Mortgage interest rates have been all over the place in the past 30 days. One day they drop significantly and the next they are on the rise.  If you lock in rates at just the right time, you may be able to time the market perfectly.  Before you celebrate your interest rate reduction there are a few things to consider.  A lower interest rate may not mean a lower monthly payment.  While this sounds hard to believe it is often the case when you refinance.  Getting the lowest possible interest rate is great but there are a few other items to consider.  Before you start your refinance application here are some things you need to keep in mind.

• Appraisal Amount. A refinance for a primary residence and investment property are not the same. With a primary residence you may be able to get away with a loan amount at 80% of the appraisal amount. With an investment property your loan amount may need to be 70% depending on the type of loan you take. Even if property values are up in your area your home may not appraise for the value you think. The appraisal takes a snapshot of what is currently happening in the market. A sale from six months ago will not have the impact you think. The most accurate values come from sales under 90 days usually within a mile from the property. Getting your property to appraise at the value you are looking for is the biggest hurdle in your refinance.

• Closing Costs/Property Taxes. Perhaps the biggest difference with a refinance and a purchase is in how the closing costs are paid. In a purchase the closing costs are brought to the closing. With most refinances the closing costs are rolled into the new loan amount. You have the option of bringing the funds to the closing but most people do not. The closing costs are almost identical regardless of a purchase or refinance. The costliest item at the closing will be for the prepaid property taxes. The new lender will restart your escrow account and hold a significant amount of property taxes. Depending on when you close it can be as much as six months of taxes. Between your property taxes and closing costs your new loan will end up being thousands above the amount you currently owe.

• Decreased Equity. Your new loan amount will directly impact the amount of available equity. Even though equity may not seem important it gives you different options in a pinch. If you needed to sell in a moments notice equity will allow you to walk away without worrying about your bottom line. It also allows you to possibly refinance and pull cash out down the road. With a higher loan amount and decreased equity you may be more inclined to hang onto the property if the market shifts.

• Longer Term. The most common loan term is the 30 year fixed. As the name indicates this loan has set payments for the next 360 months. Before you refinance you should take note of how many years you have remaining on your current mortgage. In most cases you will be adding on years to your term and starting over. If you had 22 years left you essentially have nothing to show for the last eight years of payment. With the longer term you may be able to save money per month but at the expense of extra years. This isn’t to say that all 30 year terms are bad but you need to weigh the added years versus the monthly savings.

• Monthly savings. It is possible that a lower interest rate may not equal monthly savings. When you add in the closing costs and property taxes your new loan amount will increase. It is not uncommon for your new loan to be anywhere from $8,000-$10,000 higher depending on the annual property tax amount. The higher your loan amount the less change in interest rate needed to make an impact. A quarter point difference on a $500,000 loan will produce a greater savings than a full point change on a $100,000 loan. Any savings need to justify the increased term as well as the closing costs. You also need to weigh the savings with your long term plans for the property. If you plan on selling in the next few years the savings won’t have as great of an impact.

• Shorter term/higher payment. As popular as the 30 year fixed is there are other loan terms available. You may consider refinancing out of a 30 year into a 15 year. In doing this the first thing you will notice is how much lower the rate may be. The 15 year fixed works opposite of a 30. With a shorter term your payment will increase in spite of a reduction in rate. If you are not comfortable with the payment you will eventually run into trouble. One alternative to this is keeping the longer term but making one extra principal payment a year. This gives you the security of a more comfortable payment while still reducing your balance over time.

If you are considering a refinance there are a few initial steps you should take. The first is to find a mortgage calculator online and run the numbers.  Add your closing costs to your loan amount to find your new monthly payments.  You should use a conservative interest rate with your estimate.  The next thing you should do is to get an idea of current property values.  Keep in mind that you will need an increased value on an investment property.  If the numbers make sense and you think the value is there now may be a great time to refinance.

