By now you've probably all heard about the big fall-out last week... numerous sub-prime lenders are going down.
What does that affect?
Well, firstly, all other lenders are running scared.... lending programs aimed at sub-prime borrowers are all being amended on an almost daily basis. Requirement credit scores are now moving higher.... before you might have been able to get 100% financing with a score of 560. Good luck with finding that now. Your score is more likely to have to be around 650 or higher.
Also, 100% financing for sub-prime borrowers was fairly easy to find... now, not the case any more. You now actually need to have some money if you want to buy a house. Novel idea I know but people in other countries seem to be able to do it without too much of a problem.
Anyway... there are huge implications for investors.
Firstly, if you're a "flipper", your pool of prospective buyers has just been reduced quite dramatically in the last few weeks.
Secondly, if you're a landlord, you should be feeling a warm glow as the sun is now turning it's rays toward you. Winter is over, literally & figuratively.
The 5 BIG reasons why it is now a good time to be or become a landlord.
- Now that sub-prime tenants are no longer able to buy a home with easy 100% money they're not going anywhere fast.
- 2007 is going to be a big year for foreclosures, those homeowners are going to be tenants for a while to come.
- With the increased demand for rental accommodation, the vacancy rates should diminish significantly.
- With the increased demand for rental accommodation, the rental rates will harden and increases will stick more easily.
- With increased rental income, the value of your portfolio will increase.
So, do we have any good landlord deals out there right now?
Yes... we do.
I still have two duplex investments in Conroe that are available right now. They're fully leased. The cash-on-cash return in year 1 is almost 19% with a 10% deposit and assuming you qualify for a mortgage rate of 8% with your good credit.
Click here for a detailed analysis that also contains photos of the two duplexes.
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