How to be an investor’s hero in uncertain times

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“One solution to remember is basically a buy, repair and refinance loan scenario,” said Mark Zummo-Hurley (pictured), wholesale manager at LendingOne. “Often times, an investor acquires a property that needs cosmetic or mid-level repairs to increase both the market rent and the value of the property. The intention is to keep the property for rent, to add it to its real estate portfolio. An investor is likely to go this route to create a profit margin in a property that may not be readily available in its current state. This added value allows them to build equity and is an ideal opportunity for cash refinancing once the property is completed with a signed lease.

Zummo-Hurley explained that the fix to hold model requires two loans. The first finances the renovations of the property and the second allows for permanent financing. The strategy allows investors to turn SFR goods into assets that would not necessarily offer a sufficient profit margin at the start. It’s a strategy that Zummo-Hurley says can attract more investors to the direction of a savvy broker.

Nonetheless, he noted that there are pitfalls in pursuing this strategy. Investors could overpay for a property that does not have positive cash flow, or they could over-improve the property as the rental market around them does not keep pace with the costs that must now be taken into account. counts in the rent. They can also often assume that financing will be in place for the permanent underwriting of the loan. Brokers, in partnership with LendingOne, can serve as advisers to investor clients, keeping them away from these mistakes.

LendingOne offers direct support for this advice, analyzing each transaction to ensure that the monthly rents are profitable for the investor and that they receive at least a debt service ratio of 1.15, or more, in positive cash flow per month after PITI collection. Their fixed-lease loan program comes with a transparent refinance loan product that can allow investors to move quickly to this model.

Zummo-Hurley believes that brokers and initiators looking to expand their reach into investor communities can use a fixation strategy to own and, with LendingOne on their side, start ramping up their volume in the investor market quickly.

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