Equity Matters: Financial Strategies for Real Estate Investors (Part 2)

Judy Meredith “The Mortgage Professor” Hawaii Area Manager Direct: (808) 222-7903 NMLS ID: 716323

Real Estate investment can be a quick paced game and things are always changing.

On March 16th, in a long-anticipated move, the Federal Reserve raised interest rates by 25 basis points (0.25) in a step designed to blunt inflation that has been rising at the highest levels since the 1980s. The Feds have also made statements that they plan to raise interest rates each time they meet this year – they will meet 6 more times before 2022 is over.

It goes without saying that COVID- 19 has had an unprecedented and far-reaching effect on the American economy even 2 years after the major shutdowns. The current Presidential administration has been unable to curb inflation as prices for common goods and needs increase daily. With President Vladimir Putin menacing Ukraine and gas prices going through the roof, it can be tough to find the silver lining. However, it’s important to remember that in times of fear and uncertainty, there is also opportunity. For many real estate investors this new information can be a game maker or a game changer.

So the question is: How can a real estate investor leverage change and profit in any real estate market?

Successful investors are flexible. They understand that to succeed they must be prepared to take advantage of the opportunities that come their way. And this could be during an upswing, a down real estate market, or an inflection point. Whether you’re just getting started or you’re a seasoned veteran, there are ways to make money during every phase of the real estate cycle. But to do so, it is paramount to have a strategy to handle changing market conditions.

1. Don’t Fear Change, Embrace It

As stated in a famous quote from George Bernard Shaw in 1944 “Progress is not Possible Without Change”. Change is inevitable. And you can respond to it in one of two ways:

a. You can embrace it, modify your investment strategy around it, and reap the benefits from the opportunities that present themselves.

b. Or you can fear it, refuse to adapt, miss out on the opportunities that come your way, watch your profits shrink, and potentially lose money.

2. Leverage Asset Based Lending for Real Estate Investors

At this moment, there is a possibility for making money on equity as well as capitalizing on the current low interest rates and financing terms. House prices are soaring and financing costs are still low, which is an almost unheard-of situation. The way I see it, this is a gift from the real estate gods.

Mortgage interest rates are still extremely low and the more forward-thinking Lenders are developing new mortgage loan options for investors to stay in the investing game. Built specifically for real estate investors, an asset-based mortgage is a popular solution for investors who want to qualify without income verification. Asset based loans consider your assets instead of relying on your income. As such, they do not require a tax return or proof of income to purchase a home. Since many of these creative financing options are available in 30 year terms, real estate investors can have a reduced documentation experience without having to sacrifice for higher interest rates and short-term loans , such as a bridge loan or hard money loan.

a. Investor No Ratio – These are loans that are qualified based on the property type and the cashflow your investment is producing. Thus, there are no traditional debt to income calculation to adhere to.

b. Investor Debt Service Coverage Ratio (DSCR) – These loans allow an Investor to qualify for a mortgage based on cash flow generated from an investment property, as opposed to their personal income. A calculation based on potential rental income is used to offset the proposed mortgage payment and allow for very light paperwork.

c. Investor Stated Income – These are loans that qualify based on the Buyers income profile as it is described by the Buyer. There is no income documentation, and the stated income is supported by asset statements to align with what is disclosed.

d. Investor Bank Statement program – These are loans that qualify based on business banking deposits tracked thru bank statements, in lieu of traditional tax returns.

The key to navigating the changing mortgage climate is to be sure to align yourself with a knowledgeable mortgage expert that can lead you to financial success. At PRMG, our motto for 2022 is No Homeowner Left Behind, because we pride ourselves in offering traditional as well as creative financing options for those who may find themselves “outside the box”.

We have a dedicated team of Mortgage Experts to help you and we offer free consultations! Visit https://oahu494.prmgapp. com/HonoluluTeam.html today to book your appt with one of our Specialists!

Questions for Judy Meredith? “The Mortgage Professor”

Email me:

I welcome the opportunity to help You find solutions! jmeredith@prmg.net

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