Which way are the economic headwinds blowing? These days it’s hard to know.
On the one hand, inflation is on the decline with October’s CPI report showing headline inflation cooling to a 3.2% annual rate as energy prices fell. However, the inflation rate, though decelerating for much of 2023, is still well above the Fed’s 2% annual inflation target. Given that, it seems unlikely that the Fed will cut rates in the near term.
So what does that mean for the typical real estate investor? Where are the opportunities? How can you position yourself to take advantage of current conditions?
Here’s what we see our most successful clients doing…
Digging Into The Numbers
When a client brings a new project to us, we look very closely at several metrics. Many fix -and flippers tend to underestimate initial costs. It may be a case of excitement or over-optimism about the potential profits to be had. We have talked before about beginning with the end in mind, and that means being brutally honest about the after-repair value or ARV of your subject property.
It also means putting together a realistic and comprehensive repair budget complete with a contingency reserve for unforeseen issues. Our free, downloadable Scope of Work template will put you on the right path here.
Getting Ready to Pivot
Sometimes, the numbers make better sense with a different exit strategy than the one you started with. These days, we are seeing many of our fix-and-flip clients decide that a short-term loan isn’t in their best interests. With the current housing market in a state of limbo, we have seen many of our borrowers pivot to a longer-term strategy.
Many clients have decided to refinance their fix and flip loan into a rental or DSCR loan with or without cash-out to take advantage of strong rental demand to generate passive income. Others have refinanced into a no-rehab bridge loan to give themselves extra time to get the property sold.
Either way, NavCap can help.
✅ Refinance Your Loan Into A Rental/DSCR Loan
Are you rethinking your exit strategy in the face of a challenging housing market? Have you decided against listing your property for sale upon completion? Our DSCR products allow you to take a buy-and-hold approach to investing.
🔵 30 year and 15 year Fixed OR 5, 7 and 10-year ARMs
🔵 LTV to 80% (Or 75% For Cash-Out)
🔵 No Personal Income Requirements
🔵 Qualify On Interest-Only
🔵 Escrows Available
🔵 Gross Up Rents 120%
🔵 Use Current Appraisal After Three Months Seasoning
🔵 Property May Be Vacant
✅ Refinance Your Existing Loan Into A Bridge Loan
Need a little more time to consider your options? A short-term bridge loan (up to 12 month term) can give you some breathing room to figure out your next steps.
🔵 Term to 12 Months
🔵 LTV Up To 70% of As-Is Value (65% For Cash-Out)
🔵 No Personal Income Requirements
🔵 No Prepayment Penalty
Happy To Talk Through Things
If you’re considering a change to you exit strategy or just need financing for a brand-new project, don’t hesitate to reach out to your loan officer. Or, contact us at 888.444.3160 or info@gonavcap.com to be put in touch. Get the ball rolling by request a free, no-obligation quote below:
https://thinknavigator.com/NavCap/GetAQuote.php