Private Lenders Help Investors Acquire Property
Author: Real Estate Information // Category: Mortgage InformationAs real estate markets begin to settle, investors are doing more deals which involve REO, bank owned property, and government agency owned property. The inventory of property held by banks is still increasing and investors are doing most of the business business concern deals. Real estate investor deals for these REO properties are mainly funded by private hard money lenders who offer a short term funding alternative, enabling the investor to buy property. Investors are using a variety of exit strategies but the most common involves buying property and selling to a homebuyer at a profit within a short term. Generally the property is placed on the market using the multiple listing assistance and then resold to a homebuyer at a retail terms passably to a lesser extent than the market value of the property property. Home prices have continued to be depressed.
In as much as, property inventories have continued to rise, creating a buyer’s market situation. However, this has been impacted by the fact that banks holding properties at the current time do not account for shadow inventory of homes that are currently behind on mortgage payments or in the process of being foreclosed by the banks or government agencies that originally provided the mortgage financing for these homes .
Once investor purchases are added to the mix the and REO inventories by using rehab hard money to repair the REO properties and prepare them for market, the banks inventory would be substantially greater than it is. The increasing number of deals being facilitated by private lenders has enabled banks to cut losses and get out of the business of maintaining properties and the expenses associated with. In the future, it is anticipated that more investor money will enter the market as market conditions dictate that many local real state markets have stabilized and are ready to begin recover. Many markets have already begun to experience price increases on a calendar month to month basis, albeit not as substantial as in prior years, and a good signal impacting both homeowners and residential property investors.
Conventional banks and mortgage companies have been very passive in developing any lending programs that work for the investors to acquire non-owner occupied property. At one time these conventional lenders would enable investors to purchase as many as 10 or even 15 properties . Now it is difficult for an investor to acquire even 1 or 2 properties using conventional lending sources. Because of that the investor has chosen to utilize private hard money, instead
Private lenders have filled the void by developing aggressive loan programs to enable not only purchase, rehab, but also in some cases loans that extend for up to 4 years enabling an investor to buy a property and use it as a rental property while the property appreciates in value and can be resold for a profit. These types of deals enable the investor to have more flexibility and a better profit margin.
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