The world of lending truly has changed. Gone are the days of qualifying for a mortgage by the proverbial ‘fogging of a mirror’. As a real estate investor it has become imperative that you either understand the lending landscape yourself or engage a professional mortgage agent to sit on your team and advise of how the new rules apply to you. Increasingly the role of private mortgage lenders have come to the forefront in enabling the investor to acquire additional capital when opportunity strikes. Here are some of reasons why:
Strike While The Iron Is Hot
Someone once said that you have to respond to opportunity within the lifespan of the offer. Real estate investors come across the occasional diamond in the rough and need to be able to capitalize on the ability to finance the deal. With the new mortgage rules in place – you are only allowed to finance up to 80% of the home’s value if it is going to be a non owner occupied rental property. Where do you come up with the rest? Well outside of taking on a third job or begging the existing owner to hold a vendor take back mortgage – you can access additional financing through a private mortgage lender. I have worked hard to develop proprietary relationships directly to the lenders so the process is streamlined. Funds can usually be accessed within the week giving you the ability to close the mortgage and get a great deal.
Lower Documentation Requirements
Since 2008 there has been a marked focus and scrutiny on the real estate investor as well as self employed borrowers (which a lot of REI’s are). The government has made it their job to police those who would purchase real estate for gain. Many of my investors in real estate feel the documentation requirements are cumbersome to the point of pursuing alternatives. With private mortgage lending the documentation requirements are as individual as the lender themselves. The overarching philosophy is – Am I going to get paid back? If we can show a reasonability that the answer to this question is yes then we are done. It really can be this simple. Of course it needs to be said that the pricing is adjusted according to the risk and the willingness to prove such. The bottom line here is that common sense lending still exists for those who make their prime focus finding and acquiring accretive real estate.
Flexible Terms Par For The Course
As mentioned earlier we are working with common sense lending and to that end there is flexibility. When a private lender peruses your application they are looking to assist you in reaching your goal while making a good return on their investment. Why can’t both be achieved? The truth of the matter is that there are are many that do just that. If you have done your due diligence and the math makes sense then utilizing a private mortgage lender can be the ace up a real estate investors sleeve. So where are private mortgages flexible? The length of term (6 months – 5 years), interest only or principle and interest loans, prepayment penalty or not, and loan to value (up to 100% LTV). These features are not to be overlooked as they can make the difference between a positive cashflowing property or not.
So how do you capitalize on the private mortgage lending world as a real estate investor? See this as a tool in your arsenal to get the deal done. Not every deal requires a private mortgage to complete and not every private mortgage is favourable toward a positive cashflow. Take the time to get to know ropes of private lending or reach out to me here and ask me any pertinent questions you need the answer to to become comfortable. You will come to realize that when fast, flexible and easy to qualify money is needed – we will have just the mortgage lender to get the job done. Your questions below please.