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New Credit Scoring Changes Could Prevent Millions From Buying Homes

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on Thursday, 03 March 2022
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New changes to what is being reported on credit reports could hit many potential home buyers hard, and keep them out of the market.


Along with rising interest rates, new hits to credit scores could take more home buyers out of the market. This may be welcome news to some investors who have been craving less competition.


While credit scores may not be needed to obtain transactional funding to wholesale properties, investors should also be watching out for the impacts on end buyers, and who may end up not qualifying or being able to close.


Buy Now, Pay Later

One of the latest moves by the big credit bureaus has been to include buy now, pay later loans on credit reports. This includes TransUnion and Equifax.


According to TransUnion, this is being done in the name of “inclusion.” It is estimated around 100 million Americans use this type of financing each year. It’s already a $91B market, growing at over 45% per year. It is expected to become a $4T market by 2030 according to Allied Market Research.


You’ve seen these ads online. Now when you go to check out you may see payment plans being offered by Buy Now, Pay Later companies like Affirm, Zezzle, Klarna and After Pay.


It seems convenient, but this could also create major problems.


For a start, borrowers using these loans for items as cheap as $50 can’t really afford them. It is also multiplying inflation. Now fashion companies can quadruple their prices, because consumers can pay over time. So, instead of a pair of yoga pants being $25, they may sell for $100. Then there are many hidden costs or interest involved in some of these types of credit.


This is during a time when there are already tens of billions of dollars in spiking business and credit card defaults and late payments.


The lenders want this credit on reports to motivate people to pay on time. Or perhaps because they are not paying on time. Including them on credit reports may only exclude millions of borrowers from homeownership.


This also comes in the wake of some lenders counting recent COVID forbearance programs the same as foreclosure. A move that takes even more out of the buyer pool. Even if their mortgage company put them into forbearance without their permission.


Summary

Be wary of convenient looking buy now, pay later deals. They are not designed for the benefit of consumers. Now they might exclude millions from being able to buy homes.


On one hand this may free up more inventory and lower competition for investors. It also means that while it won’t affect you obtaining 100% transactional funding for wholesale deals, it may mean many end buyers won’t qualify to buy your deals with financing.

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Real Estate Investing: How Much Should I Be Offering Sellers Now?

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on Thursday, 24 February 2022
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With the fast changing real estate market many investors are wondering if they need to be changing up their offer strategies, and how much they are offering sellers. So, what should your offer formula be now?


The Changing Real Estate Market

The economy, finances and real estate market keep on changing at a face pace. There have been plenty of twists and turns, with more to come this year.


The housing market has continued to beat expectations. Multifamily is very strong too.


Tens of billions of dollars are chasing deals in this space right now. Which is also leading many investors to question their offer strategies. Especially as they find it more challenging to secure deals with often overly optimistic sellers.


The big question is how much to offer to still ink profitable deals, and keep up deal flow? You’ll starve without doing deals, but don’t want to be losing money by overpaying either.


Be Wary Of Rules Of Thumb

There are many books, articles, and speakers out there plugging their rules of thumb for making offers on properties to flip. Much of this is outdated and out of touch.


You cannot just stick to one rule of thumb and offer formula. Market dynamics are changing all the time. Some investors are used to making offers in the 60-70% range. Others have driven hard bargains at 40 cents on the dollar during crisis times. In other phases of the market a lot of money has been made offering 90% of the retail value for homes.


In the past some appraisers and lenders have gone up to 125% of the value knowing the market is growing so fast.


Be Wary About Overpaying

Overpaying will catch up to you eventually. Even these big funds blatantly paying 50% over value for properties will eventually find they pay for it.


At the same time, you may need to be more aggressive, and be willing to pay more for property than you thought it was worth over the past couple of years. Remember, it is about what the market is willing to pay for it.


Still, with prices expected to rise, at least one guru has been advising his followers to make offers based on pending sales, not closed comps. That is extremely dangerous.

Pending sales often don't close. They are not used for lenders and appraisals. It can mean big trouble flipping, and being restricted to only cash buyers willing to over pay.


