Successfully rehabbing and retailing properties relies on being able to flip homes to buyers so what is it that is really holding them back today and hampering bigger real estate investing profits?
It certainly isn’t a lack of desire to buy homes. Even those who have lost homes to the foreclosure and economic crisis would love to buy another. Americans still recognize that homeownership is one of the best investments they can make and between low home prices, record low mortgage rates and sky rocketing rents buying a home is more attractive than ever.
Unfortunately many just can’t qualify for a home loan today or don’t have the down payment.
Underwriting guidelines just keep on getting tougher and with increased defaults and re-defaults on mortgage loans they are likely to get even hard to come by before they get easier.
There are a few low down payment options including VA, USDA and FHA home loans but not all buyers are aware of them. This problem is also compounded by the fact that many are scared to part with the little savings they have been able to amass and are holding onto every penny for dear life.
In order to increase real estate investing profits and the volume of homes being flipped investors must find ways to help more prospective home buyers get financing, as well as tapping into more funding sources themselves so that they can take advantage of distressed property deals quickly.
One powerful way to do this is through cultivating more private lending sources. This doesn’t just have to be used as short term financing for acquisitions and rehabbing but can be used to finance end buyers as well. Longer term loans mean more consistency in returns for private lenders and when used to provide seller financing can speed up flipping and increase retail profit margins. This doesn’t have to mean 15 or more years. In fact, with the right approach to providing real estate and financing education to rent-to-own candidates and helping them to create real plans to fix up their credit and boost savings everyone can come out a winner.