, the last couple of years may have just been setting the launchpad for what’s to come this year.


There are many things that have happened and are influx, which could be used as reasons to raise consumer prices this year. Everything from new regulations and taxes, to foreign wars, and supply chain issues.


Grocery and household goods prices are still extremely high compared to a couple of years ago. Consider the controversial new $18 Big Mac meal deal at McDonalds. With some of their meals now over $21. That’s for ‘cheap’ unhealthy fast food. That’s almost $100 to feed a family of four, just one meal a day.


Other basic living costs are going up too. Especially for property owners. Several Florida insurance companies just applied to be able to raise their rates by 50% this year. That’s going to make the last few years of 30% inflation look cheap.


It’s so bad, one major new story in the New York Post focused on how you can recycle and use your own poop to heat your home, cook, and grow your own food.


Distressed Real Estate Deals


Inflation is to the point where many households are now having to stop paying their bills in order to feed their families.


Food insecurity is at new highs. Just as are defaults on car loans and credit card bills. These nonperforming debt sectors have ballooned over the past couple of years. Hitting new records in 2023, even before those end of year holiday shopping bills showed up in inboxes.


We’ve even begun to see major home builders sell off entire projects to cash out, and mitigate the risk of a changing new home sales market.


Billions more in mortgage debt became delinquent in the final quarter of 2023. Meaning more motivated sellers who need to sell their homes and go rent before they have to go through foreclosure.

 

This is a great time to pick up discounted real estate deals, and flip them to landlords who are going to see a big rise in the demand for rentals, and the wealthy that have enjoyed windfall profits from AI investments. Just as the crypto crowd did before them.

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What’s Motivating Sellers As Mortgage Performance Stays Strong?

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on Wednesday, 09 November 2022
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What’s motivating sellers to sell their properties in this market?


Finding motivated sellers is critical for house flippers, real estate wholesalers, and acquirers of buy and hold income properties alike.


However, the latest data shows that mortgage borrowers of all types may be in a much stronger position than believed. At least for now. So, if they aren’t falling into foreclosure yet, what are some of the motivators that make for good sellers and deals in this market?


Mortgage Debt Performance Stays Strong

The latest round of data from banks reported by DistressedPro shows that mortgage lates and defaults have fallen across all sectors. Including residential, commercial, and farm loans. There are almost no REOs being held by banks.


Many thought there would be a lot more foreclosures and defaults by now.


Thanks to many locking in very low rate long term loans, there could be a stronger foundation in the market for this cycle. Which supports property values, and helps to avoid a new massive foreclosure crisis.


Buyers & Sellers Get Bearish

In spite of the above data, Fannie Mae has been one of the most bearish on the housing market. Predicting trouble in the real estate market could throw the entire economy into a new recession next year. Even though we just exited one.


Their recent survey shows just 16% of home buyers think that this is a good time to buy. With only around 40% of sellers thinking that this is a good time to sell.


How Do You Find The Motivated Sellers

Of course, just because it may not be as an attractive time to sell a home for regular homeowners as in the summer, that doesn’t mean people won’t have to sell.


Layoffs are surging, with few new jobs due to hiring freezes. Along with diminishing affordability due to inflation, and consumers defaulting on more credit card debt, auto loans, and business loans than any point in the past two years, many are in financial distress.


There are lead lists that can help identify these markers. Investors can also use SEO and content marketing to educate owners about their options and lead them to getting an offer.


Other real estate companies, businesses, and even the world’s largest banks have been selling off real estate assets to recoup capital to keep operating. Even at prices much lower than they were valued at a few months ago. Try direct marketing to them.


Falling home prices could be the most pressing motivator right now. In the past three months alone an estimated $1.3T in home equity has been lost due to declining prices. Any seller with some common sense, and educated on how much further prices can go down will see it is better to cut their losses now, than to wait and lose more.


Trying publishing more educational content around this. Whether it is on your blog, or via email or print newsletters.

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Could Rising Business & Consumer Credit Defaults Lead To More Mortgage Defaults?

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on Thursday, 17 February 2022
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Could an increase in late and defaulting consumer credit and business loans lead to more distressed real estate opportunities for buyers?


Mortgage loan defaults and foreclosures ended up being far lower than expected in the wake of COVID. Rather than a deep crash, house prices and sales rocketed. A lot of stimulus, forbearance plans, foreclosure moratoriums, and a strong housing market has certainly helped this.


Rising Credit Defaults

New bank data published by DistressedPro shows that while mortgage distress has been slowly improving, other types of credit are seeing more late payments and defaults


Among these are spikes in business loan, auto loan and credit card defaults. There are tens of billions of dollars in these distressed debt pools.


All of these classes of debt were showing increases in distress at the end of 2021.


How People Pay Their Bills

Typically, when consumers get into financial difficulties they first stop paying their credit cards. Then if they still can’t keep up they stop paying their car loans. Finally, if businesses and individuals still can’t keep up they start falling late or give up on making their house and real estate payments.


We also saw an extra 29,000 unemployment claims than expected in the second week of February 2022. Suggesting the job market may not be as strong as some thought.


While some areas of the economy appear to be doing very well, some experts wonder if we are actually heading into stagflation. A period of the economy in which inflation is high, but the overall economy is stagnant, and not really growing. Those conditions make it harder for businesses and workers. Their costs go up, but their sales and incomes may not.


More Opportunity For Real Estate Investors

The above all comes together to suggest that there may be more opportunity for real estate investors ahead.


