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Utilize Private Funds In Your Real Estate Today!
We as the general public have been spoiled by the low bank rates being offered to date. Many investors become so enticed by low interest rates that they do not even consider the option of using private funding when they are declined by the bank, and as result, they turn away from a purchase or refinance that could have generated great profit for them. First of all, why are more and more people getting declined by the bank? Today the banks have become very difficult to work with. This is because they have imposed extremely strict requirements for approvals and if you do not meet their exact credentials, you are declined and your buying power has been diminished. I am sure many have experienced such frustrations on the new and improved banking protocol, specifically business owners and contract workers who may have difficulty verifying income. Being in the mortgage industry for almost 2 decades now,I have witnessed vast changes in the approval process for both residential and commercial lending. Just a short time ago it was possible to purchase a residential property, single family up to 4 units, with only 5-10% down. Today you would need a minimum down payment of 20% of your purchase price. You must be able to show that you have the funds to support this purchase and if you cannot verify your income as declared on your tax returns, then there is a very high probability that you will be declined. How many individuals have fallen into this category because of being self-employed? Majority of these individuals are the ones that are seeking alternative investments such as real estate for long term stability because of a lack of post retirement pensions and government support. Iwant to inform all of you investors that we cannot let the banks criteria stop our real estateendeavours! We have access to private money where these strict rules do not apply. The approval processfor private funding is based on commonsenseapproach. A common sense approach entails analyzing a deal objectively and all-encompassing. A feasibility analysis would be conducted along with an appraisal of the property, and any relevant documentation would be requested on deal specific basis. Although the interest rates are higher, with private funding there is significantly more flexibility with closing times (mortgages can close within a matter of days!), income confirmation, loan to values, and conditions on a mortgage offer. A higher interest rate is far worth the ability to purchase real estate that could produce great future value and profit that otherwise may not even be a possibility. Since private money can fund quickly, why not use this funding source tonegotiate a better deal for a quick closing, and offset the additional interest rates? I personally am self-employed and I am an avid real estate investor whom uses this technique all the time. I pay the going rates and still have a great success from real estate! Example of how using private money worked for one of our clients: Purchased a power of sale vacant property: $550,000 Used private funding to close Used private funding for a renovation loan Renovated and leased the vacant space Appraised the property after the work was completed: New value $1,100,000 Refinanced with the bank Removed private money: now they have a beautiful property that is cash flowing and their initial investment has been returned. Please note, first mortgage rates for a private loan average from 7-10% annually, second mortgage rates average from 10-15% annually. We can obtain up to 90% of the value of the property on approved credit. On average this is on higher side, however has been funded. Lender fee and broker fee will also apply. Private money will fund land, gas stations, vacant properties, distressed properties, construction, and developmentamongst many others. If you are looking to buy a property and are hitting a wall with your funding, contact email@example.com and we can perform an assessment on your deal today!
Week in review
Real GDP continued to recover in August, gaining 1.2% m/m, a result above the +0.9% print expected by consensus. This marks the fourth monthly gain in a row for this indicator, however total output is still down 4.6% from its pre-pandemic (February) level. Production rose in 15 of the 20 industrial sectors covered in August, with two others remaining flat in the month. Goods sector output climbed 0.5% on decent rises for construction (+1.5%) and manufacturing (+1.2%). Industrial production edged up 0.1%. Services-producing industries, meanwhile, experienced a 1.5% surge in production, with the steepest progressions occurring in arts/entertainment (+13.7%), accommodation/food services (+7.3%) and educational services (+3.4%). Year on year, total economic output was down 3.8%. Canadian GDP registered yet another advance in August but the economic recovery remains highly uneven. Some sectors have now fully recovered from the COVID-19 shock and currently stand above their pre-pandemic peaks. That is the case for agriculture/forestry/fishing/hunting (+2.5% compared with February), finance/insurance (+2.1%), real estate (+1.5%), wholesale (+1.3%), retail (+1.2%) and utilities (+0.8%). That said, certain industries continue to suffer. For instance, production in the mining/quarrying/oil and gas extraction segment remains 17.2% below its February level thanks in large part to depressed energy prices. The sectors most affected by social distancing measures are also struggling to recover. Output in the arts/entertainment segment is roughly half what it was before COVID. Production in accommodation/food services, meanwhile, remains 28.2% short of pre-pandemic levels. Transportation and warehousing is also tracking 20.5% below February. While the economic rebound is likely to have extended into September Statistics Canada advance estimate suggests production expanded another 0.7% in the month the steep gap between the best and worst performing industries is likely to endure in a context in which people continue to avoid social contacts. Looking further ahead, the real question remains whether the recovery can be sustained, especially now that COVID-19 cases are surging back up, forcing some provincial governments to reintroduce social distancing measures.
Is the BoC Doing Enough?
There was no shock and awe in the Bank of Canadas overall set of communications this morning (here, here and here). In fact, the overall guidance appears to be well short of crushing it in my opinion. CAD was little changed in the aftermath of the communications, but it had been depreciating ahead of time with the driver being Covid-19 effects on global risk appetite. The Canada curve was also little affected post-communications with less than a basis point rise in the two-year yield. Here is what they did on policy measures: Purchases of Government of Canada bonds were reduced to at least C$4B/week which is down by $1B from previously. GoC bond purchases will now be skewed toward longer-term bonds in the 3, 5, 10, 15 and 30 year segments of the curve but with MPR guidance (page 25) that purchases in the 3- to 15-year maturities tend to have the greatest effect on household and business borrowing rates. Watch for the next statements of operational details ahead of the next secondary market purchases of GoC bonds for elaboration on what they are targeting in what proportions. Guidance on how long the purchases will continue remains vague and simply states they will continue until the recovery is well underway. Macklem has previously defined that point to be somewhere between the initial stages of recovery and closure of the output gap, though he did not repeat that today or offer anything else. For modelling their balance sheet Ive tended to assume until mid-2021 as a middle ground, but it could be longer. Forward guidance was moderately strengthened. They did so by now attaching a statement-codified timeline to the closure of the output gap and achievement of the 2% inflation target sometime in 2023 until which rates will remain on hold. Previously they had indicated they would not hike until this was achieved but did not attach a timeline in the statement. This shouldnt really surprise many by way of new information. Its priced, and we had already largely figured this to be roughly the case. source: Derek Holt, Scotiabank Economics