There is one overwhelming truth about real estate. No matter how many times you hear the ‘no money down, no credit needed’ mantra, it takes money and credit to make it big in real estate. For those investors that have a buy and hold strategy and/or a lease purchase strategy, now is the time to make a move. If you look around you will find that those investors that make the most money and eventually become wealthy are those that buy and control real estate. Look at many of the teachers and gurus of our day and you will see that the truth of their success and wealth belie the facts they tout in their seminars, books, CDs and DVDs. They made their money and are currently wealthy because they bought and or currently buy and control real estate.
In the heady, fast paced market of the recent past where Hard Money and Private Money lenders handed out loans like candy and conventional lenders would provide 100% purchase financing to any human being that could fog a mirror, being a buy and hold specialist was a risky game. No one was renting because everybody could buy. Rents were declining and making a positive cash flow on property was a zero sum game. However the past 90 days have changed the game! It’s a buyer’s market now. The average home sits on the market for 120 days or more, and the glut of foreclosures on the market are dragging home prices down. Add to these facts the glaring reality that almost 50% of people that qualified for a home 90 days ago don’t qualify today and you’ll see that being a quick-turn specialist with an all flip strategy is a dangerous business model.
Hard Money lenders have taken huge losses and are holding large portfolios of homes with rehab projects that are half finished. Non-performing loan portfolios are causing conventional lenders to close their doors daily and large national companies are going bankrupt. The 100% loans of the past have virtually disappeared. There is a true Credit Crunch! And it is here right now!
So how does an investor stay ahead of the curve? You must know the rules and you must be informed about what is going on in the market. Rule one is to know your credit rating and credit worthiness. It is not enough any more to just have a good score, you must have decent scores and a little jingle in your pocket. Cash is king, whether that’s money in savings or your willingness to leave equity in the property. In today’s lending environment, whether the lender is a traditional lender or an alternative money supplier, they want to know that you have the ability to repay the loan or that they have equity in the property if you decide to bail out. Rule two is simple. You must be willing to buy and control property for the long-term. Lenders of all types want to know that you aren’t a quick-turn artist looking for the fast buck. You must be willing to show that you understand that real wealth in real estate is generated over the time and that you have a plan to create a more traditional business. Rule three; show the lender that you have multiple strategies and that all will be successful.
Hard money lenders want to know that you have qualified for conventional financing first so that they can be taken out when the rehab is complete. Furthermore, the conventional lender wants to know that you will own the property for at least a year before you liquidate it. Lease purchase strategies are the best for this market. With a combination of financing from Non-Traditional and Traditional lenders investors can receive some money now from a cash-out finance and some money later from the tenant buyer when they purchase the home. Real cash-flow can be created if investors are willing to hold and control real estate and eschew the quick-turn philosophy. Call and speak with competent professionals and use lenders that have coordinated relationships. You want your conventional lender and your private lenders to work together and have a solid business relationship, communication is the key. Staying ahead of the lending curve in this era of the Credit Crunch is not difficult. It just takes the correct strategy and the right professionals on your team.
In the heady, fast paced market of the recent past where Hard Money and Private Money lenders handed out loans like candy and conventional lenders would provide 100% purchase financing to any human being that could fog a mirror, being a buy and hold specialist was a risky game. No one was renting because everybody could buy. Rents were declining and making a positive cash flow on property was a zero sum game. However the past 90 days have changed the game! It’s a buyer’s market now. The average home sits on the market for 120 days or more, and the glut of foreclosures on the market are dragging home prices down. Add to these facts the glaring reality that almost 50% of people that qualified for a home 90 days ago don’t qualify today and you’ll see that being a quick-turn specialist with an all flip strategy is a dangerous business model.
Hard Money lenders have taken huge losses and are holding large portfolios of homes with rehab projects that are half finished. Non-performing loan portfolios are causing conventional lenders to close their doors daily and large national companies are going bankrupt. The 100% loans of the past have virtually disappeared. There is a true Credit Crunch! And it is here right now!
So how does an investor stay ahead of the curve? You must know the rules and you must be informed about what is going on in the market. Rule one is to know your credit rating and credit worthiness. It is not enough any more to just have a good score, you must have decent scores and a little jingle in your pocket. Cash is king, whether that’s money in savings or your willingness to leave equity in the property. In today’s lending environment, whether the lender is a traditional lender or an alternative money supplier, they want to know that you have the ability to repay the loan or that they have equity in the property if you decide to bail out. Rule two is simple. You must be willing to buy and control property for the long-term. Lenders of all types want to know that you aren’t a quick-turn artist looking for the fast buck. You must be willing to show that you understand that real wealth in real estate is generated over the time and that you have a plan to create a more traditional business. Rule three; show the lender that you have multiple strategies and that all will be successful.
Hard money lenders want to know that you have qualified for conventional financing first so that they can be taken out when the rehab is complete. Furthermore, the conventional lender wants to know that you will own the property for at least a year before you liquidate it. Lease purchase strategies are the best for this market. With a combination of financing from Non-Traditional and Traditional lenders investors can receive some money now from a cash-out finance and some money later from the tenant buyer when they purchase the home. Real cash-flow can be created if investors are willing to hold and control real estate and eschew the quick-turn philosophy. Call and speak with competent professionals and use lenders that have coordinated relationships. You want your conventional lender and your private lenders to work together and have a solid business relationship, communication is the key. Staying ahead of the lending curve in this era of the Credit Crunch is not difficult. It just takes the correct strategy and the right professionals on your team.
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