With a continued rise in home prices we may not see a big rise in REOs. Banks are likely to be able to sell off these non-performing liabilities as mortgage notes before they get to that stage.


Commercial and residential property owners may also be able to sell their properties in the retail market before they lose them. They may not get premium prices, but the recent surge in equity could leave plenty of value on the table for everyone involved.


Keep your eyes out for more motivated sellers out there.

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5 Mortgage Underwriting Quirks That Could Kill Your Next Deal

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on Thursday, 13 January 2022
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The US real estate market is expected to hit new records this year. Yet, choosing the wrong deals and buyers could turn your best year ever into a financial nightmare.


There is plenty of capital for real estate wholesalers to use transactional funding to flip deals fast for big profits. Though end buyers relying on financing could run into challenges in trying to close due to quirks they may not anticipate in mortgage underwriting guidelines.


Even some of the most progressive new private money lenders, and investment property lenders have a lot of rules which can be directly at odds with what investors are being told are good deals this year.


Here are five to watch out for when contracting with an end buy that needs financing.


Square Footage

Unless you’ve run into it before you may not be aware that lenders often have minimum and even maximum square footage they will lend on.


This often rules out tiny homes and small condo units. As do their minimum loan amounts.


Some even have a cap on how big a home can be, and how many bedrooms it has. They prefer average sized ‘bread and butter’ deals that are easier and faster to liquidate.


Mixed Use Properties

There may be more mixed use properties being built, as well as many opportunities to buy now abandoned office and retail space, and convert it into mixed use.


It sounds like a great plan, and they can be great properties. Unfortunately many lenders don’t want to touch them. Especially when you are trying to finance a property which includes residential too.


These properties are much harder to finance, with big down payment requirements.


Acreage

Even though hundreds of thousands, if not millions of US households are heading to the suburbs, small towns and rural areas, many lenders are less interested in funding those properties. Some specifically prefer urban infill.


You may run into lot size caps as small as one acre.


Declining Vs. Improving Markets

Lenders guidelines are typically very specific about lending in improving and appreciating housing markets with strong supply and demand balance.


While many of the deepest discounts for wholesalers may be found in distressed markets, a declining market can be a nightmare for financing, with a drawn out process, repeat appraisals and more.


While most of the country is expected to keep growing this year, don’t be surprised if we see a dip in some once prime NY, CA, and IL markets.


Forbearance & Skipping Payments In The Pandemic

Many borrowers were offered the ability to skip payments on credit cards, car loans and house payments during the pandemic lockdowns. Some banks even automatically threw their borrowers into forbearance plans without them asking.


These plans were offered on the premise that they wouldn’t negatively impact credit and credit scores. Yet, some lenders are revising their mortgage underwriting guidelines to bar applicants with missed payments or that have been in forbearance plans, and consider them a loan default. Make sure your end buyers are aware of this before inking a contract.

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4 Factors You Didn’t Know Impacted Property Value

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on Monday, 01 November 2021
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Do you know what adds value to a property, and what doesn’t?


This is one of the most critical parts of investing in real estate. Sadly, even many Realtors have no idea what truly adds value to a property. You certainly shouldn’t be basing your education on ‘reality’ TV show makeovers or Zillow either.


By now, hopefully you understand that upgrading flooring and accessorizing don’t add real value. In fact, most home ‘improvements’ lose money. Which is a large part of why real estate wholesaling is so much more attractive than rehabbing or fixing and flipping.


It can take quite a few years, and hundreds of transactions for real estate investors, Realtors and even mortgage brokers to really be able to catch many of these nuances of this business. Important valuation factors which can make or break deals.


Many issues arise in mortgage underwriting. Even if you are paying all cash or are using transactional funding, where these aren’t problems, they can be incredibly problematic when it comes to your end buyer obtaining financing.


Then there are also quirks, like some of those below which may influence how much others are willing to pay for a property, regardless of what the comps may indicate based upon the numbers alone.


City Names

Some city names and mottos are certainly more attractive than others. Who wouldn’t want to move to the ‘Sunshine State’, the ‘City of Angels’ or Paradise?

Then we have those like Slaughterville in OK, Scary in WV and Hell in MI. They may certainly have some niche appeal. They may be a hit for some on Halloween. Not so much for the rest of the year, the bulk of the buyer pool, or those seeking an Airbnb escape.

Don’t forget Toad Suck, Arkansas, Boring, Oregon or Roachtown, Illinois.


Street Names

It is often bewildering to see some street names, and to try and imagine who thought they were a good idea.


Who wouldn’t want to live on Happy St.? It is a real one. Or how about Freedom Ave?


Then you have movies and events that destroy the value of streets too. Like Freddie Kruger. The Guardian reports that homes on Elm Streets all over now sell for 70% less than competing homes.


Industrial & Commercial

Having views of industrial and commercial real estate from your residential property can also be a huge issue for many mortgage underwriters. Many will just turn applications down.


Property Taxes

Homes are much more attractive in low tax destinations. Those in high cost areas can be dramatically different from one unit to the next. Often based on the owners appealing their assessments. There can sometimes be a 50% difference in the property taxes on almost identical units. Which would you pay more for? This can directly impact value when properties are being evaluated on their profitability and cap rates too.


What quirks have you found that have surprised or frustrated you, and you want to warn others about?

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5 Factors Real Estate Wholesalers Should Be Watching

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on Tuesday, 19 October 2021
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Here are the factors real estate wholesalers should be monitoring as they plan acquisitions and marketing campaigns now.


