Contributed by: Brett Carter, Fidelity Direct Mortgage
20% in 2022? Gas Prices are up. Inflation is up. Interest rates are on the rise. Is this 1979 and Interest Rates are going to 20%? (Yes, they really were 20% I bought my first house in 1980 and my interest rate was 22%) Thankfully we are not going to see 20% Interest Rates, and this 20% is all about opportunity.
Investors have steadily increased their percentage of the Market every quarter in 2021 reaching a total of 18.2% of all homes sold in the 3Q21. The MBA and NAR are forecasting Investors will represent over 20% of all homes sold in 2022. This trend is going to continue into 2023 and 2024.Why is this happening? Increasing rents, rental supply versus rental demand, (yes supply and demand have an impact), COVID-19 Forbearance ending, and the new player in the Market Airbnb. Are you prepared to meet the needs of 20% of the Market?
Fannie Mae and Freddie Mac have Investor Products, but they do not meet the current needs of Investors. Investor clients have unique needs. Conventional Investor loans are more challenging and have limited options. One of the main challenges is the ongoing conflict between the goal of an Investors Accountant and Lender. An accountant’s goal is to reduce the Investors tax liability. This goal is met by reducing the taxable income. Lenders require income to qualify for a loan. This creates a challenge as we do not have “goal congruency” between the Lender and the Accountant.
Follow the “Smart Money.” We are seeing new concepts in the Market. Builders, even large National Builders, have started “Build to Rent.” Hedge Funds continue to purchase Rental Properties confirming the belief that the Rental Market will remain brisk. Do not miss 20% of the Market in 2022.
Fidelity Direct Mortgage has created a program that qualifies the investor only on the cash-flow of the subject property. It is a simple question…. Does the rent cover the mortgage payment? No tax Returns or other income verification for the investor are required. This includes Airbnb Properties. Learn how the FDM Debt Service Coverage/Cash-Flow solution can increase your investor business.
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