June 2022 – State of the Commercial Lender Market

Where We Are and Where Are We Going!

Welcome to our re-cap of our presentation and learn our insights about borrowing money, what you need to know as a private lender, or things to be aware of before borrowing from a commercial lender in 2022.

We need to have an understanding of both the prime and treasury historic rates to gain a perspective for 2022.

When looking at the past 22 years, we are actually not at the highest interest rate. Treasury rates are used to indicate various aspects of our economy.  Over the past 22 years the 10yr and 20yr Treasury Bond rates have fluctuated with small gains or reductions over short periods of time.  The last time the Treasury rates increased anywhere near as much as they have in the past few months was between mid-2011 to early 2013.  Today’s increase is similar but has been brought on by the Federal Reserve Bank reigning the economy in, attempting to keep inflation in check.

Low Unemployment has complicated this movement by the Fed.  Unemployment and high inflation were last in the early 50’s almost 70 years ago.  The concern is while the job market is extremely tight that higher wages will be a result of this tightened market thereby fueling inflation at the consumer level even more.  Remember, the Fed is trying to tighten the money supply by raising interest rates.  By doing so, historically, the economy shrinks and unemployment rises.

Former U.S. Treasury Secretary Lawrence Summers has noted that every time inflation has exceeded 4% while unemployment was below 5% over the past 75 years—which has happened in 70 months—the U.S. has fallen into a recession within two years.

The most recent of these events is from May to June of 2006, which was followed by the financial crisis starting in December of 2007.

Fed Chair Jerome Powell said in an interview with Marketplace that he couldn’t promise a so-called soft landing for the economy where inflation gets back to the 2% range and the labor market remains strong. “It’s quite challenging to accomplish that right now,” he said. (source, Barron’s, 5/25/2022)

Bond Yield Curves – Direction of Economy can be forecast through the observation of the US Treasury Yield Curves.  In this graph, the curves from the bottom, represent the yield curves by the months for 2022.  The economy has gone from being reasonably robust for the first quarter of the year to pointing toward a future recession.  The indicator of the recession is how the curve flattens in April (Gold line) to this past Friday (dark blue line).  Economists state that when the yield of the shorter term instruments, in this case the 2-year rate, is nearing the same rate as the 10yr rate, then the economy is headed towards a recession.

Sample Institutional Lender Rates – This is one of many lenders working in the 30yr Fixed Mortgage market.  They are somewhat tied to the 10yr Treasury Bill.  As can be seen the long term rates are rising much as the consumer mortgage rates are.  What is of interest is how they perceived and mitigated their risk in this market over the past 2 years.

During the pandemic the average spread between the 10yr Bill and their mortgage was hovering around 2.9%.

As the effects of the pandemic were dropping, along with all of the government rent and mortgage freeze programs, they lowered their spread to approximately 1.9%, a full 100 basis points from the 2020 spread.

As inflation worries started showing up in their data analysis in early 2022 risk abatement was once again put in place with a hefty increase of 140 basis points to the current 3.4% spread, we see today.

In the Multifamily lending space, we are seeing an increase in the spread between the T-Bill rate and the final interest rate to the borrower.  The delta between the 5yr spread and the 10yr spread has remained pretty much the same throughout the year.  What has happened to mitigate the risk involved is the actual spread for each of these loans between the T-Bill and final rate has increased by 15+/- basis points.  This increase along with the increase in the T-Bill rates has pushed the final interest rates for a 10yr Tier 2 loan to about 5.68%.

The Secured Overnight Financing RATE, SOFR, has held steady at 0.05% up till March 16 of this year.  This coincides with the first FED rate increase.  The SOFR is an index of what banks charge during the overnight transfer of money among various institutions.  It has increase 6,800% over a year ago.