One of the biggest hurdles for investors old and new alike is securing financing. You can have everything else with your business in place but without financing you won’t get very far.  How and where you find financing has changed dramatically over the past ten years.  It wasn’t that long ago when lender financing was the only realistic source of funding.  Today between hard money lenders, private money lenders and silent capital partners there are more financing options than ever before.  While finding financing is easier it doesn’t mean it will simply fall on your lap.  You still need to dazzle your capital source and make a solid presentation regardless of who you are talking to.  Here are five tips to help establish and secure the financial backing you are looking for.

• Know Your Target. It is important that you treat every financing meeting with the respect and importance it deserves. You truly never know who will be the person that catapults your business to the next level. Regardless if you are meeting with your great uncle or a top local hard money lender you need to prepare the same. You should have a little background on what they want out of the deal and what their risk tolerance is. Without a personal understanding of who you are speaking with your presentation will sound repetitive and rehearsed. Don’t forget that you are the one looking for capital. Even if you have closed a few deals you still need to put your best foot forward. This starts with doing a little homework on your target either online or by asking questions to the people around them. The more you know about your target the more comfortable they will feel working with you.

• Prepare Numbers & Answers. No lender is going to blindly open up their wallet and give you a blank check. You may eventually get to that point but only after you have built up confidence through several deals. As you plan your financing meetings you need to be ready for every possible scenario. It is human nature for a lender to want to know their bottom line potential. This should be the starting point for your presentation. In addition to the bottom line you need to know everything about the numbers, exit strategy options, carrying costs and potential setbacks. You should leave no stone unturned and be ready for whatever question comes your way. One strategy to help with this is to think about what you would want to know if the shoe was on the other foot. The more you know about every potential outcome the more confident someone will feel working with you. Nobody likes to think about the negative but by taking a proactive approach and discussing the worst case scenario you address the elephant in the room.

• Focus On Benefit. Why would someone want to give you access to capital? As is the case with any potential business partnership there needs to be a net benefit for both sides. For you the benefit is the access to funding and the chance to grow your business. For the lender they want to know that their money is safe and they will see a positive return on their investment. During your meeting or presentation you should constantly revert back to the benefit. Every investor walks the line between risk and return. One of the things that make real estate so appealing is the potential of double digit returns. A private money lender may have money parked in a savings account currently generating somewhere in the neighborhood of 1% interest. They understand there is no risk but the returns aren’t exactly eye popping. For them the benefit is the chance to put their money at work for a strong potential return while letting you handle the real estate portion of the transaction. Whatever the benefit is you need to find it and keep coming back to it.

• Follow Up Promptly. Even the best meeting may not produce an immediate partnership. You may have set the groundwork of a partnership moving forward but you still need to seal the deal. With every meeting regardless of how you think it went you should follow up within 24 hours. By following up you show that you want to do everything possible to make things work. This also gives you the chance to find the answer to any lingering questions or hammer home the benefit you discussed. You shouldn’t wait for them to contact you. Take a proactive approach and follow up with a phone call or leave a voicemail with an exact day to speak again.

• Show Personality. One of the things that lenders really want to know is who they are working with. Numbers and returns are important but often times are not enough to secure a partnership. They want to feel comfortable and confident that you are just as vested in the partnership as they are. Don’t be afraid to show your personality. There are times when you should take your foot off the pedal and lighten things up. It is ok to talk about things going on in the community, your favorite sports teams or what is happening with your kids. Connecting with your lender about personal issues can be the final item that pushes the agreement over the top.

Even if you currently use traditional lender financing or have a hard money outlet you can never have enough sources of capital. Use these five tips in your next financing meeting.

In this article, we’ll explore how the eviction moratorium has affected landlords and rental property owners, how the pandemic has reshaped the current real estate market, and some strategies for selling your home during COVID-19. By being adaptable and understanding regulations related to rental investments, people can navigate the current real estate market more efficiently. 

