The last two months have seen an incredible increase in the number of foreclosures filed and the number of actual foreclosures being followed. Add to this the 2 million more foreclosures expected in 2012 and the real problem for most real estate investors is not the lack of available discount homes, but how to finance them.
It’s no secret that mortgage financing has become incredibly hard to come by these days. In addition to a series of new regulations, banks are still afraid to lend and are being more cautious than ever about the loans they accept. They want zero risk. Even though there has been a recent uptick in activity among subprime securities, the new rules make it virtually impossible for true subprime loans or exotic mortgages to come back in force anytime soon. So where should real estate investors go to get financing for their investments?
Unfortunately, “hard money” lenders are no longer as easy to work with as they once were. In addition to tons of equity in a property, they now want to check credit, income, assets, and require investors to have a proven track record before lending. So they still want to charge ridiculously high double-digit fees and points.
Fortunately, a new option has emerged. Transactional financing has been created as the perfect alternative for investors buying houses. It means no more jumping through hoops and much faster funding of deals for shorter cash cycles.
What are the advantages of using transactional financing?
• No appraisal required
• No income verification
• No asset verification
• No job needed
• Quick closures
• No prepayment penalties
• Less paperwork
Do you think it sounds too good to be true? What’s the trick?
Thousands of savvy real estate investors are using this type of flash financing to fund their deals every week. Although, of course, there is a catch. That is, investors must also have an ultimate buyer lined up who is either qualified for a loan or has the cash to complete the transaction.
This really isn’t that hard, especially since savvy investors know they should have an exit strategy planned out before they buy any property anyway.
These buyers can range from those looking for a new residence or second home to buy-and-hold investors who will rehab and rent them. With some regular networking and a good internet marketing campaign to attract buyers to your subscription list, you too should be able to build a good sized list of potential buyers much faster than you think.