The Supply Chain

Manipulated or just messed up, the average US household is finding supply chain pains and disruptions very real.


Some are ignoring it and hoping it passes. Others are stressed about it. Some are finding it painful as they can’t find their kids’ favorite foods and the end of year holiday season is a big question mark.


In real estate it means that some construction materials are not available. Furniture is hard to come by, and orders placed are not guaranteed to arrive. Rehabs are taking longer than normal. Fewer new homes will be coming to market.


The Second & Third Home Market Is Growing

According to Bloomberg the demand for second and third homes is growing. This can be a great niche for wholesalers to target. One which is often rich with qualified buyers who aren’t price sensitive.


The New Recession

Some analysts are arguing that by the time the next set of economic data comes out it will reveal that we’ve already entered a new recession. They are mostly basing this on what they see as the leading indicator of falling consumer sentiment.


While the majority of mainstream data being published shows the economy is growing, while mortgage forbearances decline and unemployment is low, it is important for investors to seek out the raw data to draw their own common sense conclusions as well.


On the bright side, recessions are a great time for real estate wholesalers to find distressed inventory.


Though any new stimulus and new policies could easily mask a dip or extend the current run up.


Warp Speed Inflation

Those making less than $250,0000 are probably feeling the impact of rampant inflation already. It is at the grocery store, the gas station, and in the tax bills. There is no sign of it slowing.


The good news is that real estate keeps growing faster than inflation. That includes house prices and rents. Many of which are up 50% to 70% this year alone.


Liquidity & Credit

How fast things can continue to grow versus running into a financial crunch depends a lot on credit markets. This includes interest rates, international credit, and mortgage availability. Some markets have been seeing close to 60% of home sales going to cash buyers already. Financing is essential to keep things moving. Right now that money is available. Especially for real estate wholesalers. Take advantage of it.

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Real Estate News & Trends To Watch Now

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on Thursday, 29 July 2021
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Here’s what’s happening in real estate this week, and what it means for real estate wholesalers…


Rents Are Up

US monthly apartment rents have risen by an average of 12% over the past year, with some landlords proclaiming they’ve managed to raise rents by 14%. Even in places like Rochester, NY and Allentown, PA rents are up around 20%.


Realtor Magazine says new movers are also prepared to pay 15% more than existing tenants this year.


It is a great year to be flipping to landlords, especially when it comes to vacant property, or those with leases expiring soon.


Even Will Smith and Jay-Z are getting in on the action; participating in a new $165M round for a rent to own fund.


Mortgage Delinquencies Are Down

Despite all the fear being spread in the media, and being used to force new policies, CoreLogic reports that mortgage delinquencies began turning around in April, with defaults falling in every state, except for WY.


New Foreclosure Moratorium

A combination of new mortgage servicing rules by the FHFA and CFPB are effectively creating a new foreclosure moratorium until 2022.


There are exceptions, including vacant property, and where borrowers have defaulted on trial loan modifications. These are likely to be the properties that make up much of the inventory for real estate wholesalers through the end of the year.


Biden Promises To Cut Mortgage Payments By 25%

The Biden administration just announced it will be cutting American’s monthly mortgage payments by 25%. It aims to do this via modifications, or providing second lien mortgage loans on millions of properties nationwide.


Of course, not everyone will qualify, and the disinformation could lead to a 2008 like situation where homeowners fail to act as they wait for a personal bailout that never comes.


The New Infrastructure Bill

The giant new infrastructure bill not only dedicates $109B to roads, which have clearly gone out of fashion for most future thinking international cities, but also gives the IRS $40B specifically for enforcement, and to chase down more revenues from taxpayers. The hope is that this will raise an extra $100B in cash to spend. Make sure your accounting is clean, up to date, and you’ve paid your taxes.

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Where To Get The Money To Fund Your Deals Now

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on Wednesday, 21 July 2021
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While there may have never been a stronger real estate market, there are certainly some quirks happening out there. Where do you get the money to fund your real estate deals now?


New federal mortgage servicing rules may be exasperating mortgage lenders, while landlords continue to try and battle for evictions. At the same time, banks like Wells Fargo have either increased credit requirements for loan products, or have ended loan programs like the home equity line of credit. More recently Wells Fargo just surprised its customers with a last minute notice that it will be cutting off all personal lines of credit.


Plentiful Deals, High Demand

While some types of inventory have been tight, and prices have hit new record highs, there are still plentiful deals to do. In fact, with many home flippers sitting on the sidelines over the past year according to Bloomberg, there are still endless investment deals to be done. The retail market may finally be moderating according to NAR and the latest data, but right priced properties are still in high demand.


There’s a whole buffet of deals to be done, and scaling up volume now while the end buyer market is still there seems like the intelligent thing to do. For most it is just about having all of the capital to do it.


Transactional Funding

Transactional funding is still available for real estate investors. This is the easiest investment capital to get your hands on to fund your deals.


Best Transaction Funding doesn’t require a credit score, appraisal or income verification. That means no headaches if you missed some work or your income stalled during the pandemic, your bank hurt your credit by cancelling your credit line, or you just load up on too much toilet paper and other supplies on your credit cards. You can make offers with confidence, without worrying about appraisal issues, while being able to close in just days.


Real Estate Wholesaling

Transactional funding is specifically designed for real estate wholesaling. The lowest risk and highest reward real estate strategy to deploy in this current market.


