Market Trends To Consider For Your Next Bridge and Fix & Flip Loans
MARKET TRENDS TO CONSIDER FOR YOUR NEXT BRIDGE AND FIX AND FLIP LOAN
Success in the real estate industry is largely attributable to an investor’s ability to be opportunistic and adjust their approach so it synchs with current market conditions. In the past, this entailed prioritizing the plethora of available listings that only needed minor renovations to stabilize and quickly re-sell it at a premium rate. In the present market, it is essential for real estate investors to be in-tune with emerging trends and expand the scope of their investing efforts in order to maximize profitability.
The current market remains extremely active across the majority of the country—fueled in part by the historically low interest rates prompting homebuyers to take action. However, with demand significantly outpacing the existing supply of housing options, the market has quickly transitioned into an ultra-competitive environment. Real estate investors must compete not only with their fellow investors, but also against owner occupants, major internet-based companies like Zillow and Redfin, and institutional investors.
How can real estate investors stay ahead of the curve? The following is a collection of strategies that will assist savvy investors to fine-tune their investing strategy and optimize their return on investment.
The level of foreclosures in the U.S. has dropped to historic lows. Subsequently, less homes are lingering unoccupied as compared to previous years. Sellers are hesitant to accept anything other than top-dollar for their properties and are willing to hold out for the right price with the knowledge that the unprecedented competition will produce a buyer willing to meet their financial requirements. The result is that there are limited chances for investors seeking high-volume purchasing outlets in order to grow and scale their portfolios. With the reduced number of viable properties, more and more fix-and-flip investors are expanding their horizons by acquiring properties that require more extensive rehabs than the properties they would normally target. By taking on bigger value-add projects to include adding square footage, upping the bed/bath numbers and enhancing the general value of the home, investors are able to sustain their profit margins.
SECONDARY & TERTIARY MARKETS
Markets in the Tier 1 category are among the most competitive in the nation—and in the current climate it can be challenging to not only lock-in a promising investment property but to also coordinate reliable contractors, property managers and real estate agents. Due to these potential complications, investors should consider branching out from Tier 1 areas into proximal secondary and tertiary markets. The most viable markets all tend to share a majority of the same characteristics such as sustainable population increase, a diversified local economy, above-average school systems, solid infrastructure bases and good property tax rates. Investors need to be intimately familiar with the market they are considering becoming involved in. The good news is that market data and metrics are readily available via resources such as Roofstock and Renters Warehouse that make it easier than ever to expand the geographic scope of investments.
CHOOSE THE RIGHT PARTNER
Over the past decade, the overall availability of funding options for real estate investors has expanded dramatically. In the past, the industry presented really only two financing options: traditional banks or small local private lenders. Now, there are a number of major national private institutional lenders backed by reliable capital sources such as private equity firms, hedge funds, and REITS. This is a positive development for investors as these private lending options are proving that fix-and-flip, ground-up construction, and rental property funding done the right way yields stable and consistent returns. Previously, investors who wished to flip, construct and rent properties required three separate lenders to obtain appropriate financing. Today, private lenders offer complete end-to-end products like bridge loan financing packages that allows investors to worry less about financing and more about perfecting their investment outlook. That’s where LendStacks comes in. We facilitate the expansion of this exciting industry-wide revolutionary cycle by making it easier for lenders to manage leads, process, underwrite, close and service a variety of loan programs. Everything is built in and turn key—from effective CRM, loan origination with rate engine and underwriting, document and contract management. As the market continues to develop, so will the complexity of investors’ requests for funding. Simplify the process and remain confident in your ability to deliver premium financial services to your clients by partnering with LendStacks.