U.S. property markets are rebounding strongly in 2014 and are expected to continue to do so for the foreseeable future. However, access to credit and liquidity have remained the main if only hurdle to higher transaction volumes for investors wholesaling properties, more real estate sales and faster appreciation and home equity growth.
During the downturn this impacted both sides for wholesalers making it tough for them to take full advantage of as many opportunities as they would like, as well as preventing millions of would be buyers from buying homes or buying more homes. Thanks to some innovative new loan programs this seems to be changing fast.
On the acquisition end conditions have become far easier for wholesalers. There are still plenty of opportunities for doing no money down transactions when buying or flipping distressed properties. However, hungry investors that want to do more can benefit from being able to leverage and wield more liquidity. On this end investors now have an array of options including private lenders, hard money lenders, transactional funding and commercial mortgage lender that will provide short term funding for locking up great deals.
Many of these financing sources will loan regardless of personal credit scores, assets and employment providing the deal makes sense and there is equity in the property.
The main challenge right now is financing for the end buyers. Even those with great credit scores and financials have been getting turned down due to quirks in underwriting and bizarre lender conditions.
New programs are emerging from alternative lending sources but one of the biggest challenges wholesalers face it helping would be borrowers by educating about these new options and connecting them with money sources so that they can increase their acquisitions.
By now most have probably heard about giant hedge funds getting into the investment loan business and offering millions to investors to access equity in their portfolios and add more units to them. These loans can be ideal for wholesalers wanting to shift inventory in bulk for even bigger incomes.
Then there are other new and innovative programs like those recently revealed by 'The Home Loan Answer Guy' in L.A. This creative mortgage loan product with a terrible name, but great value is known as the 'Depletion of Assets'. This program is ideal for domestic borrowers with not enough documented income to qualify for conventional debt to income ratios, don't have any reported income, and for foreign nationals which can't prove income but have sufficient cash assets. Using a unique formula lenders derive an income which can satisfy regulatory requirements and get borrowers loans even when they have been turned down by banks.
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