Deferment Fog

Although real estate agents are seeing increases in inquiries about homes in the suburbs compared to the same period last year and house sales are up slightly in the second-home market, consumers are not applying for as many loans and banks are not lending as much.

Millions of Americans, 29 million, filed for unemployment last week for the first time according to Investopedia.com, slightly more people than expected, but less than the previous week.

As they lost their jobs or were forced to close their businesses, homeowners who could not make their mortgage payments asked their mortgage servicers for permission to pause their payments. Once a rare occurrence, the number of accounts in deferment, forbearance, or some other form of relief rose to 100 million between March 1 and the end of May according to today’s Wall Street Journal article by Anna Maria Andriotis.

For lenders and borrowers, these are difficult times because the coronavirus stimulus package includes a provision that says lenders that allow borrowers to defer their debt payments cannot report these payments as late to the credit reporting companies, making credit scores an unreliable marker of how a borrower is doing paying their loans back.

Banks are pulling back on credit because lenders are having a difficult time determining if applicants’ credit scores and credit reports reflect their true levels of risk. Not only do they not know who to lend to, but they cannot tell how much their loan losses will be if the economy remains a mess.

Across the board, lending standards have been tightened. Even mailed credit card solicitations fell from 316 million in February to 74 million in May. (Wsj.com)

It takes more work to find borrowers who will pay their loans back. A lender will have to sort through more data. Some lenders are asking borrowers for permission to look at their payment history on accounts not appearing in their credit report and to analyze their banking accounts.

If you need funding, apply now. I am working online with the rest of you.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References

Andriotis, June 29, 2020, Flying Blind Into a Credit Storm’: Widespread Deferrals Mean Banks Can’t Tell Who is Creditworthy, available online at https://www.wsj.com/articles/flying-blind-into-a-credit-storm-widespread-deferrals-mean-banks-cant-tell-whos-creditworthy-11593423001?mod=hp_lead_pos5

Migration Boom

People are moving. Single-family houses in the suburbs are opportunities real estate investors should consider.

According to an article in Mansion Global, apartment living in densely populated urban areas is already losing its appeal to Americans as they process their experiences during the coronavirus pandemic. Many people are eyeing options for relocating to the suburbs and a single-family home after facing the challenges of coming into contact with infected individuals in apartment building common areas and restrictions on their use of outdoor spaces like pools and game rooms.

Buyers crave —ROOM— living space, outdoor space, privacy, flexibility, and safety.

When you are researching a purchase of a rental property, evaluate:

  1. Is there room for an office in the house?
  2. Does the house have a good-sized yard?
  3. Is there a pool in the backyard?
  4. Is there a deck or porch that offers a sheltered option to living indoors?
  5. Is the neighborhood safe to walk around in at night?
  6. Is there a neighborhood association and is it restrictive?
  7. Did local authorities try to restrict people’s use of their yard during the pandemic?
  8. Consider taxes. People are richer in states where taxes are lower.
  9. Big or tiny, single family homes in suburbs near major cities offer good opportunities for people to escape living in densely populated apartment buildings where entrances and recreation space is shared and access is restricted. If you need funding, apply now. I am working online with the rest of you.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

graphic:tsca / CC BY-SA (http://creativecommons.org/licenses/by-sa/3.0/)

Fluctuating LTV

The loan-to-value (LTV) ratio is the amount a borrower can borrow from a lender compared to the appraised value of the property that he or she wants to buy. The LTV determines the amount of a down payment a borrower has to supply from his own pocket to invest in the property.

Loan-to-Value ratio = Mortgage amount ∕Appraised value of the property.

For example, if the lender offers a loan at a 90% loan-to-value ratio, the borrower must supply 10% of the total cost of the purchase. In a fix-n-flip loan the same is true, the lender that supplies up to 90% (for example) of the home purchase price, requires the borrower to provide the other 10% of the price.