Whether you are just getting started, need to fill gaps in rental income while waiting on evictions, or need to put lump sums in the bank to make up for lost credit lines you were counting on to finish rehab projects, wholesaling could be the ideal solution.

 

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Majority Of Millennials Regret Buying Homes During The Pandemic

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on Thursday, 15 July 2021
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Almost 65% of millennials now regret their home purchases according to a new Bankrate survey.


This may be a shame for all of those who got caught up in the home buying frenzy of the past year. Yet, it also signals some new opportunities for real estate investors as well.


Homebuyer Remorse Grips Millennials

According to the data the majority of millennials now regret buying homes.


Some of the top reasons they are giving for this distress include:


  • Additional homeowner expenses like maintenance costs

  • Buying a home that is too big or too small

  • Home mortgage payments and rates too high

  • Buying in a bad location

  • Overpaying for their homes

It seems millions just jumped into the market on a whim, without really thinking the decision through, doing a budget, analyzing what was important in a home, or educating themselves about the market.


How Wholesalers Can Help Out

In many scenarios these homes have quickly become a burden for homeowners. It’s now just a big payment each month. One that prevents them from enjoying the life and freedom they really want. It’s stressful. For a lot of homeowners it may be unsustainable.


As a real estate investor you can help them out. Even if they bought at the peak of the market in the past year, soaring inflation and frenzied competition means those properties could easily have 20% more equity in them now. For some, that is enough money to make a decent profit on wholesaling them.


All many of these owners probably want is enough money out to go move into a nice rental.


Some won’t act in time, and unexpected maintenance, repair and property tax bills will bankrupt them. That can turn into nonperforming loan notes and REOs. Both of which can be buying opportunities for investors.


Wholesaling To Landlords

Equipped with this information and facing a changing market, investors may want to expand or change up who they are reselling properties to.


Many retail buyers are getting priced out of the market. It is true that interest rates are low. Yet, recent data shows that it will now take South Florida homebuyers 17 years just to save up a 10% down payment. That’s 34 years to save a 20% down payment. That could certainly lead to a decline in homeownership.


While many rehabbers have been sitting on the sidelines during the pandemic according to ATTOM Data, and will continue to due to hyperinflation of construction materials, other types of buyers are scaling up.


Buy to rent landlords are growing as fast as they can with cheap money, and in anticipation of a new wave of renters coming to the market. These end buyers may have lower profit expectations, and are likely to be bulk or repeat buyers too.

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Over 70% Say It’s A Bad Time To Buy A Home

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on Wednesday, 09 June 2021
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The overwhelming majority of US households now say they believe it is not a good time to buy a home. What does that mean for real estate investors?


According to the latest data from the Fannie Mae National Housing Survey more than 70% of respondents said they thought it was either not a good time, or it was a bad time to buy a home.


The percentage of those who thought it was a good time to buy has reportedly dropped to an all time low.


Those surveyed still said they would prefer to own a home instead of renting if they were to move, but they appear to have become worn out by bidding wars and see prices as just being far too high. So, if you’ve been frustrated in trying to find deals, you are certainly not alone.


Pending home sales also began sliding in early 2021. A leading indicator that closed homes sales and home prices may follow that trend in the coming months.


Talk of interest rate hikes could also accelerate this trend, making current prices unaffordable for millions more, and disqualifying many for mortgage loans. As we know, it was the timing of rate hikes which really pierced the real estate bubble of 2008.


For real estate investors, it is probably past peak time to list and sell properties on hand. Now is the time to get that done before there is any further cooling in home buyer appetite.


Investors who plan to keep using real estate as a source of income are also going to have to put in a little more effort to finding deals. There may still be a short window of opportunity in which even retail priced properties can be quickly flipped for profits in white hot markets.


Yet, those looking for better value deals and built in profit margins should be ramping up networking, marketing direct to owners, and building investor buyers lists, who will keep buying and rent units out if the retail market vaporizes.


There are still plenty of profits to be made in wholesaling houses. It is all about finding real deals at the right prices, and having qualified buyers lined up to take them right away.

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New Major Lawsuits Could Create Massive Change In Real Estate & Finance Costs (For The Worse)

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on Thursday, 05 November 2020
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A big new lawsuit and investigation could significantly change the costs of buying and financing real estate in the very near future. What’s happening? How is it going to impact you and those you care about?


Redfin & Opendoor

Discount real estate brokerage Redfin is in the hot seat. They are now the target of new fair housing lawsuits claiming they are racially discriminating by limiting their service by minimum home prices. That can be as low as $250,000 in some markets, compared to the national average home price of $350,000. They are being sued in Seattle, and have been asked to stop the service by a city councilperson and mayoral candidate on the east coast in Baltimore.


Opendoor, the big iBuyer and house flipper which has partnered with Redfin and has filed plans to go public with a value of close to $5B, is also the subject of an FTC investigation into its advertising.


While no one should be discriminating, period, and we don’t know the real intentions of these companies, these legal challenges could have the opposite of the declared result and prove counterproductive and harmful for those who need the help the most.


Here’s what it means for others and the real estate industry in general…


Fewer Services & Choices Of Help

It has become clear that through a series of lawsuits like this, that if you have a public website you are a target. Many may need to take their services back to being private, rely on referrals, and other mediums to do business.


These risks and liabilities are also reducing the number of those who will want to try and innovate and change things for the better in this industry, and who will be willing to risk backing them with capital.


Higher Costs

If mortgage lenders and real estate brokers are forced to do away with minimums or must provide their products to every zip code in the nation, then they will have to either end services or dramatically increase the costs of services for everyone.


