How are Home Investors getting loans these days?

At one point in time buying investment homes was a very lucrative business that brought forth great returns if you found the right deal. Couple of years ago investors could get low interest rate loans with no or very little money down. Home investors were buying up new builds, and existing home inventory all over the country. Once the bubble busted investors starting going bust everywhere. Another term for home investors is flippers. These investors would buy a home and flip that home within 6 months for a big profit.

This type of activity affected what is called the secondary market where bankers buy and sell loan paper. With the current changes one might wonder where all the flippers or home investors went? They are still out there, but the loans they are getting are not with banks. Most of them are now doing what is called hard money loans. These loans are short term and carry a high rate along with high fees. The individuals that lend this type of money could be considered a loan shark. There is nothing illegal about what they do; it’s a big risk to them as well.

The investors that have been around a while that bought large stakes in the real estate market could also be foreclosing on the properties they thought would sell. This is too common currently in our real estate market. Trying to find renters or lease option to buy is what a lot of investors are doing now. The drop in values nation wide has pretty much put a stop to most investors out there.

For years investors were buying up property in promising markets like Texas. In Texas your get buy twice the house for half the cost compared to other states in the U.S. Once the 100% stopped along with the amount of savings required to even get an investment loan, that market dried up.

Needles to say, this actually is the time to buy homes as long as your have the money and credit to do so. Mainly the rich are buying up real estate now.

With the new credit requirements and the amount of money down needed to get financing, investment loans look less attractive. If you are in the market to buy a investment home you might consider a hard money loan. There are reputable individual lenders that will lend you money on a short term note. Typically these loans are for a year or two and then you either have to sell or secure financing elsewhere.

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