Written By: Leslie Petersen, President of Mortgage Educators, and Karen Deis
At a party a few weeks ago, I met a person who claimed to have made $300,000 last year buying pre-construction condo units and selling them 6 to 9 months later when the prices of the condos were increased by the developer. It's the craze called property flipping - but the problem is, there are only certain areas of the country where the price of housing is increasing this quickly. Property values in other areas are flat.
According to the National Association of Realtors®, investment in rental units are on the rise and as a loan officer, your past clients may be coming back to you to provide financing for investment property.
Financing rental units for past clients is a lucrative niche market for you as a loan originator. You already have most of their financial information (right?) and can set them up with a real estate agent who specializes in finding rental units.
In fact, it's a great investment strategy - especially for clients that need additional write offs. This is where a CPA or financial planner would become involved with you and your clients. You could setup a meeting with the client, a CPA and yourself and create a "proposed" IRS, Schedule C, to determine exactly how investing in rental units will affect your client. Look at the capital gains aspect too.
Throughout the country, there are "Landlord Clubs" where investors meet on a regular basis, exchange ideas and even sell properties to each other. If you don't have one in your area, maybe you and a few real estate agents could form your own club. There is another "movement" out there where people are making a wonderful income buying and selling property on E-Bay.
Down payment requirements are different with different wholesale lenders or if you are a mortgage banker, you may have negotiated a special commitment with Fannie or Freddie.
While you could always help them finance the property with Alternative or Sub-prime financing, working with Fannie and Freddie - and as their trusted advisor, getting them a good interest rate (which will increase their cash flow) is a great alternative for you to present.
According to Leslie Petersen, President of Mortgage Educators, here are some of the Fannie and Freddie Guidelines - simplified for you!
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