Some lenders have switched their use from the LIBOR rate to the SOFR rate.  The spreads used are similar to either index but as with any loan the spread is what makes or breaks the deal.  One lender that was interviewed has stated their bridge loan products have a spread between 350 to 450 basis points.  At the high end for this lender their bridge products now range between 4.20% to 5.20% based on the SOFR of June 15, 2022.  These are for loans originating at the level of $15M and above.

Commercial lenders are pushing the limits of controlling their risk thru a number of methods.

            Qualifying FICO Scores have increased from an average of 640 to 660.  In order to obtain the best rates the FICO scores have increased from 740 to 780.

            Lenders are discounting professional appraisals.  Most recently I have experienced from 2 different lenders discounts of 20%-25% of the appraiser opinion of value.  Requesting data to support their claims apparently is futile.

            If the project has a Value Add component upwards of $100,000 or more then the borrower should be prepared to either prepare and or have a Feasibility Study performed by a third party construction management organization in order to satisfy the lender’s risk concerns.

            Guarantors – This has had minor changes but the members of an entity that have a 20% or greater ownership share should be ready to have their finances reviewed, even if they are on the sidelines with the strongest person as the guarantor.

            Tax Returns for the guarantor(s).  Depending on the structure of the ownership, other members/owners may need to share their tax returns as well.

Property requirements are tightening to some degree.  Regardless of the type of loan, Purchase or Refinance, the following items should always be made available to the lender:

  • P&L Statement from Previous Owner (if a purchase)
    • Balance Sheet from Previous Owner (if a purchase)
    • Rent Roll showing rents for the past 12 months
    • Lease Agreement(s)
    • Business Tax Returns
    • Environmental Report may be Required More Often than Not
    • Property Tax Statements
    • Insurance Coverage
    • Exit Strategy Statement
  • Based on the Yield Curves we have a reasonably good probability of a recession in the next 12-24 months.
  • This conclusion is bolstered by the combination of inflation being higher than un-employment.  Historically, when these two indicators are inverted there has been a recession with in 2years.
  • The question is:  How long will a recession last.  A recent Reuters article quotes James Gorman, CEO of Morgan Stanley, stating, “There is a 50% chance the U.S. economy will enter a recession though any downturn is unlikely to be severe.”
  • During these tough financial times and in to the foreseeable future, putting together and pushing a commercial loan thru to close will involve having lower LTV to meet the requirements of the DSCR for any given loan.  As the interest rates increase the only factor that can be adjusted to meet the DSCR requirements will be an increase in the borrower’s equity position, hence lower LTV.
  • Putting together and pushing a commercial loan thru to close will take more time, effort, documentation and patience.

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

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

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/

Funding the Gap

There are several reasons why a fix-n-flip investor might want to secure a fast loan to cover a gap. A gap loan, as the name implies, is a loan that bridges a span of time. It helps you gain control of a property quickly even if you are still scrambling to get all your paperwork done for a full rehabilitation loan.

A Buyer in a Hurry
At some time or other, you might face a seller in a hurry. One situation that puts a seller in a hurry is foreclosure. Many property owners in this situation are in denial so they wait until the last week or so, or even days, before the foreclosure sale to act on saving their credit. To save their credit, they must pay the bank all they owe on the mortgage right now. The house might actually be worth much more than what they owe if they have been paying on the loan a long time or put a large payment down on it. But, a foreclosure on their record will ruin their credit. So, for them, it is better to sell at a discount and survive to buy another house another day.

In this scenario, an owner in foreclosure has agreed to sell the property to you at a steep discount, but they need to close the deal quickly. You, the investor, want to buy this property and you make an offer. However, the competition is extremely stiff, and another investor is sitting in the wings waiting to obtain the property. Your offer locks up control of the property temporarily. You need to move quickly to secure a loan. Normally the loan process takes a minimum of 7 working days and typically takes 10-15 working days.

