Friday, March 18, 2011

Housing Industry Woes Means Opportunity for Investors with Access to Capital

The housing industry's got a full plate these days.  Foreclosure filings outpace sales 3 to 1. Government loan modification programs to keep millions of American in their homes have succeeded in helping only half a million. Mortgages cost more, and may require higher down payments.  And this is just the first course of bad news. The “double-dip” in home values as a result of banked-owned properties flooding the market looms, and Americans, for the first time, question the value of homeownership. But despite what appears to be dire news, smart real estate investors have found opportunity in the midst of the current turmoil.

The following are just a few issues perceived of as ills afflicting the real estate market that are creating favorable conditions for residential and commercial property entrepreneurs:

  • Failure of government loan modification programs.  As a result of distressed homeowners failing to obtain permanent workouts through HAMP, many are opting for short sale options which put property on the market at steep discounts
  • Increasing inventory of bank-owned properties on the market.  As the supply of homes for sale rises with the injection of more REOs, prices will continue to fall. Analysts have even predicted as high as a 25% drop by the end of 2011
  • Increased demand for rentals.  As homeowners either lose their homes or strategically choose to “wait-and-see” on a home purchase, millions have decided to rent. Single-family home rentals are in high demand and the values (and rents charged) of apartment properties are soaring as a result of this increased demand.

Any increased activity in home sales in 2011 has been directly attributed to all-cash buyers entering a market that has excluded typical buyers due to stiffer underwriting guidelines and higher interest rates.  Current conditions favor the investor with available capital to take advantage of low prices and eager sellers.

Unfortunately, not all have the liquidity for cash deals, and often need flexibility and speed in obtaining financing for distressed or multifamily property opportunities --- factors usually absent if acquiring financing through traditional lending channels.  Direct asset-based lenders offer an alternative to the restrictive bank underwriting machine.  These “hard money” lenders allow prospective borrowers to leverage their existing portfolio of property investments as collateral toward financing of new property purchases.  Because an asset-based lender will evaluate each borrower as a unique relationship, it can craft underwriting guidelines and loan terms that allow fast decisions for faster closings for their clients. As an additional level of flexibility for select borrowers, hard money lenders may be able to offer asset-based credit lines toward the purchase of note and REO acquisitions. Hard collateral equates to fast access to capital that empowers investors to act quickly. 

If one believes the headlines, real estate could seem a risky investment.  But real estate, like the economy, is cyclical in nature.  Savvy investors are positioning themselves now for when conditions improve and property values rise. Having access to available, quick capital is the key to turning an economic downturn into a profitable advantage.

Bridgelock Capital / Peak Finance Company, a member of the Peak Corporate Network headquartered in Woodland Hills, California, provides fast, flexible, asset-based loans (also known as “hard money loans”) for borrowers and/or properties that do not meet conventional underwriting guidelines. As a direct lender, Bridgelock Capital / Peak Finance Company finds unique solutions to meet our clients’ nonconforming borrowing needs.

In addition to mortgage loan financing, the Peak Corporate Network offers loan servicing, residential short sale, 1031 exchange, trustee work, foreclosure services, and real estate sale brokerage services.  These services are available primarily throughout the Western United States for both residential and commercial real estate properties and loans.

Bridgelock Capital / Peak Finance Company
5900 Canoga Avenue, Suite 200
Woodland Hills, CA 91367

Toll-free: 877-623-4268


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