Opportunities Exist for Investors in the New Lending Environment
I for one think it is extremely important to know what direction the banks are going. Keep in mind the FED is not the government, and they DO control the money supply. The facts are these (I am not a lender by the way, just have a ton of experience in the and study…so my perspective is not from a lender).
First the BAD NEWS
The entire bottom fell out of the funds market Friday and the FED had to act to stop the entire money market to stop functioning. This had never happened before, and is significant to investors and especially jumbo borrowers. Both the US Fed and several major European banks had to act to stop it and create liquidity. It was very serious, and thus caused one of the worse on Wall street sine 911. As a result retail lenders are further tightening their standards, especially for investors, and this will likely last for some time. In the jumbo mortgage industry many lenders have virtually stopped lending. So if you own a SFR property with a mortgage above $417,000, get ready for some serious slowing of the selling market. No money = few sales.
The GOOD NEWS
Markets will come back, but not after some depreciation in some regions. But who knows which ones. Most likely regions with high reductions in value will likely be in such markets as New Jersey, Virginia, California, Florida, Arizona, etc. The higher appreciation as of late, the faster they fall.
For savvy investors there are multiple way to finance properties which do not require a new institutional mortgage…fortunately. That money has will get much more restrictive.
Private party money raising strategies, subject to’s lease options, and short sales will truly blossom again as the way to buy many properties. The further good news, is seller will be more motivated to listen. But watch your values, a they may depreciate up to 5-20% over the next year. At least this seems more likely than not.
However when selling on contracts and lease options you can make up a lot of ground and literally create a market for the buyers who want to buy, but can’t now due to the negative lending environment. To exemplify this further, in our coaching environment with students, we are seeing record numbers of deals these days, on both the buying and selling side.
Stop by our call Tuesday night to hear more commentary on this and other strategies that will wok well in this environment. More articles such as this are also available by subscribing to our blog at http://tjmarrs.com
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