A Nonrefundable Deposit

Another reason you might need funding in a hurry is that you have stumbled upon a wholesale purchase with a tight deadline to close, perhaps 2 to 5 days. The property is ideal for your purposes and you want to make an offer. However, if you don’t get the deal closed by the deadline, you will lose the nonrefundable deposit you are required to put down and control of the property you are seeking.

mind_the_gap

Getting Control of the Property

Here is where obtaining a gap loan is useful. A gap loan allows you to purchase the property as is while you are in the process of obtaining a rehab loan. The gap loan can be secured in 2 to 3 days typically. Your strategy is to obtain control of the property through this gap loan, begin paperwork to refinance the loan immediately and eventually complete the rehab and offer the property for sale.

REI Capital Resources has funds available for fix-n-flip loans with terms up to 6 to 9 months with a minimum of 3 months.

Fix-n-Flip Option 2

E-mail or call for more information on minimum and maximum loan amounts, interest rates, terms, and fees for specific project. I can help you with first liens only and these loans are limited to the Austin, DFW, Houston, and San Antonio Metro areas.

Pat St.Cin

Patrick@reicapital.cash

512-213-2271

Austin, Texas

reposted

In-a-Hurry Loan to Cover the Gap

There are several reasons why a fix-n-flip investor might want to secure a fast loan to cover a gap. A gap loan, as the name implies, is a loan that bridges a span of time. It helps you gain control of a property quickly even if you are still scrambling to get all your paperwork done for a full rehabilitation loan.

A Buyer in a Hurry
At some time or other, you might face a seller in a hurry. One situation that puts a seller in a hurry is foreclosure. Many property owners in this situation are in denial so they wait until the last week or so, or even days, before the foreclosure sale to act on saving their credit. To save their credit, they must pay the bank all they owe on the mortgage right now. The house might actually be worth much more than what they owe if they have been paying on the loan a long time or put a large payment down on it. But, a foreclosure on their record will ruin their credit. So, for them, it is better to sell at a discount and survive to buy another house another day.

In this scenario, an owner in foreclosure has agreed to sell the property to you at a steep discount, but they need to close the deal quickly. You, the investor, want to buy this property and you make an offer. However, the competition is extremely stiff, and another investor is sitting in the wings waiting to obtain the property. Your offer locks up control of the property temporarily. You need to move quickly to secure a loan. Normally the loan process takes a minimum of 7 working days and typically takes 10-15 working days.

A Nonrefundable Deposit

Another reason you might need funding in a hurry is that you have stumbled upon a wholesale purchase with a tight deadline to close, perhaps 2 to 5 days. The property is ideal for your purposes and you want to make an offer. However, if you don’t get the deal closed by the deadline, you will lose the nonrefundable deposit you are required to put down and control of the property you are seeking.

 

mind_the_gap

Getting Control of the Property

Here is where obtaining a gap loan is useful. A gap loan allows you to purchase the property as is while you are in the process of obtaining a rehab loan. The gap loan can be secured in 2 to 3 days typically. Your strategy is to obtain control of the property through this gap loan, begin paperwork to refinance the loan immediately and eventually complete the rehab and offer the property for sale.

REI Capital Resources has funds available for fix-n-flip loans with terms up to 6 to 9 months with a minimum of 3 months.

Fix-n-Flip Option 2

E-mail or call for more information on minimum and maximum loan amounts, interest rates, terms, and fees for specific project. I can help you with first liens only and these loans are limited to the Austin, DFW, Houston, and San Antonio Metro areas.

Pat St.Cin

Patrick@reicapital.cash

512-213-2271

Austin, Texas

In-a-Hurry Loan to Cover the Gap

There are several reasons why a fix-n-flip investor might want to secure a fast loan to cover a gap. A gap loan, as the name implies, is a loan that bridges a span of time. It helps you gain control of a property quickly even if you are still scrambling to get all your paperwork done for a full rehabilitation loan.