The Coronavirus pandemic has changed things rapidly including the market value of homes, thus affecting the LTV ratios lenders depend on. Please call for the most up-to-date loan-to-value ratios on our loans for your upcoming projects. 512-213-2271

Photo by Pixabay on Pexels.com

Default

If a borrower defaults on a home loan, which is more likely to happen if they do not have much of their own money in the home, the lender takes back the home and sells it to get back the money they lent. Market fluctuations can cause lenders to lose money if the value of a house goes down and the borrower defaults on the loan. The value of the home may be less the amount of the loan. The coronavirus pandemic may make home prices goes down, but that is not certain and may not be true in all locations.

Equity

If the borrower had equity in the home and defaults, then the borrower loses the equity they have in the home because the lender takes the property and sells it to recoup their investment and expenses as quickly as possible.

Equity is the amount of money that would be returned to homeowner if the asset is liquidated (sold) and all debts are paid off. It is in a home owner’s best interest to sell a home before they default on a loan and pay the loan off if possible both so they can get their equity out of the home and so that they can keep their credit history in good shape.

FICO Score Requirements

The FICO score required on loans relates to the buyer’s credit history. It reflects how often they have been late or defaulted on loans in the past. Before the coronavirus pandemic set our lives, marketplace, and economy into a spin, REI Capital Resources required a FICO score of 650 on a hard money loan with a term of up to 24 months. Many people have lost their jobs and their credit scores have suffered. Watching the unemployment rate go up, lenders across the country have tightened up their FICO requirements and these requirements are changing daily. Please call me for our latest FICO requirements. 512-213-2271.

Selling to Avoid Foreclosure

Owners in default or facing default will sometimes take less than the market value for a house to avoid foreclosure. They may settle for only getting part of their equity back, reasoning that some is better than none. None is what they will get if they go into foreclosure and the lender takes back the property and sells it for the balance owed on the loan. The borrower may even give up all their equity to sell the house before defaulting to keep their credit history intact and their FICO scores high.

Buying Opportunity

The distressed homeowner’s situation becomes the buyer’s opportunity. The homeowner needs help to retain their high FICO score and some equity, and the fix-n-flip buyer needs to purchase a property for the lowest price. It can be a win-win deal.

As a direct lender, it is my job to help you get a purchase and rehab loan as quickly and as easily as possible. The perfect fit is still out there. Call me though for the most up-to-date information.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send me an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Waking Up

Real Estate is waking up. U.S. mortgage applications to purchase a home 🏠 rose 9% last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s seasonally adjusted index. It was the sixth straight week of gains and a 54% recovery since early April. Investopedia.com.

Photo by Pixabay on Pexels.com

This is despite the sobering news from the Labor Dept. Weekly pay fell 11% in April from the prior month. That was the biggest drop on record, but it will likely be broken in May. Investopedia.com This, plus historically high unemployment, will be immense hurdles for people buying homes but might be incentive to start a business fixing and flipping homes to add to your own income and to provide homes, maybe small homes, to young and old consumers alike. Both want to get out of community living and out of big mortgages. I have the funds to help you fill this void in housing.

Real estate agents are using more virtual tours to showcase their homes. You might be able to use a video 🎥 to showcase your remodeling experience on a loan application for a private money loan for your next project.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Fixing Up Houses for Seniors

The coronavirus pandemic has cast a shadow of mortal danger over senior community-living and assisted-living options, nursing home options, and the option of living fulltime on a cruise ship grazing the buffets and watching people, waves, and whales.  Instead of looking forward to being safe with others our own age, with staff to care for us, and convenient medical care, we find that living in community might expose us to a virus we have no immunity to and a particular susceptibility for.

