Small Balance Commercial Loans Now Available from REI Capital Resources and Current Offerings

As a direct lender and financial intermediary, we have the opportunity to place the most competitive financing options in the market.  We look forward to winning your business and creating a long-term relationship.  In addition to our core offerings of Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments, we now have the ability to place loans with multiple small-balance commercial lenders.  The small-balance commercial loan amount falls between $100,000 to $10.M.

Types of properties that can be funded: 

  • Multifamily 
  • Commercial Condo 
  • Multi-Use – Primarily Residential 
  • Multi-Use – Primarily Commercial 
  • Office 
  • Retail/Wholesale/Strip Center 
  • Warehouse 
  • Light Industrial 
  • Self Storage 
  • Mobile Home Park 
  • Automotive 
  • Day Care – Free Standing/non-residential 
  • Restaurant/Bar 

Loan Programs Available: 

  • No Doc (min FICO 700)  –  $100,000 to $2.5M 
  • Full Doc (Min FICO 600) –  $500,000 to $10.0M 
  • Lite doc (Min FICO 650)  –  $100,000 to $2.5M 
  • Bank Statement (Min FICO 650) – $100,000 to $2.5M 

Loan Terms: 

  • Amortization – 15, 25, 30 yr 
  • Term – 5, 7, 10yr 
  • Rates – from 5.5% 

Here are more details of our core lending products of Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments.

  • 1. Fix and Flip Loans – up to 90% Of Purchase with 100% of Rehab, experienced, or first-timer investors
  • 2. BRRRR – Buy, Rehab, Rent, Refinance and Repeat loans are available.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.
  • 3. Rental Property Loans – Purchase – Refi – Cash Out.  SFR 1-4 units and AirBnB properties.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.
  • 4. Ground Up Construction Loans
  • 5. Portfolio Loans for SFR – 2-4 units and Multi-Family
  • 6. Bridge Loans – Loans to Pay off current Lender – 1-2 Year Loans.
  • 7. Multi-Family Loans from 5 doors to 300+ doors.  Value-Add Purchase, Turn-Key Purchase, Bridge, New Construction, Agency and non-Agency loans
  • 8. Commercial and Mixed-Use Properties
  • 9. Haz. Ins. Co you can use. https://affiliate.nreig.com/RichardTurner­

Do you need funding for your BRRRR investment?  Basically, the loans look like this:

  • LTV – up to 88% of Cost / 68% LT Market Value
  • DSCR – 1.20 based on Market Rents (1.30 if less than 3yrs rental experience)
  • Experience – Min 5 flips or rental / 5yr look back
  • Loan Terms  – 7 yr  (5yr Fixed+2yr Floating)
  • Interest – Intro Rate 4.9% (increases with credit below 740, max 5.8%), First-year – no interest payments (rolled into loan principal)
  • Loan Terms – 12yr (10yr Fixed + 2 yr Floating)
  • Interest- Intro Rate 5.2% (increases with credit below 740, max 6.1%), First-year – no interest payments (rolled into loan principal)
  • Origination Points – 3% (2 to lender + 1 to us)  need to get a Broker/Client Agreement at 1%
  • Prepayment – Step Down 3-2-1  (No PPP if Origination Points Increased by 1%)

Some of our lenders will work with the following background issues:

  • Litigation with another Lender
  • Bankruptcy (10yr lookback)
  • Foreclosures (since 2012)
  • Delinquency with suppliers
  • Outstanding RE Liens
  • RE Loan Delinquency

Our lenders are ready to work with contractors and investors.  Now is a good time to buy a distressed property but be aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real estate investors, but the average home buyer should probably look elsewhere.

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Updates to our Loan Offerings – More for you as a Real Estate Investor

We are a direct lender and financial intermediary, which gives us the opportunity to place the most competitive financing options in the market.  Below is what we specialize in.  We look forward to winning your business and creating a long-term relationship: Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments. Here are more details of our core lending products.

