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.
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:
Is there room for an office in the house?
Does the house have a good-sized yard?
Is there a pool in the backyard?
Is there a deck or porch that offers a sheltered option to living indoors?
Is the neighborhood safe to walk around in at night?
Is there a neighborhood association and is it restrictive?
Did local authorities try to restrict people’s use of their yard during the pandemic?
Consider taxes. People are richer in states where taxes are lower.
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.
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)
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)
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)
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.
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)
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.
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.
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.
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.
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.
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%.
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.
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.
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.
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
Although many states are exempting building, utility, road, and bridge construction from “stay-at-home” work shutdowns carried out to prevent the spread of the coronavirus, some states are calling for a cessation of all residential construction because it is not defined as “life sustaining” work or “construction of essential infrastructure.” If you read the recent Dallas County Shelter in Place order, you will see that Dallas County has not shut down residential construction. However, some states and counties across the country have. A fix-n-flipper needs to pay attention to the exemptions and inclusions in the work-stoppages orders that are being issued by state or county governments because it may affect your schedule and costs in ways you cannot predict.
Dallas county residents are being ordered to stay in their homes except for crucial work and errands, beginning 11:59P.M. Monday. All businesses that aren’t deemed essential also must stop operating.
Dallas Morning News, Updated 3/22/2020
Your construction loan has or will have terms and limits, usually 24 months for a fix-n-flip loan that will pay 100% of your estimated rehab costs. In an epidemic, you may find that you cannot finish construction in 24 months or within the costs you estimated months ago. If you are faced with a situation like the coronavirus pandemic, something you could neither foresee or prevent, you need to review your contracts for “Force Majeure” and price escalation clauses to understand who bears the risk in the case of work stoppages or rising material costs and shortages that are due to situations that cannot be predicted or avoided.
Be proactive. Start working this out with the organization or lender that lent you the money. Be sure to understand that if the project needs to be stopped and the contract rewritten who calls the stoppage and who and how everyone involved must be informed.
Delays often ripple through a project and can cause you to miss the deadline for your loan to be paid back, increasing your interest and penalties. Perhaps you can’t get a plumbing fixture delivered or a critical subcontractor is quarantined, and the next trades scheduled to work cannot proceed. Jump in and be aggressive about finding local alternative materials and even workers.
Louisiana becomes the ninth state to announce a statewide shelter-in-place order since California did so on Thursday night. Residents in Connecticut, Illinois, New Jersey, New York, Ohio, Oregon and Pennsylvania have begun or are about to begin staying at home for at least two weeks.
The Advocate, March 22, 2020
Below is a list of ways the coronavirus pandemic might affect your fix-n-flip project:
Sick workers who must quarantine for 14 days
Exposed workers who must quarantine for 14 days
Workers required to take off work to care for children when schools close
You have to take off work to care for your children when schools close
Subcontractors or specialty contractors who do not show up
Government permitting offices shutdown
Material shortages caused by epidemic in China or elsewhere
Shipping delays due to port-of-entry quarantines
Construction work stoppages in your area ordered by government to slow the spread of disease.
Material shortages cause prices to rise
Shipping costs rise owing to transportation shutdowns
If you are in the process of negotiating your loan and calculating your expenses, you need to be very careful in estimating your materials. Right now, in the middle of this epidemic, it is for me, or might be for you, impossible to tell how long impacts to business will last. Review your contracts to include appropriate “Force Majeure” and price acceleration provision clauses in your contracts. Look for local alternative suppliers.
A blanket loan is a loan or mortgage used to fund the purchase of 2 or more pieces of real estate (Wikipedia, Investopedia). The real estate is held as collateral for the mortgage, but the individual pieces of property may be sold without retiring the entire mortgage. Builders and developers, investors in multiple apartment communities, or investors in more than on single family rental property use blanket loans to buy a large tract of land to subdivide or multiple properties to manage as a business. The rental investor may sell one property without redoing the mortgage on the other properties. The developer can create many individual parcels to be sold one at a time without securing a new mortgage each time the sale of a parcel is made.
The blanket loan has a release clause that allows the owner to sell a portion of the secured property and make a corresponding payment on the loan. The outstanding balance on the loan is adjusted accordingly without being completely redone or retired. Most single-house traditional mortgages contain a “due-on-sale clause,” which means the entire outstanding debt is due when the securing property is sold. If this is the type of mortgage a developer or an investor with multiple rental properties has, then each time they sell a property they have to redo all the paperwork to remake the mortgage.
The financial benefits for an investor include
Only have to pay the fees and costs of one loan rather than applying for and closing multiple mortgages.
Negotiated terms, such as the monthly payment may be better under the blanket mortgage, freeing up capital for further investment.
Acquiring more than one house to fix-n-flip under one loan when several come on the market at the same time would allow a flipper to take advantage of the opportunity to buy multiple properties all at once (saving time and fees) while still being able to sell them one at a time after they are refurbished.
The danger to the owner is that if he or she defaults on the mortgage, the lender may seek control of all the properties secured by the loan.