Stay Flexible

Be aggressive enough to land the deals. Yet, conservative enough to not lose money and get stuck with dead weight you can’t sell.


Sellers won’t hold out forever. If you hold firm, the sooner they will fold. There is a lot of distress building. Especially with inflation in gas, insurance, and medical bills. As well as declining consumer debt performance.


Ideally you already have end buyers lined up in advance. You know their numbers, and can base your offers on that. Then with transactional funding your risk is incredibly low, deals are presold, and you are in and out, and paid.

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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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Evictions, Migration Unlocking More Inventory For Real Estate Investors

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on Thursday, 16 December 2021
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While many real estate commentators have complained about a lack of inventory and high prices over the past year, others are finding that there are an abundance of deals to be done. It is just a matter of being able to scale fast enough with the inventory and demand.


The return of evictions, more migration, and availability of transactional funding are just three of the factors driving these surge, and enabling investors to hit new personal records year after year.


What Supply Shortage?

It’s true that it may be harder to find your favorite foods at the grocery store this year. Restaurants may be short on your usual menu picks. You may not even be able to find tires to fit your car. Yet, claiming that there is a shortage of housing or real estate deals to do, just isn’t true.


On the housing front many spokespeople have complained about limited inventory. Yet, there are still likely enough vacant homes across America for every homeless person to have two or more.


There are millions of properties under used, or that owners would be willing to sell, but which definitely are not listed on the MLS or Zillow or publicly advertised.


It’s just about finding the supply, or having the right connections.


More Inventory Is Coming

There is a lot more inventory coming too.


Millions, if not tens of millions of workers in America have reportedly quit their jobs this year. That is on top of all of those laid off since the beginning of the pandemic, and those being fired for choosing not to get vaccines and booster shots.


One new survey even suggests that 95% of those in old jobs want to quit. Specifically in favor of remote work from home jobs, more meaningful work, and to live more balanced and full lives.


For the vast majority, this is going to require moving. Moving to new destinations with more affordable housing, larger properties, and less urban.


We’ve already seen this in action, with tens of thousands of people heading into southern states each day. As well as not only a double digit increase in people leaving states like California, but a 45% drop in people moving in.


Then we have regular homeowners interested in cashing out at peak values while they can. Plus, landlords finally being able to evict non-performing tenants after moratoriums. Many of whom will never want to lease out their places again, but who know their properties will be more valuable on the resale market if they are empty. While these evictions may still be near 50% below pre-pandemic levels due to backlogs, they have been increasing by double digits every month.


Summary

Millions of properties across the US are there for the buying. Millions of US households are eager to move. To leave behind their old places, and find new ones.


This is unlocking housing inventory in previously hot areas, and demand for new areas with lots of low priced inventory, lots of activity and value to be traded. Make the most of it while it lasts.

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Cash Purchases, Traditional Mortgages Become More Challenging For Real Estate Investors

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on Tuesday, 07 December 2021
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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?

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Why People Are Overpaying So Much For Houses Right Now

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on Thursday, 18 November 2021
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Why are so many overpaying for houses by so much these days?


Who are these bullish buyers willing to pay high premiums for properties and why are they doing it? What does that mean for investors who want to enjoy the upside, but not end up bankrupt?


Who Is Paying So Much For Houses?

All types of buyers appear to be paying top of the market prices and more.


This includes retail home buyers all over the country who are looking for new places to live. Then there are big Wall Street backed funds and iBuyers who have been buying up entire new home communities at 50% or more over their top of the market values.


Why Are They Paying So Much?

There are a variety of factors driving this activity, including:

 

  • Those who are banking on continued inflation and long term value
  • Those believing homeownership may soon be a limited luxury for the wealthy
  • Those must deploy their capital at all costs
  • Movers with cash going into cheap areas
  • Buyers using low interest rate loans, and are finding payments cheap
  • Those who used Zillow to guess home values

 


The Trap

Just like the stock market and cryptocurrency, the biggest players and market manipulators like to suck in all the money before a correction. Those stuck holding the hot potato when that happens get burned.


This is okay if you are wholesaling and double closing with transactional funding. You won’t get stuck. However, if you are speculating and holding it, you could end up reliving a rerun of 2007.