1. Fix and Flip Loans – up to 90% Of Purchase with 100% of Rehab, experienced, or first-timer investors

2. BRRRR – Buy, Rehab, Rent, Refinance and Repeat loans are available.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

3. Rental Property Loans – Purchase – Refi – Cash Out.  SFR 1-4 units and AirBnB properties.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

4. Ground Up Construction Loans

5. Portfolio Loans for SFR – 2-4 units and Multi-Family

6. Bridge Loans – Loans to Pay off current Lender – 1-2 Year Loans.

7. Multi-Family Loans from 5 doors to 300+ doors.  Value-Add Purchase, Turn-Key Purchase, Bridge, New Construction, Agency and non-Agency loans

8. Commercial and Mixed-Use Properties

9. Haz. Ins. Co you can use. https://affiliate.nreig.com/RichardTurner­

We are also very excited to be working with a new lender that will provide funding for the BRRRR investment concept.  Basically, the loans look like this:

  • LTV – up to 88% of Cost / 68% LT Market Value
  • DSCR – 1.20 based on Market Rents (1.30 if less than 3yrs rental experience)
  • Experience – Min 5 flips or rental / 5yr look back
  • Loan Terms  – 7 yr  (5yr Fixed+2yr Floating)
  • Interest – Intro Rate 4.9% (increases with credit below 740, max 5.8%), First-year – no interest payments (rolled into loan principal)
  • Loan Terms – 12yr (10yr Fixed + 2 yr Floating)
  • Interest- Intro Rate 5.2% (increases with credit below 740, max 6.1%), First-year – no interest payments (rolled into loan principal)
  • Origination Points – 3% (2 to lender + 1 to us)  need to get a Broker/Client Agreement at 1%
  • Prepayment – Step Down 3-2-1  (No PPP if Origination Points Increased by 1%)

The lender will work with the following background issues:

  • Litigation with another Lender
  • Bankruptcy (10yr lookback)
  • Foreclosures (since 2012)
  • Delinquency with suppliers
  • Outstanding RE Liens
  • RE Loan Delinquency

This lender is geared up to work with contractors and investors.  They understand the issues they come into and have a system that helps to prevent further erosion of the borrower’s track record or credit.

One of their claims is that 95% of applications pass thru the system to get a loan.

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Photo by Andrea Piacquadio on Pexels.com

Need Rental Acquisition Funds? How to get INSTITUTIONAL FINANCING!

This sounds rather ominous – INSTITUTIONAL FUNDING OF A RENTAL PURCHASE.  There is no creativity in this type of transaction.  It is a clean method of purchasing a property without the worry of what the underlying bank may do if the truth gets out. This post will cover:

  • So how do you get one of these loans?
  • How much money is needed?
  • Does my credit need to be pulled?
  • Does it have to be in an entity?
  • Do I have to put my first-born child up as collateral?

Get Your Affairs in Order

Having your documents ready to go at a day or two notice should be paramount to running a good solid business.  Knowing what the business is, how it was formed, documents are signed, financials are essential! 

Entity

  • First of all – if there is a signature line in your entity formation documents, make sure all principals have signed the document.  About 60%-80% of entity documents are left unsigned.
  • Secondly, the entity must be filed with the Secretary of State, in the State of Organization.  If the entity is working in another State then a DBA should be filed with the appropriate State.
  • Operating Agreement (OA)
  • Articles of Organization or Incorporation (Articles)
  • Resolution – A resolution that emphatically states who has the authority to sign financial documents is a must.  If this activity is either not in the OA or is poorly worded, then a separate resolution should be written, signed and filed with the appropriate Secretary of State’s office.

Assets

  • Financial Institution’s statements.  These are basically the bank statement for the entity, banks statements, investment account statement, retirement account statements of each principal.  Yes, the funding institution wants to know there are funds available to continually make payments especially when the property is vacant or has been damaged and in being repaired.
  • The cash value of a whole life or universal live insurance policy is also considered an asset.  Please remember that the face value of the $1.0M policy means nothing to the underwriter, only the amount of cash that the insurance company states is available to be surrendered, if and when requested.

Experience

  • Starting out is understood in the lending business.  Regardless of this being the first property or the 100th property the lender needs to know your level of experience.
  • Assuming the only property type you have investing in is rentals then your rent rolls, the last 12 months of rents, a balance sheet and a P&L statement should be close by.
  • Management experience is also key.  Regardless of the properties being managed by a 3rd party or yourself, this is something the lender needs to understand.
  • If the previous investments were fix and flips, then please provide a list of those properties, with the purchase cost, rehab costs, selling price and gross profit.
  • If you have partnered with other investors via an entity then these count towards experience.
    • To be considered as experience, the principal in question must have had significant ownership of the previous /partnered entity, approximately 25% or more.
    • JV partners are discounted but can be provided to show similar activity.
  • As a general rule the more rental experience the higher the Loan to Value of the loan.