Even if one eyes being sick alone with anxiety, aging in place, at home has become even more attractive in recent months, and it has also become more possible. Advances in electronic technology have given many seniors more tools to use to assist them in staying at home while they age. Online shopping and delivery of even groceries and the surge in telemedicine are a couple of the technologies that have taken off during the pandemic. According to the Wall Street Journal article by Peter Grant, Senior-Housing Communities Face Higher Vacancy Rates Amid Coronavirus, virtual “doctor visits through American Well, also known as Amwell, increased 1000% during a six-week period (1).”

While senior community investors are taking a beating right now, a fix-n-flip real estate investor might be able to turn a profit on small rundown houses by remodeling them into the perfect haven for a senior citizen who wants to avoid community living. The task will mean focusing on details that seniors would be looking for and then marketing those amenities when you sell the home. I’ve scoured several articles for ideas about what to remodel in a fix-n-flip for seniors.

The first Advice I found was “buy a single-story home.” (3)

ENTRANCE

Make a no-rise entry by adding a ramp instead of steps. (3)

Repair uneven or cracked walkways outside and add nonslip surfaces. (3)

If stairs must stay, add 1 ½-inch diameter rails on both sides. (3)

Add reflective strips to top and bottom of stairs. (3)

Create doorways that are wide enough for a wheelchair.

Add benches and hooks for packages both inside and outside an entrance. (3)

Make a cleanup station or mud room near the door so guests can wash hands, remove shoes, discard coats, and pick up a face mask at the entrance and not expose inhabitant to pathogens.

Put a roof over at least one entryway. (3)

KITCHEN

Install appliances with easy-to-read controls and push buttons. (3)

Install a wall oven. (3)

Make a microwave drawer. (3)

Use lazy Susan’s, rollout drawers, glass doors, and open shelving in cabinets and pantries. (3)

Install a single lever kitchen faucet. (3)(4)

LIVING AREA

Removing small step ups and down between rooms and replacing them with ramps.

Install flooring that is nonslip even when wet in bath and kitchen. (2) (3) (4)

Install outlets where they will be most useful, such as on walls where a flat screen would be used so cords don’t show and a little above desk height on walls and in the corners for charging devices or plugging in computers.

BATHROOMS

Install u-shaped and vertical grab bars in the shower and near the bathtub (2) (3) and add back bracing to the walls in these areas. (3)

A walk-in tub.

Install a curb-less entrance to the shower. (4)

Give shower floors a non-slip coating. (4)

Install shower seating, some are fold down. (2) (3)

Install adjustable handheld shower sprayers. (2) (3) (4)

Add extra lightening to shower area. (3) (4)

Install tall or comfort-height toilets and bars to grip when one is lowering and lifting themselves off the toilet. (4)

Add lever faucets to bathroom sinks. (3) (4)

OUTSIDE

Install new decks with handrails and no splinters.

Add Raised garden beds to the landscaping.

I can have private funding for your project. Let’s get our economy going again.

Fill out the BLN application at   http://reicapital.blnsoftware.com/send me an e-mail or

give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.REICapital.cash

References:

Keep Moving

I am sharing with you a blog from a science writer that contains information about respiratory coronavirus transmission. The blog, The Risks – Know Them- Avoid Them, by Erin Bromage, offers information that we laymen and women might not have processed yet. The information is biological and physical and spelled out very clearly. We need to reopen for business, but we need to do so safely, and in order to do that, we need to know the risks and how to avoid them. I was most impressed by how the article, highlights how being in an enclosed space, sharing the same air for a prolonged period increases your chances of exposure and infection. Our guidelines for reopening our economy tend to emphasize distance but have not mentioned much about exposure to the virus over time.

“Infection could occur, through 1000 infectious viral particles you receive in one breath or from one eye-rub, or 100 viral particles inhaled with each breath over 10 breaths, or 10 viral particles with 100 breaths. Each of these situations can lead to an infection (Bromage Blog).”