Use It To Your Advantage

If others think properties are worth it for them at those prices and they are happy to pay them, you can serve them, even if you are making offers for more than you would normally feel comfortable. Sell in bulk to funds and wholetail to regular home buyers.


Though if it isn’t selling, understand you have to seriously drop your asking prices, and already have that priced into the offer you made.

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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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Evolving Trends In Real Estate

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on Wednesday, 29 September 2021
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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.

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6 Mistakes Wholesalers Are Making Now

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on Thursday, 09 September 2021
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This is one of the best times for wholesaling property that we’ve ever seen. Just make sure you aren’t falling into these mistakes that many wholesalers are making out there right now.


Buying Flooded Property

Disasters like hurricanes and floods can yield some great inventory and discount opportunities. Yet, for the many real estate wholesalers who are now working remotely online, it is important to know what you are getting.


You can’t expect to buy a flooded out, underwater property and sell it for the same amount as local comps which are high and dry. This is a big issue right now with record amounts of storms and rainfall.


If you do find you’ve bought a property like this, then you are probably going to have to at least seriously discount it below other comps to move it.


Properties With Non-Performing Tenants

There are end buyers who may be willing to take on these properties. Yet, expect that number to be far fewer than there were two years ago.


Now there is really no telling when they will ever be able to get that occupant out, and what their real financial bleed and costs will be until that happens.


Again, this is something that needs to be priced into your offers.


Accepting Cashier’s Checks

Payments have changed a lot in the past few years. Now some can not only pay for properties with credit cards, but PayPal or bitcoin transfers. Still, some old school investors are relying on some antiquated payment methods like cashier’s checks. They used to be considered guaranteed funds. They are not any longer. They don’t have any more value than personal checks. Do not sign over any property until you have cleared funds in your account.


Pricing In Costs For The End Buyer

Not only may your offers and asking prices fluctuate with the market, but they should also take into account inflation and property specific costs.


End buyers, especially landlords and rehabbers have to price these line items into their offers and what they are willing to pay.


Recently there has been massive inflation in installing utilities, new construction, labor, and building materials for rehabs.


If it is costing them 30% more today, then if you don’t price that in you may be sitting on that deal for too long.


Property Values

Property values seem to have been soaring. Yet, there is a massive difference between actual sold and recorded transfers and asking prices. Don’t rely on rumors or listing prices. Overpriced properties may still have been sitting on the market for two years or more. Look at recently closed comps.


Not Maximizing Financial Leverage

It is a fantastic time to scale your real estate wholesaling business. Yet, many are feeling uncertainty about the future. Maximizing your leverage with transactional funding will dramatically reduce your risks, while greatly elevating your capabilities to do more deals.

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How To Know When It’s Time To Go All In On Property Wholesaling

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on Thursday, 12 August 2021
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Is it time you went all in on real estate wholesaling?


How do you know when it is the right time to shift your focus from other real estate strategies to wholesaling real estate? Or to go all in on it in place of your other niches, or use it as your lead to get into real estate investing?


There are many ways to invest in real estate. This is one of the greatest and most profitable times to do it. Just make sure you are getting the most out of it; maximizing your upside potential, and stripping away potential risks.


When You Are Making Most Of Your Money Reselling Or In Equity

Perhaps you are already using a variety of methods of investing in real estate. When was the last time you really sat down to evaluate and compare where you are making most of your money and the best ROI?


If you are making a lot more in equity and reselling, than in rents, then it may be time to switch your focus to just wholesaling.


Perhaps you’ve owned rentals over the past couple of years, but have barely been making a couple hundred dollars per unit. Maybe you are net negative after costs, repairs, reinvesting in improvements and the personal time you’ve put in. If you can make more wholesaling the same types of properties in 3 days, than you can make in 3 years of rents, it’s probably time to change it up.


Construction Costs Are Eating Up Your Margins

Hyper-inflation has been adding 30% or more to the cost of construction materials. More hikes are coming in taxes and labor costs, if you can find good help.


This has already led many homeowners to indefinitely put off home improvement projects, and others to cancel plans to build new homes.