Guide:

• How Has the Pandemic Affected the Real Estate Market?
• What the Eviction Moratorium Means for Landlords and Rental Owners
• Strategies for Selling a Home or Rental Property During COVID-19
• How 180 Homes Can Help

How Has the Pandemic Affected the Real Estate Market?
The coronavirus pandemic undoubtedly had a tremendous impact on the real estate market, and the duration of its consequences is hard to determine. The span of COVID’s effects has influenced the entire span of real estate. Stay-at-home orders have resulted in fewer houses on the market, increasing their demand among those looking to buy homes. Interest rates have lowered, so there has been an increase in individuals looking to purchase homes or rental properties as their purchasing power has effectively increased. Due to widespread economic hardship, many renters have been unable to make their monthly rent, which resulted in the CDC imposing a federal eviction moratorium invoked in March of 2020 under the CARES Act. 
All things considered, people still need a place to call their home and real estate is a never-ending industry. Homeowners and rental property owners need to adapt to the current market to sell their homes, manage their tenants, and ensure they make educated choices during this hectic period. Let’s explore what the eviction moratorium means for landlords, tenants, and homeowners protected under the CARES Act.

What is an Eviction Moratorium?
The eviction moratorium was imposed by the CDC to assist those that have suffered from financial trauma due to COVID-19, whether it might be a loss of employment or medical bills that have resulted in non-payment of rent. The order doesn’t remove the possibility of late fees or penalties charged by the rental property owner or landlord, nor does the eviction moratorium allow tenants to break their lease outside of nonpayment scenarios. As of July of 2021, the eviction moratorium was extended for parts of the country that are still struggling in their case numbers of COVID-19. The eviction moratorium has very specific requirements for eligibility. It’s not as if any tenant who wishes to skip rent can use it to their advantage. Tenants need to apply to government assistance programs and qualify under the CDC’s requirements. 
To qualify for protection, tenants need to:

• Provide income information 
• Prove inability to pay rent 
• Make their best efforts to pay rent as much as possible
• Be in a position in which they have nowhere else to turn 

While meeting these requirements may deem a tenant eligible, there are serious ramifications if application info is falsified. After ensuring they have verified eligibility, tenants must fill out and send the CDC’s declaration form to their landlords or rental property owners to indicate they are covered under the moratorium. Once the tenant has followed all required steps and provided this documentation, renters are unable to evict the tenant due to nonpayment of rent.

What the Eviction Moratorium Means for Landlords and Rental Owners
One of the biggest takeaways from understanding how the eviction moratorium affects landlords is that legal advice is valuable. Each state is different in how its eviction process works, and knowing the correct steps to take as a home or property owner renting their space is crucial for success. Often times, reverting to a local expert could be the best decision if things point towards an eviction. Real estate lawyers are a great resource for understanding what to do if tenants are not paying their rent. Here are some of the biggest points for landlords and rental owners to consider during these unprecedented times.

Evictions Are Still Possible
The eviction moratorium was put in place to assist individuals who have suffered a substantial financial loss that has resulted in failure to pay rent. That being said, tenants are not only evicted due to non-payment of rent. If the tenant needs to be evicted for reasons non stated in the moratorium, such as smoking in a non-smoking building or otherwise violating their lease, an eviction can still be pursued. It’s just important for landlords and property owners to verify all necessary information before moving forward with an eviction toward a potentially covered individual. Additionally, it’s also possible to sue people for rent rather than eviction, which effectively sidesteps the eviction moratorium. Most tenants will want to avoid legal complications and small claims court.
Explore Month-to-Month LeasesSomething that’s become increasingly common during the pandemic has been month-to-month leases. Typically, renters are accustomed to year-long leases but having a month-to-month option can be an appealing selling point for renters as well as an advantage for landlords and property renters. Month-to-month leases allow tenants to have a bit more flexibility in their living situation which can be helpful during a time of economic uncertainty. On the flip side, renters and landlords can replace current tenants easier by not renewing to tenants who have not paid their rent. Non-renewal is not an eviction but still allows landlords to save some of their sunken profits in situations of month-to-month renters not paying rent. 
Communication is KeyAs any landlord or rental property owner is well aware, healthy communication is the only way to have an accurate snapshot of your tenants’ needs. Communication is especially important for both renters and tenants during this time. Covered tenants are required to accurately follow the steps of the moratorium and communicate with their landlords of complications paying rent, and landlords should be responsive and document all correspondence. The eviction moratorium is put in place as a temporary halt on evictions, but tenants are still expected to pay their rent in the future. Keeping track of all tenant communication is highly suggested, not only to be able to guide them through the moratorium requirements but also to provide evidence if needed down the line.
Renters Have Assistance, TooFor homeowners choosing to rent out their space, it’s important to understand that housing qualified individuals under the eviction moratorium may result in financial losses and the inability to pay their own mortgages down the line. Similar to the eviction moratorium, the foreclosure moratorium was put in place to help homeowners place a pause on federally-backed mortgages. Despite this ending in August of 2021, if a home or rental property owner applied for forbearance under the Cares Act and is still struggling financially due to pandemic-related hardship, they may be eligible for an extension. 
It Might Be Time to SellAs with any major investment, rental properties are all about generating positive cash flow. When it comes to how the eviction moratorium affects landlords, it’s certainly adapted the way they have to view their rental property investments. Especially for those renting out a home, selling your house during COVID-19 could prove to be an intelligent decision due to the current demand within the housing market. If a rental property is not generating revenue from its tenants, sunken profits can be highly anticipated. The eviction moratorium has provided landlords challenges, but the pandemic as a whole has provided insight into the success of a rental property and how much revenue the property is truly bringing in. If landlords are only projected to lose profit, it might be the best time to sell.