Although we have not determined just what the infectious load is for COVID-19, for other coronaviruses the number is 1000 virus particles. It is this principle that is behind why grocery stores can open and bars and restaurants must close. It is this principle that should concern you if you share a small office or work in an open space with a lot of people, or work 8 hours on an assembly line 6 feet from another human being who is potentially infected. In the grocery store you pass through quickly, shelves break up the aisles, and you typically don’t talk much as you shop. In bars and restaurants, you linger and talk. At work, you talk and breathe for hours near or in the same room with others.

Photo by Pixabay on Pexels.com

Taking this to heart, I would suggest that real estate buyers, agents, and lenders pass through homes that you are viewing quickly. Don’t linger too long. Don’t carry on discussions face to face in small rooms or cars.  If you must discuss things, do it outside the home and stand more than 10 feet apart with the wind behind both of you.

Keep greater than 6 feet of distance between you and another person, especially if that person is talking, yelling, or singing and is upwind of you. In an Indoor situation, up wind means between you and an open window, the air conditioner blower, or a fan.

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Don’t drive in the same car to a property.

If you are showing a house, make sure it has been vacant for several hours before showing it, so all airborne virus particles have had time to fall out of the air. This doesn’t address surface contamination, but at least your clients won’t breath in an infectious dose as they move from room to room. You should wipe down counters, door handles, and surfaces that will be touched.

Do in-person showings and meetings by appointment only. This way you can judge how many people are around you.

Always pay attention to the physical situation when you are moving about the community. Ask yourself, how many people are here? How big is this room? Is there ventilation and enough of it?

Be sure to read this great article by Erin S. Bromage and apply the knowledge you gain to your work and play.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Reference:

Restraint

Home Loans in Forbearance Grow to 3.8 Million

According to an article in the Scotsman Guide, the Mortgage Bankers Association (MBA) forbearance numbers increased again last week but at a slower rate.

MBA estimates about 7.54% in servicers’ portfolios were in forbearance as of April 26, up from 6.99% a week earlier. A total of 3.8 million homeowners are now in forbearance plans.

Photo by Andrea Piacquadio on Pexels.com

Forbearance in the context of the mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. According to the agreement, the lender delays its right to exercise foreclosure if the borrower can catch up to its payment schedule by a certain time. (Wikipedia)

As we get back to work and restart our economy, lenders are exercising restraint. Never before have so many Americans lost their jobs in so short a time. Let’s be creative and work for a quick recovery.

Please let me know if I can help you with a private loan.

Fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Vote Your Numbers

There is one thing that we can all be sure of: no one knows what will happen next.

The coronavirus has thrown all the cards into the wind and the stock market goes up even along with virus infections and deaths while main street eyes reopening a percentage of their business capacity keeping their distance and wearing masks. Forecasting is impossible.

REI Capital Resources would like to know your plans so we can put funding strategies together and find private lenders that will fit your plans and goals as you forge ahead into the murky future. Please take this brief pole for us.

Funding the BUY

Many jobs have been lost, at least temporarily. Texas has lost 50,900 jobs in the month of March. Louisiana had lost 21,000, Georgia, 7,000, and Florida 36,600. Nevertheless, homes are still selling. Realtors are advising home sellers to be flexible and willing to negotiate if they want to sell their home right now in the middle of the coronavirus pandemic (Forbes.com). Many people may not be comfortable committing a lot of money on a property when they are unemployed.

Photo by Nathan Cowley on Pexels.com

However, if you are in the business of real estate investing, such as fix-n-flip house buy and selling or buying for rental income, this may be a good time to buy. With fewer houses on the market, competition will be even more intense than usual, but sellers might be more amiable to negotiating.

I can help you get private funding for a real estate purchase for an investment. The terms would be 6 to 9 months. No appraisal is required, you can fund up to 90% of the purchase price and up to 100% of the rehab cost. Interest rates would start at 12% with points as low as 3.0%.

Photo by Gustavo Fring on Pexels.com

When you go to see a house, make an appointment and take safety precautions, such as wearing gloves and a mask when you see the home and discarding the gloves as you leave before you touch your car handle or steering wheel. Limit close contact with the real estate agent, seller, or lender. Complete as much paperwork electronically as you can. Wash your hands often. Avoid touching your face.