This would likely end discount real estate services and loans that would help borrowers with less than perfect credit and big incomes. This might seem to be great for the largest companies and Realtors, but will penalize the majority.


More Inequality

Higher costs and less help, means those who need the help most, especially for entering homeownership and investing are going to be sidelined even more, while others can get far better deals from personal connections. It will widen the divide between the uber wealthy and everyone else.


The Bottom Line

The increasing liability of having a public website means the need for real estate investors and business owners to start exploring other alternatives as a plan B and C. Discrimination is bad, but lawsuits like this can be more counterproductive. Be sure you are building your personal network of buyers, sellers and lenders now.

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Pandemic: The Truth About Investing In Real Estate In The New Economy

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on Thursday, 19 March 2020
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Suddenly all of those who have been denying a new dip was coming are realizing they were way wrong. Many are still lying to themselves about how deep this is going to go. What do you need to know about surviving and thriving as a real estate investor now?


It’s Going To Make 2008 Look Like A Vacation

This economic crisis is going to make 2008 look like a test trial. Expect the fall out from COVID-19 to be at least 2x as bad.


Fortunately, we can also take comfort in the fact that there are predictable patterns and cycles. The massive shift in daily life will really shake up some people.


They didn’t know life could change this much, so fast. Yet, we know that over the long term most real estate will keep growing. Today, the luxury NYC condos that were selling for $2M yesterday are probably worth less than a roll of toilet paper. Other parts of the market, where those quarantined have lots of yard to move around and maybe room to grow their own food are going to explode in value.


Schools and work may never be the same. In many cases that is a good thing. It is just speeding up the most to being more efficient.


A 70% drop in the stock market and some housing markets shouldn’t shock you.


Foreclosures

There will be some similarities from 2008. As in the best moves to make to get through. Yet, some things will be substantially different.


Don’t count on a flood of foreclosures. Governments are already banning foreclosures and evictions. If we don’t eradicate the virus fast, the foreclosure process will probably be years in the making.


So, be wary of spending all of your time and marketing money on foreclosures. Sellers aren’t going to buy the fact that they will lose their homes.


If you hold mortgage notes, the best thing you can do is to be proactive. Communicate with your borrowers. Give them a break on payments. Those will be the ones who stay and work things out with you.


However, there will be other types of distressed property sales. Especially among new developments and all of the owners of Airbnb properties who far overpaid and can’t rent their units. As well as speculators and flippers who need cash. Don’t forget condo owners in big cities who don’t want to be quarantined in small apartments in the middle of the chaos.


Landlords & Renters

Renters are going to stop performing. They are already being told Trump is going to send them bailout money, just like Obama in 2008.


Be proactive, talk to them, give them a break now. Or they are going to drag it out a lot longer than you think. When they do get out, you may have to lease at dramatically lower rates.


You can make it, if you work with them now, and keep tenants who will deliver cash flow again in a couple of months.


Wholesale Real Estate

Real estate wholesaling is the perfect investment strategy for this market. Get in, out and paid fast. Before the market can change on you. Use transactional funding to finance your deals, and hold onto your cash for now. They are already making runs on the banks and banks are limiting access to cash. You’ll have plenty of opportunities to invest it as asset prices get lower in the months and years ahead.


Just don’t stop marketing. This is your chance to expand market share.

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Real Estate Investing: How To Survive ‘GodZillow’

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on Tuesday, 21 August 2018
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Watch out real estate investors - the Z Apocalypse is here. Zillow has announced major expansion plans and advances into new sectors of the industry. How can real estate investors prep, survive and thrive?


Zillow’s New Moves

If you thought Zillow was already a pain for standing out online and the deals it wrecks with its seriously flawed Zestimates tool, that’s just the beginning.


Zillow recently attracted a lot of attention for taking over a large mortgage lender. Now it aims to capture and capitalize on real estate sales and listings and do all the financing for regular home buyers.


More importantly for investors, Zillow has also begun buying and selling properties itself. Like OpenDoor and so many wholesalers out there. It wants to list ‘em, buy ‘em, flip them and finance them.

 

Plus, the online giant has announced it will be offering property management and rental property services. It will act as the consumer facing portal for rental applications and approvals and processing rental payments.


Essentially Zillow is stepping on a whole lot of toes at once. All of these new revenue streams could create even more capital to expand its online monopoly in an attempt to starve smaller players out of the business.


What To Do

Obviously solo investors and small businesses are at a disadvantage in many ways. They don’t have a Zillow size marketing budget or giant team of sales staff to follow up with leads and cold call. Like Facebook, Zillow has also used all the content and links from users against them. Anyone who contributed to Zillow’s blogs, forums or credited it for data and research on their own blog, or used the site for their reviews, essentially gave away their own future business to the competition.


Fortunately, you do have some advantages to wield too. You can insist on running a very lean and highly flexible business that has better profit margins and can take advantage of market trends and new opportunities faster than Zillow.


You can stand out with your own personal brand and stay unique. You can specialize in being the expert in one niche, or become the local expert.


You can do far better at building personal relationships and providing superior personal service. You can provide more accurate information, follow up better, and conduct more targeted marketing.


Maybe you can even wholesale your properties to Zillow?

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5 Reasons Transactional Funding Is So Critical For Real Estate Investors

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Transactional funding has become an essential and invaluable tool for real estate investors. Multi-pronged benefits make it a vital tool for both experienced high volume investors, and crucial for those looking to get started in real estate investing.