You may make more profit just by immediately wholesaling that property as-is, than trying to rehab or improve it. Not to mention you’ll get paid a lot faster, and be able to roll up and compound those returns more times over the year.


Uncertainty In Rents & Future Property Values

If you aren’t certain that your income from rents will be consistent, or you just aren’t 100% sure where values on flips and buy and hold properties will be in a few months or the next 24 months, then it may be better to sell now and make the gain rather than gambling on the future.


You Can Finance Your Deals & Eliminate Risk

Real estate wholesalers can take advantage of transactional funding to finance 100% of their purchases and even closing costs. It’s fast, easy funding, that means you can virtually take all of the risk out of investing.

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How To Win Among New Foreclosure & Eviction Bans

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on Thursday, 05 August 2021
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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.

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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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How Much Of A Discount Do Real Estate Wholesalers Need?

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on Thursday, 01 July 2021
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What discount do wholesalers need to make offers on homes, and turn a profit?


There is a lot of misinformation about how much house wholesalers should pay for properties and make offers for. This can be a major detractor for sellers and agents selling to wholesalers, as well as for wholesalers themselves, when out there searching for deals and making offers.


Be wary of old rules of thumb. Especially in a fast changing market, and when what’s happening out there can be so different from one local market to the next. You don’t want to short yourself on the volume you could be doing, or get stuck and go bankrupt holding deals you paid too much for.


How Much To Offer

Formulating offers is actually quite simple as a wholesaler. You take how much your end buyer will pay, and subtract your costs of doing business and desired profit margin.


End resale price - (costs + profit) = acquisition offer price


If you secure your buyer upfront in this way, then you already know your exit price, and can use transactional funding to finance 100% of your purchase and closing costs.


Build Your Buyers List

The key to this is building a big and growing buyers list of qualified buyers.


Then get to know them intimately well.


Understand The Market, Not Just The Headlines

Everyone loves to quote the big media data points. Yet, in the back of all of our minds we know that we shouldn’t be trusting tabloid news. And it's all tabloid and fake news today.


You have to know the real local market as it is on the street.


Know how much properties are worth to retail home buyers, based on what they can afford and finance. Know how much they are worth to landlords, based on their desired yields and calculations. Know the discounts that house flippers need to be safe and profitable in the current market.


Summary

It really doesn't matter if you are buying properties off of the MLS at peak prices, as part of a bulk pool of REOs, or a direct to seller, direct mail find or inherited home. The math is still the same. Be wary of being too glued to rules of thumb in dynamic markets. Know your buyers and you’ll know your offer prices.

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Real Estate Wholesalers Wanted

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on Thursday, 04 March 2021
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Yes, there is still room in the market for you as a real estate wholesaler. The market needs you.


You may have seen lots of recent success stories about others wholesaling millions of dollars of real estate, and even hundreds of deals each year. You may be seeing an incredible rise in demand for property in your area, and sharply rising prices too.


While you may be attracted to the income this sector offers, you may also be wondering if it is still a good time to get in. The answer is yes!


Not only is there room for you, but great wholesalers are still very much needed.


Market Conditions

We are currently in the ideal market conditions for real estate wholesaling. In fact, these are probably the best conditions we’ve ever seen. There is both a large amount of motivated home sellers, and motivated home buyers.


According to one recent report from the New York Post at least 1 in 10 households are in distress with their mortgages.


At the same time home buyer activity and resale prices are hitting new highs.


To complete this trifecta, transactional funding lenders are actively looking to put their money to work with real estate wholesalers.


Finally, while there are many people trying to wholesale real estate, just like any other profession or industry, most of them are not doing it well. The market really needs honest investors, who want to give everyone a fair deal.


They Need You

Homeowners need you. They need honest real estate investors who will treat them fairly, and won’t just tie up their homes in contract for months, leaving them to lose their homes to foreclosure when they can’t find an end buyer.


Home buyers need you too. They need a reliable wholesale seller who can give them good deals, on homes that will really work for their families.


Investors need you too. Rehabbers and rental property investors desperately need inventory. They need wholesalers they can trust to give them good deals and be transparent about the properties they have. Wholesalers are the lifeblood of their businesses.