A Buyer in a Hurry
At some time or other, you might face a seller in a hurry. One situation that puts a seller in a hurry is foreclosure. Many property owners in this situation are in denial so they wait until the last week or so, or even days, before the foreclosure sale to act on saving their credit. To save their credit, they must pay the bank all they owe on the mortgage right now. The house might actually be worth much more than what they owe if they have been paying on the loan a long time or put a large payment down on it. But, a foreclosure on their record will ruin their credit. So, for them, it is better to sell at a discount and survive to buy another house another day.

In this scenario, an owner in foreclosure has agreed to sell the property to you at a steep discount, but they need to close the deal quickly. You, the investor, want to buy this property and you make an offer. However, the competition is extremely stiff, and another investor is sitting in the wings waiting to obtain the property. Your offer locks up control of the property temporarily. You need to move quickly to secure a loan. Normally the loan process takes a minimum of 7 working days and typically takes 10-15 working days.

A Nonrefundable Deposit

Another reason you might need funding in a hurry is that you have stumbled upon a wholesale purchase with a tight deadline to close, perhaps 2 to 5 days. The property is ideal for your purposes and you want to make an offer. However, if you don’t get the deal closed by the deadline, you will lose the nonrefundable deposit you are required to put down and control of the property you are seeking.

 

mind_the_gap

Getting Control of the Property

Here is where obtaining a gap loan is useful. A gap loan allows you to purchase the property as is while you are in the process of obtaining a rehab loan. The gap loan can be secured in 2 to 3 days typically. Your strategy is to obtain control of the property through this gap loan, begin paperwork to refinance the loan immediately and eventually complete the rehab and offer the property for sale.

REI Capital Resources has funds available for fix-n-flip loans with terms up to 6 to 9 months with a minimum of 3 months.

Fix-n-Flip Option 2

E-mail or call for more information on minimum and maximum loan amounts, interest rates, terms, and fees for specific project. I can help you with first liens only and these loans are limited to the Austin, DFW, Houston, and San Antonio Metro areas.

Pat St.Cin

Patrick@reicapital.cash

512-213-2271

Austin, Texas

What is $358.00?

Answer: Price per square foot for a luxury home in TX.

It is true that you can put a price tag on anything, well maybe not everything, but you certainly can put one on a luxury home. According to the 2018 Texas Luxury Home Sales Report by the Texas Association of Realtors (TAR), the median price for a Texas luxury home  remains unchanged at $1.35 million.

Houses priced over $1 million dollars are considered “luxury” and 5,123 of them sold across the state of Texas from October 2017 to November 2018, up 11.5% from the previous year. The average price per square foot for a luxury home was $358.00. This is up 2.5% from the first ten months of 2017. A median house in Texas carried an average price tag of $128.00 per square foot.

From January to October 2018 the average time a luxury home spent on the market in Texas was 94 days, a decrease of four days from the same timeframe in 2017. It makes sense that the bigger price would lead to a longer time on the market because there are few buyers who can afford the higher price and it takes longer to get a big loan.

For comparison, here are some statistics courtesy of Realtor.com.

Austin-Round Rock, TX, Median Price $350,000. Days on the Market, 65.

Dallas-Fort Worth – Arlignton, TX Median price $335,000. Days on the Market, 58

Houston-The Woodlands-Sugar Land, TZ – Median Price $350,000. Days on the Market, 65.

Killeen-Temple, TX, Median Price $200,000. Days on the Market, 68

San Antonio-New Braunfels, TX – Median Price $285,000. Days on the Market, 66.

For more on luxury houses, read “Livin’ Large: Texas’ Robust Luxury Home Market,” a Tierra Grande article by Real Estate Center Senior Data Analyst Joshua Roberson. https://www.recenter.tamu.edu/news/newstalk-texas/?Item=21652.Read more at Texas Association of REALTORS

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

pexels-photo-316080.jpeg

Photo by Pixabay on Pexels.com

 

Museums and Investment

The Guggenheim Effect

When you are buying a house to fix up or lending money for that fix-n-flip project you hope to profit from, the value the property has now and will have after the renovation is complete is what you are focusing on. You will be thinking about neighborhood and what makes a neighborhood a good place to live. These days, according to Alina Dizik of the WSJ, you should look around for a nearby museum.