Here are just some of the reasons it has become so important..

Liquidity

It doesn’t matter if you start investing in real estate with millions or are making seven figures a year. That cash can become tied up quickly. Without liquidity investors get stuck, and everything grinds to a halt. That cannot just be financially perilous, but means missing out on the best and most profitable opportunities. Transactional funding breaks that cycle, even as the wider mortgage market looks to become tighter, by offering virtually limitless capital.

Fast Funding

Sellers and Realtors don’t want to wait around anymore. They don’t want drawn out closings, and will give preference to offers that promise a quicker closing. Investors don’t want to be playing the waiting game for months either. The faster you can close and flip it, and get paid, the higher your annual returns and income. Transactional funding can be closed in just days.

Access to Credit

Transactional funding offers access to credit for those without perfect credit or all the paperwork that conventional lenders are demanding today. You don’t have to worry about the IRS speedily sending copies of tax returns, how backed up real estate appraisers are, or if you have an error on your credit report that just won’t go away. This provides a desperately needed service for new investors looking to change the dynamics of their finances.

Ability to Act as a Cash Buyer

The best transaction funding enables investors to act just like cash buyers. The money is there, and available to close in just days, without worrying about all the micro-underwriting of most banks. For sellers and Realtors, that makes wholesalers using transactional funding as good as cash buyers.

Protecting Your Deals with Legal Double Closings

Unfortunately, the market continues to be rife with unscrupulous buyers, sellers, and agents who try to go behind the backs of investors. It doesn’t matter how good of a deal you seem to give some people, they still try to manipulate the system, and think they can get away with it. Instead of relying on assignments and assigning contracts, transactional funding provides the ability to double close legally and quickly, and protect all the investment made in marketing and securing buyers and sellers.

Why do you use transactional funding?

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Real Estate Investing & The California Wildfires

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on Thursday, 26 October 2017
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Recent California wildfires have displaced thousands of residents. What help is available? How can real estate investors lend a hand?

The latest round of CA wildfires have dealt what may be one of the most catastrophic seasons on the state, with new record costs, and thousands forced from their homes. According to the state government website, 2017 has seen almost twice the average amount of acreage burned, with damage that could cost at least $1B, if not close to $5B. This includes around 8,500 residential homes which have been damaged or burned down.

The IRS has responded by extending some tax deadlines for those affected until January 31st, 2018. Victims may also be eligible for FEMA of up to $34,000 to help with funeral costs, emergency hospital bills, and housing expenses. There are also going to be a variety of agents and real estate investors looking to help house those displaced, and to offer quick sales for those who don’t want to, or can’t hang on and rebuild their homes.

A new report from UpNest shows data that suggests recent years of fires have not have much impact on the state’s property prices or demand. Yet, there are clearly many property owners who have lost everything, are still struggling to get back on track years down the line, and whose land is still badly scorched. The most immediate impact for real estate appears to be even worse lack of available housing, and rocketing rental and housing costs.

There is a huge need for fast acting real estate investors who can go in and help owners liquidate fire damaged homes, as well as for rebuilding and renovating them. Real estate wholesalers can play an urgent and much needed role in this, by finding, contracting to buy, and providing inventory to other investors who have more time and capital to reposition, remodel, and build. While fire damage and burnouts can typically be a roadblock for traditional mortgage financing, wholesalers can use Best Transaction Funding to acquire and flip these houses to cash buyers and those with flexible credit lines, that don’t rely on property inspections.

Summary

Data suggests that California housing prices are not likely to be slowed by recent fires. There is a big need for housing, and funding is available for fast flips. Wholesalers can help out by getting product in front of those with the time, money, patience to rebuild or rehab, while giving sellers the quick cash they need.

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Real Estate Financing Trends

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What’s trending in the real estate financing space now?

Here’s what’s changing in the market as we roll through the second quarter, and into the second half of 2017…

Rising Loan Volumes

The Mortgage Bankers Association, analysts, and individual lenders are expecting loan volumes to rise this year. Commercial real estate loans are predicted to hit new highs in 2017 and 2018. That’s following RealtyTrac’s annual house flipping report which shows far more flippers are now using financing. Buy and hold real estate is still popular too, yet many rental property investors have most of their capital tied up in equity and will need to use leverage to expand their portfolios this year.

Higher LTV Financing

Lenders are expanding loan programs with new higher LTV options. In addition to 100% transactional funding, VA and USDA loans, private lenders and rehab lenders are also moving closer to offering 100% financing for fixing and flipping houses and small multifamily properties.

Declining Credit Score Requirements

Various efforts are being made to reduce credit scores used in underwriting. How much relief this provides to investors will depend on how front line mortgage originators adopt them. Many are still being far more stringent than the secondary market demands.

True Stated Income Loans

Alternative documentation loans have been on the fringes of the market for a while. Now we are finally seeing more lenders offer stated income loans for investors that don’t require tax returns, or even bank statements.

Equity Sharing Loans

Lenders are bullish on the market continuing to grow. More are wanting a piece of that rising equity, in addition to interest and origination fees.

JVs

Savvy investors and lenders are increasingly partnering up. This can be a great strategy for expanding, while minimizing risk, increasing diversification, and gaining access to more lucrative investments.

 

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.

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How Will New TRID Rules Affect Real Estate Wholesalers?

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on Thursday, 08 October 2015
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New TRID mortgage and closing rules threaten the biggest shake up in the industry so far. How will they affect real estate wholesalers?

