April 12, 2018 | By RGR Marketing Blog

Investors Have More Mortgage Options Than Ever Before

For investors looking to “flip” houses, securing funding for their investments isn’t always a walk in the park. Often times, traditional lenders just aren’t comfortable approving funds for properties that are in bad need of repairs and/or remodeling. As a result, investors have started looking beyond the banks for getting the money they need to purchase, fix, and move their properties. Typically, this is where private lending comes in.

Private lending is gaining momentum in the market because it fills a void in the funding sector while at the same time making for lucrative opportunities for those in the private loan industry. As a mortgage industry participant, private lending is also something that you need to know about.

Why Private Lending?

Figuring out just how prevalent private lending will get in the market requires us to look at how many properties get flipped by investors per year, and what percentage those sales account for when all home sales are considered.

According to ATTOM, a leading national data warehouse, the number of homes and condos that were flipped in 2016 in counties where 80 percent of Americans live was 193,009, which was up by 3.1 percent from the year prior. This number also accounted for 5.7 percent of all single-family home and condos sold during the year and it was the highest level since 2006.

In truth, when the remaining 20 percent of the country is included, the total number of flips was closer to 300,000. The average selling price for flipped properties in 2016 was $189,000, which makes home flipping a $56 billion market and a sound investment.

These numbers are proof-positive that home flipping is alive and well in the U.S. and when you consider that a third of those properties were financed, private funding can be viewed as making a dent in traditional mortgage funding. This is especially the case in areas where there are more buyers/investors than there is inventory.

In these cases, investors need to move very quickly if they want to win the bid, so they are more likely to use a private lending resource than to go with a much slower-moving bank lender. With private lending, the investor can purchase the property quickly, renovate it, and sell it – often quicker than a traditional lender can turn around an application approval.

What Is the Future of Privately Funded Loans in the Mortgage Industry?

One benefit of private loans that traditional lending can’t compete with is the fact that investors can use their loans to fix and flip a property, but unlike a traditional loan, they aren’t restricted as to how the funds can be used. They can use their funds for construction, purchasing and developing land, short-term refinances, and more.

Thanks to this flexibility, private lending accounts for a significant market share compared to traditional financing. For these reasons, as well as the potentially high returns and security benefits of a diversified portfolio, private lending is expected to continue to grow in popularity among real estate investors for quite some time.

Feeling a bit cramped in your business by private lenders? Consider boosting your bottom line today when you buy high quality exclusive mortgage leads from RGR Marketing.

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