3 Reasons You Can't Get a Mortgage Right Now | Why is it so difficult to get a real estate loan?


Real estate, like all other asset classes, goes through market cycles. As the market rises, property values ​​increase and, in general, the possibility of obtaining a loan becomes easier. As the market falls, property values ​​decline and the ability to obtain a loan generally becomes more difficult. Usually when loans become more difficult to obtain; you can start to ask yourself a list of questions: Where do I get money for my next deal? Why has it gotten so much more difficult to get a loan today when it seemed easy two months ago? And most importantly, how am I going to finance my next deal? To answer the questions above, we must take a step back and see how loans have evolved in real estate. I started investing in real estate when I bought my first duplex in 2004 outside of Philadelphia with a private loan of $ 30,000. Since that first deal, I have seen four different loan markets. From 2005 to 2008, real estate went through its infamous “no doc” period that basically provided loans without the need for documentation. As you can imagine, this did not end well with a collapse in asset prices that had not been seen since the great depression. From 2007 to 2010, the pendulum swung completely the other way, and obtaining a loan became extremely cumbersome. This period was famous for the large number of offers to buy, but without capital to buy. For the past nine years, the process of getting money for a deal can be summed up in one word: easy. When I talk about getting money, I mean the debt of the deal. For example, an apartment building costs $ 1 million. For simplicity, I have to raise 25% or 250k of the deal from my investor partners, leaving the remaining 75% or 750k to be financed by a debt provider, such as a bank, agency debt, or private lender. Obtaining that 75% of debt has been “easy” until the COVID virus. Now we enter what I call the “crazy crown” atmosphere. Which is a fluid and ever-changing environment that may be completely different on the day I publish this article. 📘Grab your copy of “Private Capital Raising” available now on Amazon

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Viralrook: 3 Reasons You Can't Get a Mortgage Right Now | Why is it so difficult to get a real estate loan?
3 Reasons You Can't Get a Mortgage Right Now | Why is it so difficult to get a real estate loan?
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