Principals

  • Copy of your Drivers License or other government picture ID.
  • Either an application or a Personal Financial Statement are required
  • Authorization to pull your credit.
    • Credit drives the interest rate.
    • The higher the score the lower the rate.
    • Min Score is 660 for most lenders.
    • Some will go much lower to 500 but a higher interest rate will reflect this score.
  • The institutions are truly not interested in using your first born as collateral!

Property

  • Will need an appraisal
  • Depending on the experience of the principals the maximum LTV could be as high as 80%
  • The purchase contract is required
    • Any Amendments, Addendums or Assignments will be required
  • Lease documents
    • If there is a lease in place that will be sufficient
    • If a new lease has been signed then make sure that all attachments, Lead Based Paint forms, and As Is Condition forms are included.
  • All pages of the lease need to be sent in.
  • What is the target closing date?

Title Company

  • What is the name of the title company?
  • Who is the person(s) in this office that will handle the closing?
  • What is their Address?
  • What is their phone number?
  • What is their email?

Insurance Agency

  • Who is the insurance agent?
  • What is their Address?
  • What is their phone number?
  • What is their email?
  • Minimum Coverages (as of January 2022)
    • Greater of Building Replacement Costs or the Value of the Loan
    • Min Liability is $500,000
    • Fire and Hazard Coverage
    • Min 6 months Rental Loss Coverage

So, what does this same purchase look like in an institutional loan?

“Subject To”Institutional
ARV$200,000$200,000
Purchase Price$25,000$175,000
Credit Score740
LTV80%
Down Payment$35,000
Loan$165,000$140,000
Interest Rate4.00%4.25%
Term30 years with only 25 yrs remaining30 years
Payment$788.00$689.00

The upsides to this transaction are many:

  • Arears are covered making this a clean deal, cleared off the books of the previous bank
  • Lower monthly payments
  • Possible immediate tenant
  • Lender has no reason to call the loan
  • Refinancing to pull equity at your desired timing not an underlying bank

The downsides, to name a few, are:

  • $10,000 more in down payment
  • May take more time to close

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Photo by Kindel Media on Pexels.com

Texas’ hot housing market might be cooling down … or not?

As providing funding for real estate projects which include new construction as well as fix-n-flip loans and long-term rental loans, we keep our eyes on the market economics that might impact our clients.

The pandemic price run-up for homes has been helpful for some of our investors especially to mitigate the rising cost of lumber and other materials. In major Texas cities from the end of 2020 through much of 2021, the median house price soared!!! Here’s the difference in cost between September 2021 and September 2022:

  • D-FW: $298,884 (Sept. ’20) to $350,000 (Sept. ’21). Change: + $51,116 
  • Houston: $261,000 (Sept. ’20) to $300,000 (Sept. ’21). Change: + $39,000 
  • San Antonio: $255,000 (Sept. ’20) to 294,950 (Sept. ’21). Change: + $39,950 
  • Austin: $350,318 (Sept. ’20) to $448,00 (Sept. ’21). Change: + $97,682 

The A&M researchers expect the price per square foot to keep going up in the next several years, but not anything like what we have just seen. Home prices have risen and so have property taxes. Landlords want to pass costs to renters and renters are not immune.

New research from the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA) found that renters were about 3X more likely than homeowners to miss payments this year.  Renters may be vulnerable to the expiration of expanded pandemic unemployment benefits.  Therefore, we recommend our long-term buy-and-hold investors be sure to run background checks on potential renters.

From Texas Real Estate Research Center at Texas A&M University: “With lumber prices falling, total Texas housing starts increased for the second consecutive quarter. Zonda data revealed roughly 38,000 homes broke ground in the Texas Triangle in 3Q2021, pushing single-family housing starts up 3.9 percent on a quarterly basis amid strengthening economic conditions and robust housing demand. Housing starts in North Texas and Austin reached an all-time high, increasing 8 and 13.8 percent, respectively, from last quarter. “

Read more stats here:  https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

Lastly, the average rate on 30-year fixed-rate mortgages in Freddie Mac’s survey was 3.11% during the week ending December 2, up one basis point from the previous week. The rate averaged 3.07% in both October and November. All rates quoted have fees and points averaging 0.6% to 0.7% of the loan amount.   