Leave your tenant worries behind. Get a Cash Offer for your property today!

Strategies for Selling a Home or Rental Property During COVID-19
Even with the backdrop of a pandemic extremely present, the real estate world does not stop. In terms of how the eviction moratorium affects landlords and rental property owners, it’s provided an opportunity to move forward, and in many cases sell. Many rental property owners and home sellers are simply waiting for the right time to list their homes and find a buyer. As difficult as it may appear for rental property owners to consider marketing their investment within a pandemic, you can still sell your home in today’s market. 
From a buyer’s perspective, now could be seen as a great time to buy. Interest rates have once again dropped to all-time lows and many lenders have loosened some of their most restrictive guidelines. With states and individual companies embracing remote work schedules, buyers have more time than ever to investigate and research their dream home. While COVID-19 is changing the way you may go about it, selling your home or rental property is still very possible. If you’re wondering how to sell your house during COVID-19, here are a few strategies for selling your home during COVID-19 as we continue to fight against the coronavirus and its variants.

Leveraging Technology to Sell Faster
Over the past year, many real estate agents have shifted how they preview and show their listings. To maximize their time, they have started producing property virtual materials for websites or public viewings. Homeowners or rental property owners can easily take videos of their property for agents to share with prospective buyers who can view these materials and quickly decide if they’d like to move forward. The benefits of these virtual materials will outlive the pandemic as an appealing option for non-local buyers to view properties that they might have struggled to view or gain interest in originally. Virtual staging, 3-D tours, and video tools such as FaceTime and Zoom have completely transformed the way buyers can get the first impression of a property, and utilizing these technologies to perform real estate tasks is a smart decision.

Utilize Modern Marketing
In a traditional real estate transaction, initial interest is usually derived from an alert through a multiple listing service (MLS), a database utilized by real estate brokers for information regarding properties for sale. In modern markets, sellers and real estate agents have become more creative. The most common starting point nowadays is social media and online marketing. With an uptick in remote work, there has been a subsequent increase in online traffic. Sellers can use this to their advantage for organic interest in the listing through virtual tours, video tours, sponsored posts, linked websites, etc. This allows buyers to access facts and data regarding a property more often, with many of these online resources also providing alerts to agents, investors, and brokers to see new listings. By adapting to modern marketing techniques, exposure shouldn’t be an issue when selling a home during the coronavirus pandemic. 

Showing Your Property (Carefully)
As much as a virtual property tour or dedicated online marketing campaigns can provide valuable property information to potential buyers, nothing can replace the confirmation a buyer receives from physically walking through the property. Especially with the increase of vaccinations, if there is true interest in the property it’s likely that the buyer will want to see it in person. It’s important to note that not all prospective buyers or sellers are vaccinated, so it’s important to still follow county and individual state regulations regarding COVID-19. The bottom line is that if a buyer needs to put eyes on the property, they are still allowed to, so sellers should be aware of local guidelines when selling their home during COVID-19.