A new set of rules went into effect on October 3rd, 2015. The TILA-RESPA Integrated Disclosure rules a.k.a ‘TRID’ are the most notable changes to the industry since at least Dodd-Frank. The head of the Mortgage Bankers Association warns that these new commandments of mortgage lending and real estate closings will impact everyone from loan officers to Realtors to individual home buyers and sellers. Some companies have reportedly spent millions on restructuring to be prepared. Others still may have little clue what they mean for their transactions.

There is sure to be some closing mayhem ahead. Whether these new rules and forms will really make a positive difference will have to be seen. Much of that depends on whether the rules are followed. After all, the previous issues that the Consumer Finance Protection Bureau is reportedly attempting to fix with these changes, were in reality a lack of following the rules and forms that were already in place. Unfortunately it could be the end consumer who is hurt worst as normally happens with regulatory changes like this.

TRID rules which are meant to simplify the mortgage and closing process with 2 new documents have 2,000 pages of guidelines. So no one should be surprised if there is a lot of confusion over the next few months.

The four main things you need to know are:

  1. The amount of paperwork lenders can collect upfront is being limited
  2. The old Good Faith Estimate is being replaced with the ‘Lending Estimate’
  3. The old HUD 1 Settlement Statement is being replaced with the ‘Closing Disclosure’
  4. There is now a 3 day waiting period between receiving the final Closing Disclosure and actual completion of the transaction

Real estate wholesalers can be better prepared to navigate TRID challenges by; building extra time to close into real estate contracts, requiring copies of buyers’ official loan commitments faster, making sure all parties for both transactions have their Closing Disclosures 3 days in advance, and by working with title companies that are on top of new TRID rule implementation.

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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2014 Real Estate Trends To Watch For Property Wholesalers

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New 2014 real estate trends reports and forecasts pinpoint where the most active markets will be this year, what buyers really want, and who has the money to buy them…

This data is critical for real estate wholesalers who are serious about scaling their businesses in 2014 and beyond. Those wholesaling and flipping houses may work fast enough to be able to make a profit in any market cycle and anywhere. However, to go big, requires being a little more strategic.

So what 2014 real estate trends should wholesalers have an eye on?

1. Going Green

Going green is increasingly not just wanted, but clearly more profitable. In the U.S. street trees alone are reportedly adding $52M to property values. Now Fannie and Freddie are launching new green rated securities, while bigger investment firms push ‘green’ bonds.

2. Urban, Urban, Urban

It winning in real estate investment is all about “location”, in 2014 it’s all about urban locations, infill and redevelopment. Some may mistakenly allow themselves to be led into the idea the ‘burbs’ are dead for good, but there is no question downtown is the focus of the moment.

3. Mixed Use

For many reasons mixed use properties are being pushed hard from all angles. This should not be underestimated. Some may find this class more challenging, but those investors which embrace it first and find their angle stand to win big.

4. Capital Flow

If property investors thought there was a lot of money floating around over the last few years, it’s only going to get greener in 2014 and beyond. Aside from private equity jumping into the mortgage business, BestTransactionFunding.com offers virtually unlimited access to capital for fast flips and legitimate double closings. At the same time top trends reports and surveys from the urban Land Institute and PwC which surveyed over 1,000 of the most influential industry leaders, suggests capital flows are increasing with much of it flowing out of Asia. With London topped out and Hong Kong bursting you can bet the U.S. is a top pick for those seeking both yield and safety.

5. Demographic Shifts

It’s not just Generation Y driving trends into urban areas to keep in mind this year. Senior analysts also comment on aging Boomers also relocating to find warmer weather and better and more convenient health care solutions.
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A Second Chance For A Failed Real Estate Investor?

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Does the new housing boom create a miracle second chance for real estate investors that have flopped in the past? Is flipping houses the best chance for the kings of realty to get back on top and regain the reins to their financial futures or is it just too late?

There is No Denying the New Housing Boom

Even the most pessimistic analysts are having a hard time spinning anything negative about the U.S. housing market right now.

Check out the facts &and figures according to the National Association of Realtors (NAR) latest press release on June 20th:

· Existing home sales rose 4.2% in the 12 months to May 2013

· Median existing home sales price jumps 15.4% year-over-year to $208,000

· Buyer traffic has risen 29% in the last year

· Median days on market dropped to just 41 in May 2013

On June 2th Bloomberg ran coverage of the new Mortgage Credit Availability Index from the Mortgage Bankers Association showing U.S. home loan lenders loosening up access to mortgage loans which will only further fuel home sales.

It isn’t just existing home sales that are performing well either. The real signal that the new housing boom is officially opening its gates is new home builders like KB Homes announcing a 74% increase in revenues as of the 2nd quarter 2013.

Based on historical real estate cycles we are now entering a new boom era that will last another 10 to 15 years, during which home values will double.

10,000 Donald Trumps Looking to Rebuild an Empire

So is this new era of plenty in the U.S. residential real estate market the signal that real estate investors and investor groups should jump back into the game and flip more houses once again?

There are many, many real estate investors that completely flopped when the bubble burst. Many lost businesses, homes, expensive sports cars and even saw their families fall apart. So why did it really come to this for so many individuals and is this really their chance for a do-over?

The single biggest cause of failure among the real estate investment crowd when the bubble burst was being overleveraged. Many found themselves in negative cash flow and equity situations. Some are still recovering, others have cleared the debt and are seeing their credit scores gradually rising again.