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Photo by Monstera on Pexels.com

Happy Thanksgiving! We’re Grateful for you!

As we think about the things we’re grateful for, YOU were on top of our list. Thank you for allowing us in the past year to fund your real estate projects. We hope to bring more value to your business in the years to come.  With the end of the year coming, it is still possible to close and fund your next deal before Christmas!

“Be present in all things and thankful for all things.” ~Maya Angelou   

Do you know how expressing gratitude can help others and yourself?  Boost your health, hope, and happiness with a powerful dose of gratitude.  Also, people do business with happier less grumpy people so it’s good for not only company morale but with your customers and partners too. What does appreciation really mean, and why is there so little of it to go around these days? Just listen to all your friends and peers who complain that winter warm days are not lasting or are always grumpy or gossiping. Approximately 90% of people responded with comments like “Yeah, but it won’t last!” and “Oh, you just wait for summer!”

All this made me think a lot about the ways we express ourselves and the way we do or do not give thanks in moments of satisfaction and happiness.

Definitions of Grateful and Thankful

Being grateful is defined by Merriam Webster as being “appreciative of benefits received.” Meanwhile being thankful is defined as being “conscious of benefits received.” Being grateful isn’t just about performing one action, it’s also an emotion that serves a positive purpose. Gratitude embodies a general state of thankfulness. Gratefulness can be the result of many small, positive actions that come together to shape a mindset of appreciation. Some examples may be:

  • After hearing about a sick friend or co-worker, you may reflect on your life and feel grateful for your health.
  • If you have to reschedule a meeting at the last minute due to a family emergency, you will feel grateful for the other meeting attendees if they’re understanding of your last-minute crisis.
  • If you have a tough day at work, you might stop and be grateful that you have a job, unlike the many who are unemployed.

Thankfulness, on the other hand, is a conscious act you engage in after you receive some sort of benefit. Thankfulness differs from gratitude in many ways, one of which is that it is commonly associated with materialism, which is not a characteristic of people who practice gratitude. Appreciation is gratitude in action.  Gratitude embodies a general state of thankfulness.

During Thanksgiving, I hope you take a moment to reflect on the hard work you put in daily. Take pride in your efforts and give thanks to those who contribute to your success. 

I am thankful to all of you for reading my blog and newsletters. Your support means a lot.

Gratefully yours,

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Photo by Eva Elijas on Pexels.com

10 Real Estate Investor Blogs You Should Be Reading in 2021 and 2022

10 Real Estate Investor Blogs You Should Be Reading in 2021 and 2022

Whether you’re a seasoned investor or are just acquiring your first property, real estate investment blogs are an excellent source of information. From rental properties to fix-and-flips to REITs, there’s a blog — and usually a partner podcast — that will give you the scoop on all things real estate investing. 

There’s a universe of knowledge about real estate out there, and just being willing to seek it out can accelerate your expertise far beyond your years of experience. The best place to start is the internet’s most prominent real estate investor blogs. What we are reading at REI Capital Resources and recommend you do too!  Take a look at our top 10 picks for blogs to follow:

1. Afford Anything

Blogger: Paula Pant

Focus: Rental properties

A former journalist, Paula Pant achieved financial freedom through real estate, and now she teaches others how to do it through her blog and podcast. Her philosophy? You can afford anything, but not everything, so you’ll need to take control of your money to build the life you want most. Whether you read her blog or listen to the podcast, you’ll get great advice on how to set a course toward financial freedom with real estate investing.

2. JoeFairless.com

Blogger: Joe Fairless

Focus: Multifamily investing, apartment syndication

Joe Fairless is a bit of a Renaissance man — he’s taught preschool, done standup, and worked as an ad exec. He also controls more than $900 million in real estate. So if you’re an investor looking to up your game, you’ll want to read Joe’s blog and his long-running daily podcast, “Best Ever Show.” 

3. Mr. Money Mustache

Blogger: Peter Adeney

Focus: Real estate investing for beginners, rentals, and REITs

“Financial freedom through badassity” is the tagline of Peter Adeney’s blog, so right away you know you’re in for a no-holds barred perspective on real estate investing. Adeney was able to retire in his 30s by cutting expenses in half and investing the savings in Vanguard index funds and rental homes. His blog is great for beginners, as many of the posts offer great advice on how to stash away more money by slashing food bill costs and other lifestyle expenses.

