Is Real Estate Investing Dead? - By: Duncan Wierman

Being a real estate investor is even more difficult with today's market. It may look promising for investors because when the "bubble" burst, there are many deals out there to be had. BUT it's also the worst of times to be in real estate investment.

Yes, housing values have come down drastically and there are lots of foreclosure and bank owned properties to choose from, and it's also the worst of times because it's very difficult to get financing for new investors.

If you review the financing rules that went into effect in August of 2008, they have for the most part made many people "un-financeable."

A new marketing strategy is required to succeed. Lets go over the new rules of marketing to succeed.

Rule#1: Stated Income Loans Are a Thing of the Past

"Stated income loans" which were also referred to as "liar loans" by many, are probably responsible for many of the foreclosures happening across the USA. These loans were set up to allow the self-employed to qualify for loans without having to use tax returns to document income.

New bank loans now, have to be completely documented. I bet that many people cannot qualify to refinance their rental property because many self-employed people don't show enough income on their tax returns.

Rule #2: US Government has put limits on the number of Properties you can finance

Many people think that they should be able to have as many financed properties as they could qualify for, as long as you factor in your debt and income in the debt to income ratio. Wrong !

Fannie Mae and Freddie Mac have eased up a slightly on this rule. The amount of properties you may have financing for is between five to 10( previously four) if you fully document your income, assets and employment. The other criteria is that you must have a credit score of 720 or higher and have cash reserves equal to six months' worth of payments for every property you own. Guess what, for those of you who are self-employed, the limit won't matter, because you can't document six months' payments in cash for every property owned. Gotcha on that one!

Because the government tells professional real estate investors that they can only own five to 10 income producing properties at a maximum, this limits them, much like telling a cab company, for example, that they can only have five to 10 cabs on the street.

Rule #3: You May Not Take Cash Out Of Properties for At Least 12 Months, Even If They Were Bought with Cash

Freddie and Fannie now say that a property has to be held for at least 12 months before a "cash out" refinance could be done. Example: If you bought a house with cash, used a line of credit to rehab it up, and then you rented out the property, you cannot get a loan on the property to take cash out. That means, you may not refinance just to pull cash out and moving on to the next deal.

Rule #4: You May Not Refinance a Property Held in an LLC

Freddie and Fannie say you may no longer refinance properties held in limited liability corporations unless they're returned to "personal name" holding and held there for six months. . NO more asset protection this way. Ouch!

What sense does this make, because the loans aren't made in the name of the company LLC, that have no personal guarantees, that owners could walk away from. These types of loans are in the investor's names, and were "quit claimed" after LLCs were closed. Is this a governmental assault on real estate investors? Is this the end of "bargain-basement" real estate market investing? In other words, does this mean the end of real estate investing? NO.

Real Estate Investors are very entrepreneurial and they will always look for ways to get things done. If you can't get financing the old-fashioned way, then you have to have a new way of doing business. What does that mean? The answer comes in the form of Bulk REO Property Investing. Bulk REO Property investing is a very simple, yet profitable business, of quick-turning distressed Bank REO property for a huge fee.

About the Author

Duncan Wierman is the founding members of "Bank REO Property Deals. His company is connecting sellers of verifiable" product with qualified buyers. If you are interested in learning more about Bulk REO investing, he created a insiders training guide to help you through the maze getting started, all the way through the closing process. http://www.BulkReoPropertyInvesting.com/

Article Directory Source: http://www.articlerich.com/profile/Duncan-Wierman/46688

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