2014 promises to be a huge year for real estate in the United States. The liquidity the market has been looking for appears to finally be here; just in time for those seeking to bulk up their portfolios.
Buyer confidence is expected to keep sales activity and demand up. More foreclosures and rising rents also promise buy and hold investors many great deals and healthy cash flow levels. However, there is clearly a lot of pressure to speed up acquisitions for maximum short and long term returns.
This could all help mark 2014 as one of the biggest years in history for small and mid-sized investors acquiring properties in bulk.
In recent years, bulk purchasing of rental properties has definitely been a challenge. The massive real estate surge and a plethora of REOs created much frustration with long chains, mythical deals and amateur middlemen. Cash has been equally elusive for many. Even the most credit worthy individuals and investment firms with solid holdings found cash hard to come by. Fortunately, these things are changing and the stars appear to all be aligned for expanding portfolios.
Those bouncing around the web with phantom bulk deals seem to have given up and moved on to something else. Their removal has, therefore, helped other investors looking to buy up a lot of properties.
New lenders and loan programs are also breaking into the market in 2014, finally bringing big liquidity for those eager to make savvy investments now.
It may not have a huge appeal to larger real estate investors, but Bloomberg recently reported on Wells Fargo developing a sizable new in-house mortgage unit that will make portfolio loans. This trend should spread from bank to bank, as new regulations for secondary markets kick in. Competitiveness would help buyers on a national level.
Of course, one of the best things to come out of recent years of tight underwriting and conservative banks has been alternative lenders. These commercial mortgage lenders have been much more aggressive and flexible and willing to make deals happen.
Now, major hedge funds and private equity firms have pulled a pretty notable pivot, going from being the biggest competitor and roadblock for smaller investors to setting up new mortgage units and reaching out proactively.
This works in favor of income investment property buyers in two ways. Firstly; leaving more attractive deals on the table for investors to choose from. Secondly; providing the leverage those looking to bulk up quickly need. Lending units like FirstKey and B2R Finance have been created by the biggest funds to loan to those with portfolios of single family rental properties. These lenders are seriously hungry about putting their money to work, are working hard to streamline the borrowing and transaction process, and even offer non-recourse loans.
They are bullish on appreciation and are quite comfortable with making aggressive loans. These loans are available for refinancing to cash out and expand existing portfolios.