The economy needs you. While many love to hate on real estate investors and wholesalers, it was this group which virtually single handedly pulled the country out of the 2008 Great Recession. It is this group which has greatly contributed to the economic rebound since COVID lockdowns started, and will be leading the charge to pull us through the next recession.


This is your chance to provide an incredibly valuable service and be very well paid for it.

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Don’t Get Caught Out By Fake Real Estate Market Data

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on Thursday, 29 October 2020
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Just as there is plenty of fake news in the media around elections and celebrity gossip, there are plenty of misleading real estate market headlines too.


Falling for false market data may not only bankrupt you as a real estate investor, but can really hurt the local market and industry too. Here’s how to avoid that, and ensure you don’t get caught out.


The Danger Of Dead Weight

For wholesalers who are paying cash or using credit lines to buy properties with the hope of reselling, it only takes being stuck with one or two dead weight properties to really mess up your model and finances.


Instead of those deals being resold for lump sum profits in a couple of days, you may end up like all those crusty Craigslist ads that have been trying to sell the same properties for years.


During this time you’ll still be coming out of pocket for property taxes, insurance and have to risk further devaluation on a daily basis. This money has to come from your personal income or savings, or the profits on any other deals you do successfully wholesale. It can quickly eat away the profits on good deals you complete.


Looking at the bigger picture, if wholesalers have swamped a local market with tying up properties they don’t close on, or deadweight properties they are asking too much for, it can send signals to everyone else that the market has stalled. Days on market will appear very long, it could bring down values, and sellers will be more wary about who they contract with.


The Numbers Do Lie

Salespeople like to use numbers, because they appear factual and indisputable. In reality, the numbers lie all the time.


It’s not uncommon to see two contradicting new headlines on the direction on the market on the same day. Sometimes even from the same publication.


Numbers and statistics can be manipulated to tell just about any story the storyteller wants to spin.


Zillow was notorious for poor real estate data. It now appears they have stopped reporting on most statistics. Even the National Association of Realtors went back and restated several years of home sales data after the 2008 crisis became undeniable.


Realtors twist it all the time. With most preferring only to show the optimistic data, and hiding anything that may turn off their clients.


We’ve also recently seen a variety of big claims about new pending sales, home prices, and the traction in the housing market. Some of it may absolutely be true, in some places.


In other cases, few of those pending sales may actually close due to lenders changing their minds, tightening up and being too afraid to lend. While some properties may seem to sell fast, there may been many listings which have been on the market for 24 months or longer.


Perhaps most impactful, asking prices can be completely unrelated to actual closed sales prices and values. If you buy based on the crazy overpriced listings of a few people swinging for a lottery ticket sale, you might find the market thinks you are just as crazy.


How To Avoid A Glitch

The most obvious way to avoid this trap is to dig into the real data yourself. Know your market intimately.


Look at public records, know the neighbors who have actually sold, and have an appraiser you can pick up and call for questions 24/7. Look at how much properties are actually closing at, and any concessions which may impact the true net price and sold comps.


Having alternative exit strategies to avoid being stuck with a property is good. Like being able to offer it as a rent to own.


Savvy real estate wholesalers go even further by securing solid preorders and preselling deals before they even sign the buy side contract. Then they use transactional funding, so that they aren’t trying up any of their own capital in the deal.

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5 Reasons To Try Wholesaling Before You Give Up On Real Estate

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on Thursday, 15 October 2020
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If you are frustrated with or fearful of other types of real estate investment, here are five important reasons that you should try wholesaling before you quit.


Real estate is still the best tool for getting and staying ahead financially. Yet, between recent events and the common nuisances of other forms of real estate, it’s understandable that many are tired or worried about their strategies. Wholesaling could be the cure you’ve been looking for.


Here’s why…


No Tenants Or Guests

Renters and Airbnb guests can really test your patience with the human race. They drive many good landlords with great intentions of helping and making a difference out of the business. With wholesaling you are in and out, and don’t have to deal with them. You can choose properties with no tenants and let someone else deal with leasing if they choose to.