Museums are revitalizing neighborhoods all over the world. The neighborhood revitalizing phenomenon of a museum is called the Guggenheim Effect. According to the Economist and the WSJ the Guggenheim Effect is the phenomenal revitalization of an industrial town that was dying, Bilbao in Spain in this instance, into a “sleek tourist destination” by the construction of a museum (Economist).

Walkability, and Safety, Interesting Things to Do

According to research done by Stephen Sheppard, an economics professor at Williams College in Massachusetts, “property values of homes near museums rise between 20% and 50% over the course of five years (WSJ ). ” Homebuyers, according to Dizik, are drawn to a museum building’s bold architecture, its rotating exhibits, “its guest lectures, and attractive indoor and outdoor common areas.” Some are looking for safety and amenities in one place. Entertainment and restaurants that you can walk to are also big draws.

There are museum districts in several towns in Texas. Look around your town and see if a museum is raising property values near you. This may be where you want to invest next.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

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Mercedes-Benz Museum in Stuttgart, Germany, during blue hour.  Julian Herzog [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY 4.0

Austin Museums

In Austin, the museum district is more of a museum partnership and there are many museums in the downtown. There is a plan here to connect the walking and biking trails into a big loop of urban trails that will extend 30 miles, traversing the city from Lady Bird lake to Walnut Creek Metropolitan Park, creating a safe walkable and bikeable commute route through downtown. So living near or on that route may be attractive. http://www.austinmuseums.org/

Mexic Arte Museum, 419 Congress Ave

The Blanton Museum of Art, University of Texas Campus

The Harry Ransom Center, 300 W. 21st street, University of Texas Campus

Mondo Gallery, 4115 Guadalupe St

Bob Bullock Texas State History Museum

Yard Dog Art Gallery, 1510 S. Congress Ave.

Arthouse at the Jones Center, 700 Congress Ave.

Houston Museums

There is one in Houston and it boasts 4 walkable zones, 19 museums, and over 2,300 residents according to http://houmuse.org/. Homes in the museum district sell faster than average compared to other neighborhoods in Houston. Realtor.com The neighborhoods and surrounding area are a mix of historic homes with character and charm, to modern townhomes, and high rises.

Museum of Fine Arts Houston Expansion

Moody Center for the Arts at Rice University

The Houston Center for Contemporary Craft

Czech Center Museum

Buffalo Soldiers National Museum

Lawndale Arts Center

Houston Museum of African American Culture

Children’s Museum of Houston

Houston Museum of Natural Science

Dallas Museums

In Dallas, the museum district is the Arts District downtown. It is a cultural hub of music, art, and theatre. The Dallas Arts District is bordered by St. Paul Street and Ross Avenue as well as major throughways Woodall Rodgers Freeway and Central Expressway. http://www.dallasartsdistrict.org/

Dallas Museum of Art

Modern Art Museum of Fort Worth

Nasher Sculpture Center,

Perot Museum of Nature and Science

Kimbrel Art Museum

Dallas Contemporary

Meadows Museum

San Antonio Museums

In San Antonio, a river walk extension completed in 2009 is called the Museum Reach. It extends past the zoo, the Japanese Tea Gardens, Brackenridge Park, the Pearl District, and three of San Antonio’s museums, all listed below. https://www.thesanantonioriverwalk.com/explore/museum-reach

The Do Seum, San Antonio’s Museum for Kids, 2800 Broadway

The Witte Museum, 3801 Broadway

San Antonio Museum of Art, 200 West Jones Avenue

 

What do all these neighborhoods have in common, interesting things to do, walkability, and safety.

References

Dizik, Alina, To Discover an up-and-Coming Neighborhood, Look for a Museum, The Wall Street Journal, November 25, 2018

The Economist, The Guggenheim Effect, Can other cities imitate Bilbao’s cultural-tourism success? August 18, 2018