4. InvestFourMore.com

Blogger: Mark Ferguson

Focus: Real estate investing, wholesaling, BRRRR strategy

Mark Ferguson built $3.7 million in equity through real estate investing. He’s got info for everyone, from advanced investors to those who are just getting their feet wet. Ferguson blogs and has a regular e-newsletter that discusses flipping houses, financing, finding deals, wholesaling, and BRRR strategy.

5. Bigger Pockets

Focus: All aspects of real estate investing and personal finance

BiggerPockets is the single largest real estate investing platform in the world.  

BP is an empire of knowledge that spans podcasts, a growing library of books, and a vast website with all the information and resources an investor could want. Half educational, half social network, it brings together both new and experienced investors in all phases of real estate.

6. REtipster

Seth Williams is the founder of REtipster, a real estate investing blog that talks a lot about investing in raw land and some pretty cool land-investing strategies. I’ve always enjoyed talking with Seth at conferences, and he is a knowledgeable and transparent investor.  Seth’s website is easy to navigate and very user-friendly. He talks about more than just investing in land on his platform, so don’t write off this awesome resource just because you don’t buy land (yet).

7. Short Term Sage

Julian Sage of Short Term Sage is the short-term rental (STR) guy. I have had the pleasure of knowing Julian for a couple of years now, and he is in a mastermind group we host for service members. Julian is on active duty in the Coast Guard and has become an expert in the short-term rental space, hosting not one, but two, of the top short-term rental podcasts on iTunes.

Not only does Julian talk about traditional short-term rental strategies, but he also talks about rental arbitrage, STR property management, and even multifamily STR opportunities with apartment buildings.

8. Inman

Inman is a leading source of real estate information used by investors, realtors, brokers, and other professionals. It’s often one of the first sites to post major stories that affect the housing market. Frequent visitors will find news about:

  • The most recent mortgage rates
  • Statistics such as mortgage delinquency rates
  • New tools and tech platforms for real estate searches and transactions
  • Real estate firm mergers
  • Real estate crime and legislation

While the site focuses on the latest news, that isn’t the only kind of content you’ll find here. A decent amount of the content covers tips, secrets, and industry advice.  Inman is for real estate investors who rely on up-to-date information about the industry. That may include large-scale investors who are looking to break into local markets. Most of the advice is meant for people who are actively investing in property rather than new investors.

9. Realty Times

Realty Times is a real estate news and advice site that serves both investors and homebuyers with stories about: 

  • The definitions of critical real estate terms
  • Legal challenges and new legislation
  • Changes in consumer behavior and trends
  • Shifts in the housing market
  • Home selling advice

It regularly publishes market outlook reports for specific housing markets. These reports are detailed with information about average home prices, the best time to sell, and other data. Anyone who can make use of the reports can benefit from this blog. It’s a good resource for both buyers and sellers. If you’re going to focus on selling, what you learn here may help you understand buyers’ mindsets better. 

10. Commercial Property Executive

Activity in the commercial real estate market matters, even if your focus is residential real estate. That’s because the local job market and economy have a dramatic effect on the performance of residential rental properties.

Start learning from the best

Your education as a real estate investor never stops — especially if you want to keep growing your holdings. Blogs and podcasts are a great way to hear what’s working/not working for other investors. Find a few you like and commit to reading them to get new ideas and fresh perspectives for your real estate investing business. Reading blogs is one way that you can significantly increase your expertise with only a little effort. Use your downtime to do some reading, and you may be able to catch up on years of experience.  All of us at REI Capital Resources recommend checking out each of these blogs to find out which one can offer you the most. 

Photo by Pixabay on Pexels.com

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

http://www.reicapital.cash/

ANNOUNCING: Bridge FICO Bands Lowered to 600+ Minimum Requirement

Photo by Amina Filkins on Pexels.com

We’re constantly analyzing data to train our machine learning models and inform our credit policies. Recently, we’ve lowered our bridge FICO minimum requirement to 600+ for qualifying clients. With newly expanded FICO bands, you have the potential to approve different clients and scale your business. Please note that all terms and borrowers are subject to credit approval.
We’ve also increased our bridge rehab limit to $500k maximum for clients of all REI experience levels. Take advantage of our other bridge loan program highlights, such as:

  • Rates as low as 6.5%*
  • Minimum 600+ FICO – new
  • Max $500k rehab size with up to 100% of rehab costs covered – new
  • Loans from $50k to $3MM
  • 12, 18 & 24-month terms
  • Up to 90% of the purchase price
  • Up to 75% of after-repair value

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

http://www.reicapital.cash/

Homeowners who are delinquent on their mortgage provide an opportunity for investors

Homeowners are delinquent on their mortgage provide an opportunity for investors!

