How To Weather Real Estate Investing Challenges
A few years ago, the real estate investing was a wide open playing field where you could do any type of deals. Things have changed with the real estate bubble forcing real estate investors to re-discover themselves to succeed.
Here are a few things that affect real estate investing business. A few years ago, the real estate investing was a wide open playing field where you could do any type of deals. Real estate investors have been forced to re-discover themselves with the real estate and economic bubble.
Here are a few things that affect real estate investing business.
1) Taking over mortgage payments
This business model earns real estate investors lots of money. Deals with lease options, rent to own, owner financing, form a big part of most real estate investors income.
Lots of states are now requiring that you disclose and get permission to the lender before you can take over payments.
They also require you to disclose to the buyer. Some states force you to less than 180 days for lease options. This means you have to keep up with lots of paperwork.
2) No stated income loans
Gone are the days when self employed people could easily get loans. It used to be you just provided proof of your current assets, state what you make per year and you could get funded for a mortgage.
This is no longer possible, so if you are self employed, you must have an alternative way of buying properties.
3) Hard money credit based?
Some hard money lenders are now lending based on income and credit scores and the property.
The rules are more relaxed, but you have to shop for good hard money lenders.
4) Limit on number of properties you can finance
You can only finance up to 10 properties if your income is fully documented and your credit score is 720 or better.
It is also necessary to have at least 6 months worth of monthly payments in cash reserves.
Of course if you are self employed you cannot document your income!
5) Seasoning rules
Even if you buy a property with cash, you cannot refinance to cash out until you keep it for 12 months. In other words you cannot just move on to the next deal when you want!
If you buy rental properties, you have to take this into account.
If you are self employed, can you refinance if you cannot document your income?
6) No refinancing properties held in an LLC
In order to refinance, you must hold a property in your personal name. If they are held in an LLC, you have to hold them in your personal name for six months to refinance them.
So what do these new limitations mean? Does this spell the end of real estate investing?
The answer is no. Real estate investors know how to re-discover themselves and are flexible enough to adapt to changing market forces.
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