For most the failure experienced wasn’t anything to do with personal ability, talent or a fault in the housing market. Too many just rushed in without investing in their real estate education or kept gambling on the market even though they knew an end to the run was coming.

A large percentage of this group was turned off to real estate investment and never went back, but now are green with envy as they see others banking big on distressed properties and rapidly rising values. One thing that they all recognize is that there are few if any other alternatives for regaining wealth, status and their previous lifestyles as flipping houses or building portfolios of rentals. And no one can deny if there was ever a good time to get in, this is it.

So if you are a member of this group can you bounce back and hit the big time again by investing in real estate a second time, and how can you prevent failing twice?

It’s entirely possible. Just look at Donald Trump. According to his bio on Wikipedia he once sank to a low of being $900 million in personal debt and some $3.5 billion in business debt. He certainly made a significant comeback and now boasts new developments all over the globe in addition to his stint on reality TV with the ‘Apprentice’.

Few of those reading this are anywhere near that deep in debt. So if he could do it, you can too. So how can you get back on you’re a game fast?

The Inside Scoop on the Next Real Estate Hotspot

The one thing that real estate investors who have ridden the recent housing roller coaster certainly respect is knowledge. So how can investors tap into the best data for identifying investment opportunities and targeting their marketing for maximum effective and ROI?

As predicted ‘Big Data’ has become big business in 2013. The government has recently jumped into the game amidst a variety of scandals. Bloomberg has been criticized in the New York Times for journalists’ tactics and on revelation the conglomerate owns more than 30% of the $25 billion plus financial data services market. Now real estate related firms are bulking up on acquisitions too with news of CoreLogic acquiring DataQuick for $661 million and Fidelity buying back Lender Processing Services for $2.9 billion.

Some of these firms provide valuable information to the real estate investment community, but can also drip out misinformation via faulty calculations, stale figures that do not reflect current trends or data designed to move money to their clients benefit.

So while the news can be a good barometer to keep an eye on, savvier investors will zoom in on more local data using sources like RealEstate.com’s Local Info and Market Analysis tools, as well as conducting their own market research via social media and word of mouth.

When it comes real estate marketing investors have never before been so spoilt with in depth insights for targeting and maximizing ROI on cultivating buyer and seller leads. Information giants like Verizon and Google now open the door to masses of information on consumers for enhancing marketing performance, while other companies cut to the chase and provide direct access to exclusive real estate leads.

Tips for Building Momentum Fast

While many would no doubt love to jump into investing in real estate again most can’t afford to go months without a paycheck today. So how can you get back into the game and see results fast?

5 steps to investing successfully the second time around:

1. Recognize the mistakes of the past (and put them behind you)

2. Get wired into blogs like this and other sources of good data and emerging trends

3. Start networking to build contacts and lead sources

4. Set up effective, proven systems that help avoid pitfalls and improve time management

5. Make the leap of faith and go for it

A new entrepreneur publication featured on Yahoo Finance and Reuters, G-Code Magazine, suggests that some of the best growth hacking moves small business owners and independent real estate entrepreneurs can make include taking the time to understand their customer, then engaging in guest blogging, building affiliate networks, becoming a member of local coworking office spaces and even paid search for immediate results.

Excellence = Rewards

Finally, commit to doing it right this time around; no shady short cuts, keeping eyes on the main objective and doing it for the right reasons. Real estate investment may be the fastest path to a handsome income and great wealth but it comes with so many other benefits too.

 

Commit to excellence in every area of you new venture and the rewards will come. You will build and hold a substantial legacy for your loved ones, help to improve the economy and have a direct positive impact on revitalizing communities and bringing new hope to others too.

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Where To Find More Distressed Homeowner Leads

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on Tuesday, 09 August 2011
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There are many places to find homes to flip today. You can often find deals among short sales, HUD homes and REOs. However most of the best deals are those that aren’t already listed. These are the distressed or motivated homeowners who haven’t taken action yet but need help and a way out of their homes. So where do you find them?

Credit Bureaus
You can actually get leads right from the credit bureaus with information on 30, 60 and 90 day late payments. However, legally this information is only to be shared if you are able to offer them a per-approved credit offer. So be careful if tempted to use this type of lead list.

Lead List Providers
Lead list companies and data compilers can tailor almost any combination of filters to allow you to hone in on potential leads. This can be done by LTV, mortgage amounts, lender and more. These lists are normally sold from anywhere between 2 cents to $2 dollars per name depending on the criteria you select.

Some companies you may want to check out include:

  • DMALeads.com
  • ListSource.com
  • US Data Corporation
  • Info USA


Attorneys
Probate, divorce and bankruptcy attorneys often have access to the best leads on distressed homeowners and others who want to sell quickly. They have privileged information on properties that have small or no mortgages and where the sellers are desperate to sell. Though do expect them to want to do the title work.

Title Companies
Title companies have huge databases of potential leads. They have data on when adjustable mortgages will come up for adjustment, who paid cash for their properties, who is delinquent on their taxes and they know who other cash investors are in your area who may be great prospects for flipping your properties too. Again they are going to want the title work in exchange for giving you these leads.

Loan Officers
Bank loan officers have a constant flow of leads. They take inquiries all day long from those who can’t qualify for refinances and they know who is behind on their mortgages and of course who have big bank balances too. These loan officers don’t make very much and will either be happy to exchange referrals or look for some type of referral fee.

Be sure to come back next week to read some of the best ways to capitalize on these leads....

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