There are still 1.5 million borrowers who are seriously delinquent or have late-stage delinquencies at 90 days or more past due on their home loans, according to the June Mortgage Monitor report from Black Knight.

While the national delinquency rate is at its lowest level since the beginning of the pandemic, about 1 million homeowners are expected to be in serious delinquency as September’s wave of mortgage forbearance program expirations begin, the report showed.

The economic recovery is expected to slow down even more as more Americans fall behind on their mortgage payments, and fewer can afford to purchase homes. The housing recovery will be delayed as banks tighten their lending standards. 

What is the difference between default and delinquency?

Delinquency means that you are behind on payments. Once you are delinquent for a certain period of time (usually nine months for federal loans), your lender will declare the loan to be in default. The entire loan balance will become due at that time.

How did we get here?

One of the most difficult things about owning a home is taking care of your financial obligations. If you’re not making your monthly mortgage payments, you’re considered delinquent. In the past decade, this has been a problem for a lot of homeowners. In total, about 1.5 million homeowners are delinquent on their mortgage payments. This is a problem for the investors, as the value of these homes goes down because the homeowners can’t afford to pay their mortgage. It’s a frustrating situation for everyone involved.

The 90–day delinquency rate is a measure of serious delinquencies. It captures borrowers that have missed three or more payments. This rate measures more severe economic distress. View this link to learn more and view interactive charts:  https://www.consumerfinance.gov/data-research/mortgage-performance-trends/mortgages-90-or-more-days-delinquent/

What you need to know as an investor

Per MarketWatch (https://www.marketwatch.com/story/one-subset-of-homeowners-could-be-in-trouble-here-are-the-real-estate-markets-most-at-risk-11625591292):

Any homeowner who isn’t able to sell their home or modify their loan is likely to face foreclosure or other financially challenging options, such as a short sale, the researchers warned. Whether a homeowner leaves their home by choice or through foreclosure at the end of all this, it will have the effect of adding supply to the market they live in.

“As a result, a buyer’s market could develop in ZIP Codes with heavy exposure to such borrowers,” the researchers wrote, noting that these would be areas with a high concentration of FHA loans in delinquency. So which markets are most at risk?

Atlanta tops the list, with 17.4% of the city’s mortgages in delinquency as of May. The city also has a large share of FHA loans overall, with those loans representing over a fifth of all mortgages in the city.

Many of the metro areas most threatened by such a scenario were located in Texas, including Houston (No. 2), Dallas (No. 4), San Antonio (No. 8) and Ft. Worth (No. 9).

Should you buy a distressed property now?

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

http://www.reicapital.cash/

Photo by Public Domain Pictures on Pexels.com

Diamonds are not forever but Real Estate Is … Make Wise Investing Choices!

Would you ever think to compare diamonds and real estate? At first glance, they seem like two completely different things.  However, they are both hard assets that are cost-prohibitive to acquire for the average US worker.  However, you can sell both “assets” quickly and not realize their full value in the marketplace.    Let’s first compare the similarities and then differences from an investment perspective.

Real Estate is a better long term investment than diamonds

Similarities

Hard Assets:

  • Both Diamonds and Real Estate are Hard Assets similar to other commodities
  • Negatively correlated with bonds and stocks, so when stocks crash both appreciate in value

Long Term Investments

  • Suitable for investors who are not looking for fast returns on their investment
  • Risk losing money if you try to “flip” your investment too early or didn’t acquire at the right price below market value

Additional Utility

  • Provide the investor with enjoyment and value
    • Diamonds are pretty to look at and make the person or people associated with the diamond have better social value 
    • Real Estate provides rental income and in the case of short-term rentals – owners can enjoy the property and generate revenue when not in use.