Earlier this year, the National Association of Home Builders (NAHB) surveyed nearly 4,000 home buyers, those who have either recently purchased a home or plan to purchase a home within the next 3 years. Realtor.com also reviewed home transactions between January 2018 and September 2018 and compared them to the 2017 home sales to come up with some statistics about who will drive home sales in 2019.
These statistics become meaningful when you apply them to
your own real estate investment plan as much as possible. As you approach your
real estate fix-n-flip project, it is important to apply the money in your
budget toward the areas that will give you the most buyer draw for the dollar. This
is not easy, and the target is constantly moving as new products come onto the
market, new buyer demographics emerge, incomes fluctuate, and young buyers learn
from their parents, study what their parents have done and listen to what they
would have done differently.
Millennial Generation Buyers
When you first start looking for the right property to remodel, you may want to consider looking in areas where the largest group of people are looking. The realtor.com survey of emerging home buyers in 2019 points out that affordable homes, jobs, and the availability of entry level homes are “magnets for young buyer.” A large segment of the millennial generation will be turning 30 years old in 2020, so they are starting families, and, as rents rise, moving out of apartments and buying houses. According to the NAHB survey, 64% of buyers preferred to buy a home in the suburbs. 24% of buyers were looking for a house in a rural area. 11% of buyers were looking for a house in or near the center of a city.
Storage and Energy Efficiency
The information in the NAHB buyer survey gives you some general guidelines on what home buyers are looking for in their homes. After location, buyers prefer
energy saving appliances
energy saving insulation
energy saving windows
A few rising trends were noted in the NAHB buyer survey that may pique your interest and inspire some research, including: houses are getting smaller, engineered quartz countertops, vinyl and resilient flooring, wireless controls, open interior and exterior spaces in kitchens, and higher-end fixtures in bathrooms, such as wall-mounted sinks, faucets, and toilets, are becoming more popular.
REI Capital Resources built its reputation on finding private funding for investors for quick turn purchases and difficult situations. This is still true today.
Give me a call or send an e-mail and share with me your plans and needs, and I’ll see what lending solution I can generate for you.
512-213-2271 Patrick@REICapital.cash Info@REICapital.cash Menti
Getting a property financed can be an overwhelming process. Sometimes borrowers don’t recognize the bumps in the road that will derail their project plans and loan schedule. Here is a list to help you see and remember the small, but important, details involved in getting a loan. These are the most common time sucking land mines that drag the loan process out (or even cause disqualification) along with tips to avoid them.
Scheduling & Anticipating the Appraisal
Loans officially start when they are put into processing, which does not happen until appraisal reports are turned in or the application fee is paid. A loan will be delayed if there is an issue getting the appraisal. Sometimes a borrower will schedule an appraisal when the property is not available or repairs/rehab are incomplete. For example, someone may live in or on the property and will not allow the appraiser access to the property. The loan will be delayed if this happens. If the appraiser arrives and finds the home in the midst of rehab, the loan will also be delayed.
Another bump in the road related to the appraisal occurs when the value of the property is based on too little research. This usually leads to an inflated initial value. If the appraisal comes in lower than what the borrower expected, this will delay the loan process and can even halt it altogether.
Key: Be ready, careful, and deliberate about scheduling the appraisal. Coordinate with the current occupants and your contractor.
Key: Be really accurate from the start about the value of the property.
Procrastination, my favorite strategy, does not help when it comes to loan documentation; like taxes and even more than hearing protection, documentation is required. It is a terrible idea to wait to start gathering the documents necessary to move the loan process along until the appraisal comes in. Start by making a list of the documents you need as soon as you come up with your project and begin immediately, while the idea is hot, to gather them and check them off your list. Your goal is to have them ready as soon as your loan goes into processing.
Key: Gather the necessary documents when your idea is hot.
Hazard: Wrong Policy Type or Amount
You might not think of hazard insurance in connection with your loan but obtaining hazard insurance is a very important component to securing a loan. Carefully study the types of coverage available and don’t just buy a policy to say you have it. Buy hazard insurance that covers 100% of the replacement cost of the property and calculate the premium carefully. Often the wrong type or amount of coverage is purchased, which will not only slow the loan down but can also potentially change your loan parameters (up to and including disqualification).
Key: Know your numbers. Buy hazard insurance that covers 100% of the replacement cost of your property
Liens, judgments, delinquent taxes, and mortgage releases are all common things that show up on a title. These things take time to clean up and drag the loan process out. Be sure to check your title for these attachments before you start your loan. If you have any clouds on the title, you’ll want to clean them up asap to keep your loan on schedule.
Key: Start early, Clean up the title ASAP.
Patience may be a virtue, but it is one that is often tested when you are eager to close a loan and get on with your project. To save your dream and your nerves, follow these tips: coordinate the appraisal, be accurate on the value, gather the necessary documents, buy the right insurance, and clean up that title.
I would be pleased to give you a hand, and I have funds available for lending.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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