Wednesday, 24 May 2017 00:00

Stated Income Loans To Create New Surge In US Property Investment

Stated income loans could provide the liquidity and confidence needed to fuel an extended surge in the US property market.

Home sales are up, the economy is looking up, and demand for real estate is growing. However, it could be stated income loans which finally offer the fuel needed to get investors more active, and provide the new round of growth analysts have been watching for.

US Investment Trends

New data from the National Association of Home Builders shows US home builder confidence hitting yet another new high in March 2017. It is now at its highest level since June 2005. CBRE’s new Global Investor Survey also shows $1.7T in capital is waiting to be deployed into property markets this year, with North America being the preferred destination. This could be compounded further with Eric Trump’s recent revelation that his organization is planning to halt developing projects overseas, in favor of more domestic investment.

Rising rental rates, rising equity, and markets like Suffolk County, NY and Cleveland, OH which still offer sizable prices discounts from pre-2008 levels are all factors making it more attractive to invest in American real estate.

The Need For Stated Income Loans

Despite the booming demand for US real estate many investors have been held back due to tight mortgage lending. With stated income loans now back on the menu, more investors may find it more appealing to grow their portfolios and increase investment activity.

Many sophisticated and experienced real estate investors have been held back in recent years because they either didn’t qualify for appealing loans, or were just turned off to the deep documentation process. One of the main issues behind this was the demand for tax returns and bank statements. Those operating multiple entities and with multiple bank accounts just found the process to burdensome. Even if all the paperwork could be found, it can take hours and hours for these borrowers to find and organize. They just don’t have the time. That’s on top of the depletion of the very little privacy they have left. Even among those that are willing to jump through the hoops, full time investors and the self-employed are in a catch 22 situation. They often either have to choose between writing off as much as possible to legally avoid as much tax as possible, or to take the tax hit to qualify for loans. Otherwise their adjusted gross income can be a fraction of what they actually make. It’s entirely possible to make several million dollars per year, and yet to only show a net income in the mid-six figures, or even have paper losses. Most would rather save on taxes. Then there are foreign nationals. The Miami Herald shows a net international migration into the metro area of 397% in the last 7 years. Many of those new residents are, or at least could be, big real estate investors. Verifying income for foreign nationals is even tougher, with potential requests for multiple official translations, and more. Stated income loans solve all of these issues, making it far more attractive and easier for the most qualified and valuable real estate investors to exercise their interest in expanding income property portfolios.

These new generation stated income loans which are emerging in the market now can be used for a variety of purposes including capital release from existing assets, making value-add improvements, and acquiring new single family rental homes, and multifamily apartment buildings.

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