Differences

As investors, we all know that not all hard assets, such as real estate or diamonds, have the same return on investment.  In fact, ROI performance varies greatly even among real estate classes:  residential property, commercial real estate, agricultural property, etc.  Financial crises prove time and again that real estate is a highly volatile asset.   Diamonds are a closed market that is stable and less risky.  However, there are still differences among the rate of returns on diamonds such as the colored diamonds are less risky.

  • Maintenance Fees
    • Diamonds don’t have a maintenance fee … you’re ROI is based on the price you paid upfront for the diamond
    • Real Estate requires maintenance and repairs and possibly property management fees.  All these factors need to be carefully considered before acquiring property and affect your return on investment.
  • Portability
    • Several millions of dollars can fit in your fist and transport in a pocket … the irony for not being the rarest stone they have the highest size to value ratio of the natural resource category.   This is how historically (since the silk road trail) wealth was transported long distances and across borders.
    • Real estate can’t be moved. Real estate is not physically portable and the value does not transfer easily either.  However, 1031 exchanges are a great way to transfer appreciation as you sell your property.

At REI Capital Resources, we prefer real estate investing to diamonds.  In fact, diamond prices are extremely volatile – shooting up 249% from 1978 to 1980 before falling 77% by early 1986 – but the value of diamonds has also long been propped up by a number of artificial sources.   Real estate can be utilized and provide rental income.  As the number of cloud and work from home startups rise, commercial real estate is increasingly valuable to investors to provide “server farms” to meet bandwidth demands.

We are not saying diamonds aren’t valuable or important – especially as emergency currency and making your future or current spouse a little happier this valentine’s day.  We’re saying don’t buy a diamond as an investment with the idea of retained value.  If you look at diamond prices since the 1970s, there has been “Too Much Price Volatility & Demand Uncertainty To Be Considered Investable” by numerous sources.  Also, the use of diamonds as a symbol of a woman to be married is only about a 100-year-old custom.  There are numerous other stones considered rarer.  Thank you, Madison Avenue for making weddings a thing to save money for and cause the intelligent investor to consider generating a new stream of revenue.

We love this quote by Milton Friedman, “The speculator is looking for hidden weak spots in the market,” and acts as “the advance agent of the investor, seeking always to bring market prices into line with investment values.”   Diamonds don’t provide an adequate hedge against inflation, and most people would be better off with more practical financial planning, than investing for catastrophe purposes.  The diamond while a modern symbol of one’s love and commitment to another is expensive and ranks low when compared to value stability.

Diamonds vs. Gold vs. S&P 500

YearGold ROI  %Diamond ROI  %S&P500 ROI  %
2004000
200536-110
200657323
200797291
200811911-22
200917619-7
2010254507
20112763915
20122182437
20131852061
2014172873

*Data courtesy of the Rappaport Diamond Index, Kitco, the World Gold Council and Yahoo Finance. Diamond prices reflect monthly averages based on a 1-carat diamond. Gold prices are based on average annual London PM fixed prices. S&P 500 prices reflect average monthly adjusted closing prices. ROIs are cumulative.

The chart shows when the stock market suffered historic losses, diamonds at best served as a short-term hedge and very quickly fell behind the returns of alternative investments.

Therefore, I would recommend a 3 bedroom house that generates a positive return on investment that you can set aside the money after a year to buy your sweetie her diamond.  If she loves you, she’ll wait a year knowing a diamond is coming.

3 Ways Real Estate Investors Can Owner Occupy Their Rentals

by Patrick St.Cin

Property investments potentially have excellent returns and can diversify your portfolio to insulate you from recessions and other adverse economic conditions. There’s no single right answer on the best way to invest in real estate. Are you getting started in Real Estate Investing and wonder how to live in your investment property? 

Tip 1:  House Hacking

This can mean a few different things. House hacking is essentially a hybrid of buying a home to use as a primary residence and buying a rental property. In general, the term refers to buying a residential property with two to four units or with a Granny Flat/Additional Dwelling Unit in the backyard and living in one of the units while renting the others out. In theory, if you have the money you could purchase an entire duplex or four-plex and rent out any apartment to tenants. Keep your expenses low so you can keep rent affordable to entice prospective tenants.  You also could purchase property that you live in while renting out other rooms in the property. 

Either way, you’re the landlord. Be a good one, and you’ll be in a much better position to succeed in this investment. Keep the property in great condition, be readily available to your tenants when needed, and if necessary hire someone who can help with repairs.

