Check out this first-time investment property flip from our newbie mother/daughter client team:
This newbie team jumped all in and tackled this investment property flip in Colorado Springs, Colorado with the help of a general contractor. In less than 6 short months, this mother and daughter duo added some much-needed updates and some serious curb appeal and are already under contract to sell and take their profits and move on to the next deal! Pretty impressive for a first-time flip!
From cluttered kitchen to bright-and-shiny function!
The best part of this deal? This was an investment property in their own neighborhood!
A fix-and-flip deal doesn’t have to be made across town: Look for deals in your own backyard (or, you know, down the street.) These clients not only fixed up a home to turn a profit for themselves, but they helped update their neighborhood at the same time. Making money while increasing the value of you AND your neighbors’ homes? That’s what we call a #HouseFlipping win, and ultimately, it’s really the thing a good fix-and-flip deal is made of.
We could all probably learn something valuable from this team about making smart choices about the locations of our investment properties.
It’s easy to sit back and draw inspiration from the successes of others, but if you happen to be on the hunt for hard money funds to jump into your own first-time flip, we can help! Contact us today to see if we can help you realize your investment property dreams!
Why did all the banks just make it damn near impossible to get a loan on an investment property?
For lenders, times are more uncertain than ever.
With conventional/standard loans as the only lending option available for rental investors, lenders went and changed the rules…and not in the investor’s favor.
As of this week, the new underwriting criteria has hit 90% + of the market for investor loans on rental properties. Plus, most lenders now require a minimum of 6 months reserves (and, a lot of times, up to 12 months) for every rental property that has a loan on it. That’s right. If you have four rental properties, you now need at least 6 months of payment reserves on each property. That adds up quickly.
That may not even be the worst of it.
In addition, most lenders are not allowing borrowers to use the rental income from their properties to qualify. If they do, they might only allow a very low percentage of the rent (like 50% of gross rent). That means if you have rent coming into a property at $2K, they may only count 50%, or $1K, of that towards your expenses (if they allow you to use it at all). In this example, if the rental property has expenses at or above $1K (and most will) the underwriters will expect you to cover the shortage with other non-rental cash flow.
So, if you don’t have great credit (lenders have raised the threshold here, too) and other income to qualify for a new loan, you will be out of luck…for now.
We don’t know how long this will last. It might be weeks, but more likely months. Nobody will know until banks and lenders figure out how current stay at home orders will affect the markets.
So, why exactly is this happening?
Once the lenders get the data, they will adjust. Let’s cross our fingers that rents are being paid and, likewise, mortgages are kept up. This flow of money will help bring lenders and loan choices back to our market.
What can you do?
Keep informed on what is happening in the lending markets. If you are selling properties, then stay updated for your potential buyers, too.
Keep paying your mortgages. This will help the overall market, but especially you when you are looking to borrow in the future for better rates (the rates are expected to be great after we return to some normal) or new opportunities.
Keep your credit score high and keep working with your renters to pay what they can when they can.
Remember the loans and rates will come back. When they do, be prepared to take advantage.
If you have a credit score at or above 760, and have ability to income qualify, then your rate estimates this week for conventional loans look like the following:
Paying closing costs rates for rental properties (1-4 units) in the high 3’s for a rate and term. Typical break-even point is between 2 and 2.5 years.
Paying little to no closing costs rates are high 4’s (best for strategies for keeping a property under 2.5 years).
If you want to know where you stand and what you can do, schedule a time to discuss your lending needs with us today by emailing email@example.com.
Everyone knows that you kill a business by cutting off their credit/finance. Once the credit is cut off, we are all in trouble.
Or, ARE we?
Did you hear the lending markets just explode/implode in on the investor market? What felt like overnight (within mere weeks,) the traditional funding faucet was virtually turned off. Lenders across the country are pumping the brakes on loans for investment properties due to COVID19-related closures, job losses, and resulting economic uncertainty.
What does this mean for folks who rely on that normally steady stream of capital for investment real estate funding? The existing and would-be landlords? The fix-and-flippers? The fix-and-holders? The short answer: Without credit or funding, investing in properties becomes problematic. Therefore, MAKING money becomes much tougher.
Notice that we said ‘tougher,’ and not ‘impossible?’ There IS another way…
“What does that even mean,” you may find yourself asking? It means finding PEOPLE, not banks, with money—money that they would be willing to invest. This could be your mom, your best friend, your neighbor, or anyone else who has some extra funds that they want to put to work for their future financial benefit.
Don’t allow the banks to socially distance you from your investment income! Learn how to keep your business running steady now and in the future by having a consistent stream of OPM- or Other People’s Money- funding.
Join us for our next weekly Webinar, where we’ll be going over market updates and the basics of how to transition your lending stream from traditional lenders to OPM funds, all while keeping it legal, keeping it safe, and keeping it honest for you AND your funding partners!
https://thecashflowmortgagecompany.com/wp-content/uploads/2020/04/photo-1552417462-62a41380bb1f.jpg500666Mike Bhttps://thecashflowmortgagecompany.com/wp-content/uploads/2021/03/TheCashFlowMortageCompany-logo.svgMike B2020-04-09 09:36:232020-04-09 10:20:15The Lending Faucet Has Been Shut Off. What Happens Now?
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