ICG Real Estate Investing

No Fannie Mae Loans Available? Non Qualifying Mortgages are The Way To Go!

The government directives regarding Fannie Mae or qualified mortgages is seen as bad news by investors. They are scared because this could well mean scarcity of QM loans in the market. But here’s the solution: non qualifying mortgage loans! These are the loans that are going to tide you over and secure those retirement riches for you. Watch as I explain how.

Non-Qualifying Mortgage – your secret for success.

As I always say, it is the loan duration and the amount of down payment (should be the lowest possible for most circumstances) that are the key to a successful investment and rich returns. This is more important than whether it’s a non-qualifying mortgage or a Fannie Mae loan.
Right now, the idea of non-QM loans may seem intimidating, but they are a smart choice for investors who cannot get QM loans, and in the long run, they aren’t that much different. Right now rates are low and this is what makes now the perfect time for you to pick this option instead of doing nothing, as I explain in this video.

Initial negative cash flows? No problem!

And yes, even if you’re looking at negative cash flows to begin with, I would still tell you to go ahead and invest in property and buy as many homes as you possibly can (assuming you can sustain  the slight negatives). Whatever your negative cash flow is right now, in the future it may be  about the same as one dinner in a fancy restaurant (after, say, fifteen years or so)! While your PI payments will remain fixed, the rising cost of living will ensure that your rent amounts keep increasing.
Check out this short episode where I speak about non-qualifying mortgages as well as Fannie Mae loans and the pros and cons of each. Also find out more about my early experiences with real estate investments in the Vegas areas back in the 80s. You probably will not believe the sort of prices at which I acquired homes at the time why I was able to buy so many and why I would buy a hundred more if I could go back in time. Check it out right now – you can thank me later!

Three-Point Formula for the Best Returns On Your Property Investments

Buying Property to Secure Your Retirement – As Easy As 1, 2, 3
People tell me it is so very difficult to decide how, where, when to buy property, and I tell them it is not! Buy now, buy as many as you can! It’s simple and easy if you follow these three rules of thumb that I will now share with you
I am someone who has facilitated the sale of thousands of properties, and I would recommend property as the best investment you can possibly make. But it is daunting, I hear you say! What if you make the wrong choices? Would you be endangering the financial security that you have mapped out for your retirement years? No! Let me explain how you can invest safely, wisely, and smartly.

Where should you buy?

I’ve been in the property investment business long enough to know which markets are saturated and which ones still have potential for growth. So where at one time I would have urged people to opt for, say, Las Vegas or Phoenix, my advice is very different today. We closed thousands of deals in those areas in the past. Right now, I see potential in the Sun Belt states. Investing in properties in areas such as Nevada, Arizona, Texas, Oklahoma, Louisiana, Georgia, and Florida today will serve you well in the long term.
I always recommend that investors should invest in properties in the larger metropolitan areas to get the best returns on the property in terms of rental income, and make it easier to find good property managers and so on. Metropolitan areas are where commerce and industry are. These areas are also magnets for employees and professionals. This is where you’re going to see the biggest turnover of professionals who come in search of better opportunities.

What should you buy?

Another criterion for buying property – I am often asked – should you opt for new or preowned property? The answer is really clear and it is clear for a lot of reasons as I explain in this short video. Find out more about these simple but useful property-buying mantras. After you’ve made the right choice, just do what I always say is the most difficult thing for a human being to do – you do nothing! And you wait for your life to change – for the better!
Watch this under 5-minute video to learn the three golden rules to follow when buying homes for investment and financial freedom.

Tenants, Stimulus, and Inflation

One of the worries landlords have these days, is that due to the Covid-19 situation, some tenants who may lose their job, will be unable to pay rents.

We have already addressed this (banks also allow leeway in mortgage payments etc.). However one point to consider is the following.

Unemployment benefits have been beefed up aggressively by the government. Once people who are unemployed or partially employed start getting their unemployment benefits (hopefully any minute now), and due to the enhanced payments, many people will earn about as much as they did while they were employed. Especially in the median income territory, where a lot of our tenants live.

