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Just how bad is the impact of Hurricane Harvey on the Houston housing market? What will it mean for real estate investors? What does the potential for recovery look like?
Harvey’s Impact on Houston
At least tens of thousands of Houston housing units have been impacted by Harvey. Some estimates put this damage at around $400B. That’s around 4x the cost of Katrina. Add to this the loss and damage to other commercial properties, and interruption of business, and the impact over the next few years could come close to $1T.
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Where are the best places to invest in rental homes now?
Home prices are up and rental yields have been squeezed in some areas. So, where are the best markets for rental property investors to acquire new income producing assets now?
The Hunt for Yield
According to The Street, these are 10 of the best markets for rental property yields in 2017:
Yield maintenance can be a new and unfamiliar term to newer real estate investors. What is it? How does it work?
Essentially, yield maintenance helps ensure the lender and their investors achieve a minimum yield on the loans they make. They need to ensure they stay profitable, and deliver on their guarantees to others.
Yield maintenance typically shows up as a prepayment premium or penalty in mortgage loan documents.This is a standard feature in many commercial real estate loans. How much it is can depend on a combination of interest rate, points, pre-payment penalties, and interest rate trends.
How Yield Maintenance Works
There are no absolute rules when it comes to applying this factor. Each lender can apply their own calculations, and desired minimum yield.
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Real Estate Investors
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Cash flow real estate continues to grow in popularity with individual and Wall Street level investors alike. What’s the big draw to, and what advantages of this asset class?
There are many reasons cash flow properties are an attractive investment. Here are seven of those drivers to consider when looking for new investments.
Key Highlight Overview Points
- Cash Flow
- Equity Growth
- Returns
- Security
- Leverage
- Let Others Pay Your Investments
- Learn About Tax Benefits
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DSCR LOANS
No ratio DSCR and DSCR based loans offer different advantages to investors, depending on their status and the type of property they are acquiring.
DSCR stands for Debt Service Coverage Ratio, which is a fancy way of saying, "is there enough cash flow from the monthly rent to cover the mortgage payment, insurance, and taxes?"
What is a DSCR Loan?
When you use a DSCR loan product, you are choosing a loan driven by the ratio of the monthly rent to the mortgage payment, taxes, and insurance. This ratio will drive the size of the loan and the pricing.
What is a No DSCR Loan?
With a No DSCR loan, the same ratio used in a DSCR loan is considered, but it's not the primary consideration for the lender when it comes to the size of the loan and the price. These are asset-based loans, based on the value of the property.
For example, with a No DSCR loan, you will get up to 70% of the value based on the appraisal with a rate falling within the lender's range. Pricing incentives may be given for good credit scores, loan-to-value, zip code, loan size, term and leased vs vacant.
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Real estate investors often run into issues with financing properties once they hit about 10. Having more than 10 mortgages isn't allowed by many lenders. Some won’t loan to borrowers who have as few as 4 mortgage loans on their credit. So, how are you supposed to build your empire to 20, 30 or even 100 properties?
There are a few ways you can find the financing you need, when you have more than 10 rental properties. Since most lenders will stop loaning you money after you have 4 to 10 mortgages showing up on your credit report, you need to know where to turn, in advance. Here are a few ways to finance more than 10 properties as an investor.
A blanket mortgage allows you to finance an entire portfolio of rental properties, without limits. Builders and developers often use these types of loans along with commercial property investors. When you need to fund more than one property, you can use a blanket loan, which will act as one loan with a single servicer. This not only helps you to finance more than ten properties, but also helps to cut down on the paperwork of managing payments each month.
The goal of investing in a vacation rental is to create an income. Without using the right vacation rental listing site, this may become far more difficult. While the process starts with financing and finding the right loan program for your specific needs, it won't matter much if you cannot get anybody to stay in your vacation property.
You have a few basic choices when it comes to listing sites. HomeAway, VBRO, and Airbnb are the three main choices. Here's a look at some of the important information you should know about all three of these sites.
The Traveler Service Fee
Most of the major booking sites for vacation properties will charge a traveler service fee. This is calculated based on the total nightly rate and fees. These fees can affect your bookings as the traveler will have to pay the fee in order to stay on your property.
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AirBnB
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After you've gone through the process of finding the right vacation rental property financing and you've purchased your new assets, what do you do next? Maybe you've decided you want to use the home a few weeks out of the year and the rest of the year you want to rent your vacation home on Airbnb. This is an option many choose, and for good reason.
Airbnb provides one of the top options for those looking to book a vacation rental in some of the best destinations around the world. They have more than 1.5 million listings in over 34,000 cities with all kinds of accommodations. Here are seven tips you can use to make sure you get more bookings when listing your vacation rental with Airbnb.
Take Great Pictures
The one thing you have to set you apart from your competition is the picture you include with your listing. Sure, price might matter to some travelers, but if you don't show off great pictures, the price will become insignificant. If you have the means to get professional pictures taken, this is always a good option.
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AirBnB
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.
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There are a lot of investment options out there. Why are savvy and experienced investors still trending towards investing in single family homes? What are the benefits?
1. Passive Income
The need for passive income far outweighs simple returns or potential for asset growth. Single family homes are true workhorses for churning out cash flow and passive income month after month. With good property management investor-landlords can put their portfolios on autopilot and just let the returns flow in.
Vacation rental property investing is trending.
What factors are driving this sector now? What financing options for vacation rentals are there?
The premium rents and returns that short-term rentals like vacation properties can deliver are drawing more and more investors. Income property investors are realizing that they can often get 2-4x the monthly rent by offering Airbnb style accommodations. By avoiding the traditional long term lease these investors are also able to avoid much of the risk normally associated with being a landlord, and stay poised to capitalize on rate increase opportunities. townhomes
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AirBnB
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New No Ratio Loans offer real estate investors simplified financing options for taking advantage of the current market, fast.
This is expected to be another record year for the US real estate market. In order to take full advantage of the opportunities, investors need leverage. Interest rates may have changed, but many investors have been holding back due to fears of the hassles of applying for financing. Fortunately, a variety of new lending products are available in 2022, including streamlined loans with limited documentation requirements.
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Availability of Rental Home Financing loan programs continues to give real estate investors an edge in the market. A tight mortgage market has been blamed for holding the US property market back from its full potential for years. However, while that hasn’t changed too much for regular home buyers, capital markets appear to continue to be fueling rental home investment activity.
Tight Mortgage Lending Standards Continue In 2022
The latest reports show that despite increased confidence and sales activity in the housing market, mortgage lending remains tight for consumers. The National Association of Realtors’ Economists Outlook and mortgage originator survey shows both concerns over-servicing issues and regulatory risk as significant factors in restricting new lending activity.
The Urban Institute and Market Watch report that lenders have still been turning down over 1 million loan applications per year, from borrowers who would have been approved in 2001. In fact, Market Watch says more people aren’t even bothering to apply for credit.
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Rental Home Financing
9465 Counselors Way
Suite #200,
Indianapolis, IN 46240
About Rental Home Financing:
Rental Home Financing, as the best mortgage lenders we originate rental home loan products and cash out refinance investment property loans as the best investment property refinance lenders. Commercial blanket loans are available with a commercial purpose to suit your needs.
Also, as DSCR loan specialists, we are currently authorized to make such loans in most all areas of the United States. Specific circumstances will determine whether we have the ability approve/close portfolio rental home loans in your state(s). When you are ready to get a mortgage for rental property, we are ready to serve you.