Let’s say you find a quadruplex (four units) for $200,000. Including taxes and insurance, we’ll say your mortgage payment is $1,500 per month. After you buy the property, you rent out three of the units for $600 each and live in the fourth. Not only do you live for free (the rent covers your entire mortgage payment), but you’re generating a positive cash flow of $300 per month and are building equity in a more valuable property than if you had bought one unit to live in.

House hacking can be an excellent low-cost way to start building a portfolio of rental properties. Because you live in the property, even a multi-unit residential property can qualify for primary residence financing, which comes with lower interest rates and lower down payment requirements than investment property loans. You’re typically required to live in the property for a certain amount of time after you buy it, but once that period expires (usually a year or two), you’re free to repeat the process with another multi-unit property.

The obvious downside is privacy. There’s value in having your own yard, and it can create some awkward situations when you live in the same building as your tenants. Even so, if you’re a new real estate investor and don’t really need your own house, you may want to consider house hacking. This isn’t as much of an investment strategy as it is a side hustle, but it’s still worth mentioning here. With the emergence of platforms like Airbnb, it’s easier than ever to rent out your home when you aren’t around or to rent out a spare room in your home for a few days here and there.  

Tip 2: Tax-Free 2 Weeks Income 

One interesting aspect of this strategy is that if you rent out your home for fewer than 14 days in a year, you don’t pay tax on the money you collect. If you go out of town for the holidays or take a summer vacation, using your home as an occasional short-term rental can offset your travel expenses with tax-free income.

Landlord Tax benefits: 

  1. The mortgage interest deduction for the mortgage interest you pay to buy and/or fix up your properties. 
  2. Deductions: insurance premiums, repairs, utilities (that are not paid for by the tenants)
  3. Depreciation: You are allowed an annual deduction for the wear and tear your property experiences over time, spread out over 27.5 years for residential properties. Land cannot be depreciated.

Living with Tenants is Too Much – What is a Traditional Landlord? 

Owning rental properties is an excellent way to invest in real estate while building wealth and generating income. The return potential is strong thanks to a combination of income, equity appreciation, and the easy use of leverage when buying real estate.

However, owning rental properties isn’t right for everyone, so consider these drawbacks before you start looking:

  • Cost barriers: It can be very expensive to buy your first rental property. Most lenders want at least 25% down for an investment property loan and it’s smart to keep several months’ worth of expenses in reserves.
  • Uncertainty: When it comes to rental properties, vacancies happen and things break. While the overall return potential can be great, rental properties have considerable short-term risk.
  • Time commitment: Even if you hire a property management company, owning a rental can be a time-consuming form of real estate investing.

Tip 3: Vacation or Short-Term Rentals

A vacation rental tends to bring in more income per rented day than a comparable long-term rental property. However, there are some potential drawbacks to owning a vacation rental. Marketing and managing a vacation rental is more involved than a long-term rental. As such, property management is far more expensive — expect to pay a property manager about 25% of the rent on a vacation rental. That’s more than double the 10% industry standard for properties with long-term tenants.  Furthermore, you may need a special license in your preferred locations, which can be very expensive.

On the positive side, you may be able to use the home when it isn’t occupied. It can also be significantly easier to finance a vacation rental, especially if it meets your lender’s definition of a second home and you don’t use the rental income to qualify. There are loans options available for short-term rental funding.

Always buy property for the best possible price. You want to buy those properties that offer specific challenges that match your personal talents so you can use your skills to upgrade and enhance the value of the property and increase the Net Operating Income over time.  Obviously, the higher the rents and the lower your total monthly expenses, the greater your net income from the property will be. Costs that affect cash flow include principal & interest payments; property taxes; insurance; maintenance/repair costs.

Although we’re always quick to advise against borrowing too much and overleveraging your real estate investments, you also don’t want to be too conservative and underestimate your cash needs. The cost of refinancing is such that you may be able to refinance the property no more than once every several years, and if you suddenly need cash to overcome some unanticipated problems, the costs of short-term funds can be high. Borrow extra money or have an untapped line of credit available (which some lenders offer at no carrying cost to their best customers) to allow for reserves.

Joint ventures, wholesaling, fix-and-flip, and property management are just a few of the other ways investors can profit from real estate.   

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

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

http://www.reicapital.cash/