No Repairs Or Contractors

Rehabbing and renovating properties can be an inspiring dream. Completing projects can bring a lot of satisfaction. Yet, every experienced flipper knows that these projects notoriously cost more than expected and take longer than planned. As well as how incredibly challenging it is to find those mythical good contractors. Wholesalers don’t have to deal with any of that. No repairs. No improvements. No juggling construction and maintenance crews.


No Credit Or Acquisition Capital

If you fear putting your personal credit on the line or don’t have good credit and cash to buy properties, then wholesaling offers access to 100% financing, without using your personal credit. Keep your credit free and healthy for other emergencies and optimize your personal finances. Keep your cash in reserve for plugging income gaps and when you face unexpected expenses, like medical bills.


No Captive Equity

Real estate’s ability to appreciate rapidly can be one of its great appeals and benefits. Of course, it can also depreciate just as fast in other phases of the market. It may ultimately bounce back and rise higher again. Though who wants to see their down payment or sweat equity evaporated? With wholesaling you are in and out before the market can change on you. All of your capital can then be used on marketing and scaling, rather than sitting stagnant.


No Financing Hurdles

Wholesalers use transactional funding which doesn’t rely on the usual underwriting hurdles, income verification, personal credit or even appraisal reviews. It’s super fast.

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The Rich Have Added 30% To Their Wealth Thanks To The Chaos Of 2020

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on Thursday, 08 October 2020
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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

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4 Ways To Wholesale Houses Smarter In 2020

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on Thursday, 10 September 2020
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This is one of the best phases of the real estate market for wholesalers. There is a strong mix of distressed properties and motivated sellers, as well as demand from buyers looking to relocate.


New wholesalers should find this a fantastic time to get in the game. Experienced investors should be scaling their businesses fast.


Still, no one wants to get caught holding dead weight properties. It doesn’t take many of those to pull you down and eat up your other profits. So, here’s how to be more confident in taking on deals, how to find more of them with less competition, and how to lower your risk and do more at the same time.


Build In A Downside Cushion

Most experienced investors started doing this the minute that COVID-19 hit. While so far the US housing market seems to have kept going up, with no lack of demand, there appears to be a lot of financial distress and defaults happening under the surface. There’s no telling when it will pop. Though if you build in a little extra cushion to your deals, then you should still be able to exit profitably, even if prices come down 10% overnight. This will also help in case mortgage lenders start backing out on your buyers at the last minute, or are cutting loan amounts to account for declining markets.


Check Closed Sales

At first glance the market seems to be incredibly strong. Listing prices are skyrocketing, and if you throw up a house listing ad on Craigslist you are bound to get a lot of messages, calls and even showings.


It is vital to differentiate between the lookers and pending sales versus how many transactions are actually closing. Check out the latest closed sales data. What are the real prices and any contributions or other adjustments that alter the net sales price?


Be sure you are pricing your offers accordingly. It is also worth prescreening buyers and compiling a list of those who are qualified, so you have them ready to go in advance.


Look For Aged & Expired Listings

In spite of how hot the media, Realtors and other investors say the market is, many listings have still been sitting on the market for a year or more. Many investors have been holding dead weight properties for at least that long. Big liabilities which cost them money every month.


Sellers can feel spoiled for choice when they first list and get lots of lookers. None of those deals may materialize. Or they just get burned out from talking to too many buyers and hosting too many showings, without a closing.


Then after a few weeks those listings get ignored. They are buried under all the new ones, and no one sees them.


This is a great time to go back to older listings and expired listings, while owners may be refreshed and yet more motivated to unload their homes to any true cash buyers.


Use 100% Financing

You want to go fast during these times. Don’t miss out on all the opportunities. Of course you don’t want to take on extra risk in uncertain times either. Using 100% financing and transactional funding is ideal for this. With no skin in the game, and deals already sold before you buy them, not only are you looking at pure profit plays, but no risk to your own capital.


Many other lenders may be cutting back, but Best Transaction Funding is still here. Ask about our VOD service today so that you can get out there and make more offers.

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Real Estate Investing: How To Minimize Risk

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on Thursday, 02 July 2020
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How risky is real estate investing really?