Let’s get our economy started again but be safe about it.

Fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Investing in Apartments – Commitment and Study

Even in the coronavirus pandemic crisis investing in rental apartment property can still be a good way to add thousands of dollars to your income in the long term. If you buy apartment real estate that is in a good location with growth potential, but that is not too expensive, this real estate investment will likely recover after the crisis passes according to (Brad Hunter, Forbes.com). However, the investment takes funds and commitment over the long haul.

Appreciation

There are two way to make money from rental real estate. The first, appreciation, is a rise in value over time. This profit can only be realized by reselling the property after some time has passed or after you have made upgrades that add to the value. Generally, real estate appreciates in value over time if you are in the right location. Be sure to study employment and home buying trends in your local area before purchasing rental property.

Cash Flow & Coronavirus

You can also make money in the form of cash flow by collecting rents as income. The coronavirus pandemic is affecting the apartment rental real estate industry because many people, more people than we have ever seen before, have lost their income in only a few weeks, unemployment claims are up all over America, and tenants may not be able to pay their rents for the next couple of months. This will impact the ability of landlords to make money. Either the landlord forgives the rent and eats the loss for a while to keep the tenant, or the renter is evicted, and the property becomes vacant. In either case, the landlord is not receiving income on the property and may have to seek forbearance from their own lenders.

If a landlord has paid off his or her own mortgage on the property or if he or she has established an emergency fund as Dave Ramsey suggest (daveramsey.com), they will be able to weather the storm caused by the jobs lost in the pandemic shutdown.

Jobs and Renting

Either the jobs come back after the danger from the virus is past and businesses reopen, and the renters stay, or a new set of renters materialize because those people who are no longer able to afford their own homes move to apartments and construction of new homes slows because of coronavirus-driven delays caused by labor shortages, and supply shortages. More people may need to rent. In this case. It is likely the landlord’s income will return after some shaky months.

Photo by Michael (Black) Ritter on Pexels.com

Asset Rebound

Because the income potential should rebound, rental apartment property should not lose its value overtime as an asset. If the building itself remains sound, there is no reason why the property value will not increase as other investments tank and real estate once again looks solid and reliable compared to stocks. Also, if interest rates remain low, investors will be willing to take on more debt and are not restrained from purchasing property at higher prices. This will help investors who plan to sell their rental properties make a profit.

Single-Family Rentals

Investments in single-family rental homes may also benefit in the long run as more people work from home and need more room than apartments afford. Brad Hunter also suggests in his article on Forbes.com that the single-family-built-to rent-industry may benefit as people need that specially designed home office space with its own door and bathroom.

Due Diligence

Investment in rental real estate should remain attractive but be sure to do your due diligence.

Study everything from location, jobs, virus hotspots, distancing trends, supply chains, virus rebounds as they occur, and what the kids are doing now.

References:

Dave Ramsey online at https://www.daveramsey.com/blog/how-to-invest-in-real-estate

Forbes online: https://www.forbes.com/sites/bradhunter/2020/03/24/coronavirus-impacts-on-real-estate–why-you-need-to-think-short-term-and-longer-term/#6f2133345f6f

Investopedia, The Impact of Interest Rates Changes by the Federal Reserve. https://www.investopedia.com/articles/investing/010616/impact-fed-interest-rate-hike.asp

We have funds available so let us invest in something together.

I would be pleased to have you call or e-mail too.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

REI Capital Resources is in accordance with the Federal Equal Credit Opportunity Act, REI Capital Resources employs business practices that promote fair lending and will not tolerate discrimination relative to borrower race, color, religion, sex, handicap, familial status, age, national origin or ancestry. REI Capital Resources fully supports the letter and spirit of these laws and does not condone discrimination in any mortgage credit transaction.

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