This is something to consider, as the fears may have been over-blown. The unemployment payments are slated to be serious, and make a big difference. The idea behind them is that unemployed or partially employed people, could pay rent, buy food and gas etc.

On the issue of the government stimulus overall, the US government has just come out with a stimulus of over 2 trillion dollars. The Fed is also injecting liquidity into the financial markets, to the tune what appears to be 4 trillion dollars. The Government is already seeking a second stimulus (possibly having to do with massive infrastructure once people can be out and work), also seemingly to be about 2 trillion dollars.

With all these trillions of dollars essentially just being “printed by the government”, any economist will tell you that it will very likely create inflation. Possibly a strong one, once things are recovered.

At the same time, interest rates are close to being the lowest in history.

Once again, you can buy a single family home now, with a 30-year fixed rate loan at maybe the lowest rate ever. Then the home price is likely to go quite a bit higher just due to inflation (not even counting real appreciation). The mortgage does NOT go up with inflation, of course. Thus, as I always say, the 30-year loan gets eroded by inflation, and your equity gets built up faster thanks to inflation. Hard assets benefits during inflationary times, and are usually the safe havens investors go to. Single family homes are not only a hard asset , but an undeniable necessity (as opposed to office buildings, for example, since people can work from home. From HOME! Yes they need a home). Also, they are the asset class on which the fixed rate loan, which never changes with inflation for as long as 30 years, can be obtained.

When inflation hits hard, you will likely feel pretty smart having bought single family home investments, with fixed rate loans.

Historic Decline in HomeOwnership affects Economy, Bodes well For Investors

In a Wall Street Journal article from March 27, 2017, by Laura Kusisto, as well as in a few blog entries on WSJ, the point is made that homeownership in the US is at a historic low. At 63.7% homeownership, it is the lowest such number for the past 48 years!
The reasons given for it include more strict lending practices following the recession. Perhaps another issue is that the recession is still fresh enough to have taken the belief away that your home will “always appreciate “ in value and will serve not only as a residence but as a major lifelong investment. Some people may no longer think so.
Add to that the natural desire of people to be free to move at will, and we have only 63.7% of homeowners in the US as of the 4th quarter of 2016.
As investors, of course, we are quite familiar with the powerful financial effect owning houses can have on our future, especially if we finance them with the incomprehensible 30-year fixed loans still available, and at still super low rates.
Having 63.7% homeownership percentage means, of course, that a full 36.3% of the population are renters! That is about 117,000,000 people!
Those of us who know the value and power of investing in houses and holding them as rentals can only look at this statistic as a positive – obviously, these renters need a place to rent and we will have a larger renter pool available for our homes. Sure some single people may want to rent an apartment, but families usually prefer renting a single-family home.
Coupling this data regarding the highest number of renters available to us in nearly 50 years, with the still-low interest rates available on 30-year fixed rate loans, means this is an excellent time to stock up on single-family homes as investments.
Interest rates are on the way up. The fed keeps reminding us they will continue to raise rates. Having a period of such low rates (despite the small “Trump Bump” we experienced recently), makes it a special time to buy and hold.
If you are under the FNMA allotted 10 loans per person (20 per married couple if they buy separately), it is high time for you to go out there and purchase brand-new single-family homes in good areas, finance them using these great 30-year fixed rate loans, which will never ever keep up with inflation (thus they will get eroded by inflation as to their real dollar value). The homes will be managed by local property managers we use ourselves in the various cities in which we invest.
We will discuss this as well as many other important topics for investors, at our quarterly ICG 1-Day Expo near the San Francisco Airport on Saturday, May 20th. We will have experts lecturing on important topics, lenders, market teams from the best markets in the U.S., and lots of Q&A, networking, and learning. Just send us an email at info@icgre.com. Just put in in the subject line, “Saw your blog on homeownership” and list your name and those of your guests. We will confirm!  See you on May 20th.