Investing in real estate is often promoted as a super low or zero risk business or investment. All with many great benefits. Yet, many would be investors get stuck on the sidelines, worrying about risk. It paralyzes them into inaction.


So, what are the real risks? How can you eliminate and minimize them?


What’s The Real Risk?

The truth is that there is no such thing as a 110% risk free investment. They don’t exist. Just like there is no guarantee you won’t slip and fall getting out of the bed in the morning, or a plane won’t crash through your roof and get you in bed in a freak accident if you don’t get out of bed each day.


In real estate there is a risk that property values will fluctuate, that malicious tenants and employees will try to sue you, that scammers will sue you for your website features, that tenants won’t pay, or even there could be an earthquake, wildfire or global pandemic virus that prevents you from collecting rents.


However, small the chances, these are potential risks. The most important question that investors should be asking is whether the risks outweigh the rewards or vice versa? Or even more critical, does failing to invest in real estate bring even more risk than doing it?


What if you don’t invest in real estate? What if the money under your mattress gets stolen or is devalued due to inflation? What if your own home catches fire and burns down? What if your bank goes bankrupt or leaks your information and you lose all the money in your checking and savings accounts? These may actually be more serious risks than investing in real estate.


What if none of those things happen, but you one day simply can’t work anymore or are laid off, and don’t have enough money for you and your family for 30 years of retirement? All because you didn’t invest in real estate.


When you dig in. what’s really scary is NOT doing it.


Ways To Reduce Risk When Investing In Real Estate

It seems far less risky to take action and invest in real estate. Yet, it would be foolish to completely ignore the potential risks either. Fortunately, there are several ways to minimize these risks, and boost your upside potential.


The top risks of investing in real estate seem to fall into these buckets:


  • Falling values of properties you are holding onto

  • In ability to collect consistent rents on properties you are holding long term

  • Malicious business and personal injury lawsuits

  • Exposure to losing any money you have tied up in properties

 

Here’s how to crush that risk…


Get Insurance

Insurance can help defend and against direct loss and damages to properties, as well as potential lawsuits.


Use Financial Leverage

If you don’t have any of your own money tied up in a property, then you can’t lose it. If you pay all cash for a property and sit on it, you are a target for lawsuits. So, what if you were able to use other people’s money to fund 100% of your investments? You’d have nothing to lose and everything to gain. That’s exactly what Best Transaction Funding does for you.


Secure Your Profits & Exit In Advance

The smartest, wealthiest and most successful investors don’t put out a penny unless they know they have a dollar coming in. They don’t buy inventory unless it is already presold. You can do the same thing with real estate through wholesaling and reverse wholesaling too. Find the end buyers, use transactional funding to finance the deal, and you are in, out and paid right away. You know you are going to profit before you buy a property, or spend an hour looking for one.

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How To Get More House Offers Accepted

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on Thursday, 11 June 2020
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This is an amazing time to be a real estate investor. How do you get more offers accepted, and more house deals done?


The Market Is Hot

The summer 2020 market is sizzling hot. This is always peak time of the year in most US housing markets. It’s when the vast bulk of homes are listed, sold and bought and people are on the move.


This year is shaping up to be busier than ever. Between the coronavirus lock downs and riots even more people are hyper motivated to move and invest in real estate. Recent data suggests the market is active, and house prices have continued rising.


So, what’s holding you back from making this your beast season in real estate yet?


It probably all comes down to getting more house offers accepted.


Get More Inbound Leads

Inbound real estate leads are the most efficient to work, easiest to close and most profitable.


No one may want to touch their mail these days, but you can still leverage a good looking website, SEO and content marketing and Google Ads.


This may be even easier today after some of the biggest iBuyer competitors like Zillow and OpenDoor have reportedly dropped out of the race.


Make More Offers Daily

Real estate is a numbers game. Not every offer you make will be accepted. So, if you want to get your numbers up, you have to make more offers every day. If you want to close a deal a day you might have to be firing out five offers a day.


Be A Strong Buyer

The number one roadblock to getting house offers accepted is credibility. Agents and sellers are scared of contracting with buyers who don’t really have the money to close.


Get a Proof Of Funds Letter, or get one of our VODs to nail far more offers and stand out as the best buyer.

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