Contact 180 Homes for Help Selling Your House or Rental Property During COVID-19

The coronavirus pandemic has caused changes in local real estate practices and procedures that will become the new normal in a few years. While it has altered the way homeowners and landlords have conducted their business, COVID-19 doesn’t have to be a major roadblock in your real estate experience. At 180 Homes, we’re passionate about helping homeowners sell their homes with cash offers that can speed up the entire transaction. Additionally, 180 Homes has valuable insight into selling rental properties for landlords and rental property owners looking to make a change. 

The first step of any real estate deal is securing financing. Any grand real estate plans you have are based on your available capital. It will directly impact the market you choose, the purchase price, repair budget and everything about your transaction. One of the most common complaints in the investing business is the inability to find financing. What savvy investors know is that with a little digging there are multiple options available in almost every market. Depending your investing style and goals some of these work better than others.  Never let a lack of capital stop you from pursuing a deal.  Here are five popular sources of capital for your next deal.

• Bank Financing. Depending on your investing goals bank financing can be your initial starting point in finding capital. Bank financing is best used for buying properties you plan on keeping for the long term. With bank turnaround times near 45 days coupled with low interest rates this becomes a viable option. There are a few hurdles when working with a bank. Gone are most of the programs for borrowers with any kind of damaged credit. Today’s investor programs require a mix of above average credit scores coupled with low debt to income and a significant down payment. If you are weak in any one of those areas your approval will be in jeopardy. On the positive side lender financing gives you the ability to take advantage of record low interest rates with a reasonable amount of closing costs. There are certain programs, like FHA, where first time homebuyers can purchase a 2 family house with just 3.5% down payment. Under this scenario they can live in one of the units and rent the other side all the while gaining valuable landlord experience.

• Private Money. The odds are you probably know more people interested in investing in real estate than you realize. In a nutshell that is what private money is. You find a friend, family member or co-worker that has surplus capital they are willing to invest in real estate with you. This partnership can be a onetime deal or something that you continue for the long term. In the simplest terms you supply the deal and they supply the capital. You can take care of the day to day operations and they provide the financial backing. The beauty about private money partnerships is that there is no set structure that has to be achieved. You can allocate the work load and returns any way you desire. The most important thing is that you get everything on the table as before you get going. As great as working with someone close to you is it can also turn ugly once finances come into play. The more you discuss before you start the easier the relationship will be.

• Hard Money Lenders. Over the past five years a flood of hard money lenders have entered the real estate business. While they may sound intimidating hard money lenders are a great source for capital. These are individuals or groups of individuals who lend money as an alternative to big banks. They have a set of terms, fees and guidelines that are agreed upon before any funds are issued. On one hand they are similar to traditional banks but on the other they couldn’t be more different. Instead of evaluating credit score and tax returns they look at the property and the potential profit. They can use personal assets as collateral and don’t follow the same underwriting guidelines that big banks do. Working with hard money is very similar to having a personal line of credit. This access allows you to make offers with quick, cash closings and close more deals. If you reach out to your real estate agent, attorney or mortgage broker you can quickly find a hard money lender. Additionally they are at most local real estate investment club meetings. Hard money lenders may not work for every deal but they should be considered for rehabs and flips that benefit from quick closings.

• Existing Portfolio. You may be sitting on capital without even realizing it. If you are struggling with options take a look at your existing portfolio. Sift through every property you own and evaluate the available equity. Property values have increased over the past few years. You may have more options with your property than you think. Increased equity allows you to explore the possibility of refinancing or taking a second mortgage. With rates still low you can pull cash out and still maintain a comfortable monthly payment. The same is the case with a second mortgage. A home equity line of credit (HELOC) allows you to keep your first mortgage in place and use the HELOC to borrow from. You only repay on the capital you use and most second mortgages offer a low interest only payment option. Additionally the fees and expenses with a HELOC are minimal, at best. A final option you can find in your portfolio is the option of selling a property. You may have been waiting for the right time to sell and feel that trying to time the market perfectly is too much of a challenge. By selling and reinvesting those funds you may be able to avoid any tax penalty and get a property you really want.

With just a little legwork you can find available capital. Use these four options as a starting point for your next deal.