Don’t Self-Sabotage as a Real Estate Investor, Rates are RISING!

Rates are heading up rapidly! Since 9/1/2021 when the best 30yr fully amortized loan interest rate was 3.625%, there has been a steady increase.  Within the past 7 days, the same institutional lender has increased its rates to 5.750%, the lowest possible rate available.  This is a 2.125% increase in approximately 6 months.  Interest rates will remain volatile during this period of inflation.  As the Fed works to rein in inflation by adjusting the rate upward, we will continue to see these increases.

What can be done to mitigate these increases?

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When your Loan Officer requests Documents please be expeditious in sending them.  We are seeing investors delay signatures, sending documents, and poor response times which have led to as much as a 1.00% to 1.25% increase in the interest rates.  Investors want to see the mailbox money flow in with a minimum of effort, that is understandable.  But when it comes time to purchase or refinance a property, please make sure that your entity documents are in order.  This means signatures are where they should be (the biggest issue we see today), That a clear chain of ownership of the entity is evident.  Lawyers like to hide the ownership trail to minimize exposure to risks.  Lending institutions want to know exactly who they are lending to, minimal smoke and mirrors make the organizations with the money happy.

Some lenders offer a rate buy-down.  The basic way this works is that by paying an increase in the origination points to the lender the interest rate can be lowered.  Generally, this is a ratio of points to interest buy-down.  An example could be:

The ratio is 0.333% per Point.  The maximum buydown is 2 points or 2 times the buy-down points offered.

Interest7.00%7.00%7.00%
Origination Pts0%1%2%
Buy Down0.000%0.333%0.667%
New Interest Rate7.000%6.667%6.334%

There are other lenders that offer a similar buy down at a rate of 0.5% maximum for an increase in the lender’s origination points of 1.5%.  This buy down can be bought in 0.125% increments if that works for your program.

BUT WAIT THERE IS MORE!

We do have better news if you are doing a BRR strategy and not just a regular refinance and are open to a 5 or 7 year ARM. Call us today to find out more about all our options.

If you need funding, apply now.   

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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.  

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http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

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ANNOUNCING: Bridge FICO Bands Lowered to 600+ Minimum Requirement

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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/

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

No-Handshake Survival

I have had to really watch myself with this social distancing thing.  I am a toucher. I lean into hugs, always shake hands, pat shoulders. I soak up touch. When I’m talking, I find myself creeping closer to the person I am talking to as if I can’t see them or hear them well enough at a distance. 

I am certain this economy will recover. People still need homes and loans, but we still may not be able to shake hands for a long time.

In some American states, selling real estate is still an essential occupation as is banking. When we are selling homes or signing loan papers, we are working with others in small groups, but we may be working with people from other states or countries and need to keep ourselves and our families safe during this Covid-19 pandemic.

FIRST & IN THE FUTURE

Use only appointment-only open house formats this way you know who is coming when and you are not surprised. But advertise this new situation on the door so people don’t come in unannounced. This will help you assure that only one group is walking through a house at a time.

Use social media to make virtual tours, even if people will want to see a property before they buy. They can spend more time exploring the house online and visit the website multiple times without having to worry about personal protection equipment.

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

YOUR DAILY PREP

Prepare business cards and signs to reflect appointment-only restriction.

Place a separate set of clothes and shoes for home just inside the door to your home or in your mudroom if you have one.

Remove your wedding ring.

Stop using a purse or briefcase and instead use a plastic or washable cloth bag for business cards, open- house guest books and pens.

Place a fresh set of business cards and other items in 6 or 7 bags and label them for each day. Take a fresh bag of supplies with you to an open house or to the office every day.

Equip yourself with gloves, face mask, face shield, and booties for your shoes (For open house).

AT THE OPEN HOUSE

Spend time cleaning doorknobs and surfaces before and after a showing, A glossy kitchen counter can be a magnet for a tactile person. They just have to run their hands over the surface. Windowsills might also need some disinfectant. If your store is out of prepared disinfectant use original unflavored Listerine in a spray bottle.

Wash your hands before and after a showing.

Invite your potential buyer to wash their hands before and after touring the house. And, provide a hand sanitizer.

Remind everyone to be aware of where they set down their mobile phone so they don’t set it down on counters or in the bathroom or on other shared surfaces.

Stay alert to what is touched during a showing so you can be sure to clean these surfaces with extra attention after the showing.

You can wear gloves but know how to take them off and dispose of them correctly without contaminating your hands and everything around you when you take them off. Peel them off before you touch your car, turn them inside out and place them in a plastic bag and tie it shut. Put the plastic bag in the trunk of your car for later disposal if there is no trashcan nearby.

Keep your distance from each other. This is the best way to prevent the spread of a respiratory disease.

Wearing a mask will protect you and your client. While wearing a mask, smile more, wink and speak so you are sure to acknowledge people even if you keep your distance and do not touch.

coronavirus covid-2019 girl in mask – stop pandemic

COMING HOME

Hang up the bag of supplies you return with near the door, spray it with disinfectant and Let the bags hang unused for a week to 9 days so the virus will have time to die out before you use the bag again.

Strip out of your outside or work clothes and shoes near the doorway or in the mudroom.

Wash your hands.

If you are wearing gloves, dispose of them before touching your clean clothes. If you want to reuse them, place them in a plastic bag so you can disinfect them later.

Dress in your indoor clothes.

With gloves on, bag us your work clothes and wash them immediately.

Let jackets and hard items rest for a week or 9 days at room temperature before using them again to give the virus time to die out.


An open house is not as dangerous as a concert or a basketball game. Usually there are 3 people involved and they are usually adults.  Perhaps sometimes parents bring their children, but that is something that can be avoided right now.

Unlike a family, the 3 people involved in the showing usually do not know each other intimately.  The buyer does not know where the realtor had been recently and neither know where the homeowner has been recently if they are still living in the home being shown. Precautions need to be taken so you don’t catch the coronavirus or bring it home to your family.

I hope that I can be of help to you this month. I can be reached at

Patrick@REICapital.cash

512-213-2271

Austin, Texas