Delayed Financing for Investors
It's December already and 2015 has been another great year for Austin real estate! The headlines continue to boast about our city's "record breaking" year (see this article). So what's going to happen in 2016? It's hard to say for sure, but I believe that we are going to see a big Spring selling season in Austin. If you read last month's newsletter, you'll know that this time of the year is the absolute best time to buy, but the worst time to sell. This is especially so in regards to duplexes and foreclosures, both of which we have extensive experience buying and selling.
To give you some perspective, there are 79 duplexes on the market right now. Twenty-six are priced under $250,000. What we have seen recently is that most of the duplexes being rented out are charging "under-market" rent. They have been purchased and rented by out-of-state investors and managed by incompetent property management companies that haven't kept an eye on where rents in Austin are going. We are also seeing sold comparables for upgraded properties that are far above what current listings are selling for. Yes, there is pain in getting these renovated, but we're here to help with that. If you have been thinking about buying an investment property, now is the best time. Give us a call and we can help you with the initial purchase in addition to helping you facilitate any necessary renovations.
I also want to tell you about a "finance hack" that most people probably haven't heard of. It's called Delayed Finance. Delayed Finance allows you to purchase a property with cash, then refinance within 6 months at its NEW appraised value. Not the appraised value at the time of purchase. We leverage this in a couple of different ways. First, we capitalize on the lure of cash, a quick closing and the appeal of a deal that doesn't have any chance of falling out because of financing. Secondly, we are able to complete repairs and improvements to the property (raising the property's value) and then refinance the property, getting it appraised at a higher price than what it was purchased for. This allows you to get 70% loan-to-value in some cases, reducing the amount of capital you need for both down payment and repairs. You can then be reimbursed by your lender for the sales price and pay the mortgage over time, just like any other home loan. It's a beautiful system, but it only works on properties that have that perceived increased value. Simply put, it's leveraging the instant equity in a property once it's renovated, allowing you to use that cash for other investments.
Are you interested in investment property? Do you have cash? Call or email us today and I'll send you a detailed sample calculation of how Delayed Finance could work for you!