Hey, strap in.It's time for the epic real estate investing show.We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair.
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Let's go. This could be your last chance to buy a home with a zero down payment.And if you miss it, you're probably going to regret it because the real estate market has been on a roller coaster.
And this year, it's shaping up to be the craziest one yet.Home prices are climbing, interest rates, they're not cooperating, and some major political moves are about to shake everything up.
I mean, we've got a perfect storm brewing in massive legal battles that could disrupt the entire real estate industry.AI powered companies are secretly manipulating rents and keeping properties vacant.I mean, it's like a real life housing thriller.
There will be casualties.Will the zero down deal be one of them?Well, let's dive in. First thing, the current state of real estate in 2024.You know, one, you've got rising home prices.Since the pandemic, home prices have surged, hitting record highs.
I mean, as of early 2024, home prices were around 47% higher than in early 2020, with the median sales price now five times the median household income.
This surge, it's fueled by high demand, supply chain disruptions, and ongoing inflation, which has pushed up the cost of building materials and labor.The affordability gap, it's continuing to widen and widen and widen.
It's getting really big, making it tougher for first-time buyers and low-down payment buyers to compete in today's market.Number two, interest rates, mortgage rates specifically.
They've stayed high as the Federal Reserve continues its efforts to manage inflation.I mean, by 2024, 30 year fixed rates hovered around 7%, making monthly mortgage payments far more expensive.
And higher rates mean stricter lending standards, because banks are now requiring larger down payments to offset the risks associated with high rate environments.
This further restricts access to low or no money down loans, especially for buyers with tighter budgets.And despite the rising rates, prices have continued to go up also.Houses right now just might be as affordable as they're ever going to be.
And three, history shows us that periods with high inflation and rising interest rates like the 1970s and the early 1980s had similar impacts on the housing market.
These times made no money down deals scarce since lenders tightened criteria and buyers needed to come in with more money up front to secure a mortgage.
The current market mirrors some of these past trends with affordability at a multi-decade low and higher rates limiting options for those without significant savings.Fourth thing, banks tightening credit.
This means they're becoming a lot more selective about who they lend to, especially for buyers who are trying to get a home with little to no money down.
I mean, I just had a buyer with a VA loan fall out of escrow on one of my properties for this very reason.With high interest rates and more economic uncertainty, lenders are trying to protect themselves from potential default.
So this means they're more likely to ask for higher down payments to reduce their risk, making it harder to find zero down deals in this current climate.And number five, rising mortgage insurance premiums.
You see, for those who managed to get a loan with less than a 20% down payment, Mortgage insurance, it's almost always required.You know, as housing prices climb and lending risks increase, the premiums for this insurance are also going up.
And higher premiums add an extra layer of cost for buyers who might already be struggling with their mortgage payments due to rising interest rates. It makes these low or no down payment deals even more expensive in the long run.
Number six, the possible end of government-backed programs like FHA, VA, and USDA loans.I mean, they have traditionally made homeownership possible for buyers with little or no money down.
And despite the promises from politicians, there's growing speculation that these programs might tighten their rules.For example, if the FHA raises its minimum down payment or credit requirement or
If the VA program faces funding issues, it could severely limit the availability of low down payment options.
Without these government backed programs, many buyers could be forced out of the market entirely and forever, putting an end to the possibility of no money down deals for a lot of people.The good news is, though,
that currently these government programs and more are still available.And I put them all into a short document for you at ZeroDownKit.com.It's free.Now, outside of those, what does that leave us with?Enter creative financing.
It's becoming essential for zero down deals because not only is it possible to negotiate the down payment, but also the terms on how the balance is paid back. And because it's becoming essential, its popularity is falling.
It's growing because fewer buyers can qualify for conventional mortgages.I mean, every day, more and more are getting completely priced out of the market.
So creative financing options like seller financing, lease options, and subject to deals have become more attractive for buyers. for obvious reasons, but for sellers also.
You see, given the uncertainty in the market and overall economy, many sellers face long waits for buyers or rising holding costs like property taxes and maintenance.
Additionally, some are in danger of foreclosure or simply just want to offload properties quickly.
And because of these pressures, they're increasingly open to accepting creative offers that help them sell faster, even if the deal involves non-traditional terms or even if it involves selling at a discount.
Further, it doesn't just help move their property, it can actually lead to a more favorable price and terms for the seller.For instance, with seller financing, they can often get their asking price or even more by offering flexible terms.
Additionally, they can continue earning money from the property by collecting interest from the buyer.Also, they can spread out their tax liability over time.It's a win-win. in the right scenarios.
The seller becomes the bank and enjoys a higher price, steady cash flow, and a deferred tax bill while the buyer gets the deal that they need to make the purchase possible.
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Now, as competition for traditional real estate listings heats up, more investors are turning to off-market deals.
These are properties that aren't listed publicly, and they often come with more room for negotiation, are typically more flexible and motivated, making them prime candidates for creative financing.
I mean, investors can work directly with sellers to negotiate deals that would be impossible through traditional lenders.
And while FHA and VA loans still exist as low down payment options, government backed loans are really no longer as competitive as they used to be.
You see, rising home prices means that buyers using these loans are at a disadvantage and sellers often shy away from accepting them due to the slow and strict appraisal processes.
And this leaves a gap in the market that creative financing is stepping in to fill.The current economic environment, it's pushing more buyers and sellers to explore creative financing.
I mean, it's actually becoming the lifeline for buyers who can't get a traditional mortgage and for sellers who need to offload their properties in a restrictive market.
And unless something significant happens and we see, you know, a tumble in home prices, creative financing, it's not only the future of zero down real estate, it's looking like it's soon to be the final frontier of it.
Now, there are three primary types of creative financing that you need to know.The first one, subject to.Now, this is where the buyer takes over the seller's existing mortgage.
You see, by taking over a seller's loan, buyers can typically avoid the lending process and today's higher rates.
For sellers, this can be a way to move a property without going through foreclosure or waiting for a buyer who can qualify for traditional financing. The second creative financing strategy as a zero down path being lease options.
These offer a creative solution for buyers who may not have enough capital up front.In these deals, buyers lease the property with the option to buy it at a later date.
Now, often a portion of the rent payments counts toward their down payment so they can build that up over time. And this arrangement, it's perfect for buyers who want to lock in a property now, but need time to gather the full down payment.
I mean, lease options also offer flexibility for sellers who want to generate income while waiting for a buyer to complete the purchase.And the third strategy, and almost certainly the most popular one, And the most flexible one is seller financing.
And this is when the seller essentially becomes the bank.So instead of the buyer getting a mortgage through a traditional lender, the buyer makes payments directly to the seller.
In this arrangement, it allows the seller to potentially receive a higher price for their property by offering flexible terms.And they earn ongoing income from the interest payments.
For buyers, seller financing means they don't have to deal with strict mortgage requirements or high interest rates from a bank. I mean, it's a win-win.
The seller gets the price that they want and the buyer secures a deal without the hassle of traditional lending.As banks continue to tighten credit, expect seller financing to play an even bigger role next year and beyond.
With the economic outlook becoming more uncertain, this might be the last chance for buyers to capitalize on zero down purchases before they're left with no other option than to use creative financing.
I'm getting together this month with a small group of aspiring investors to guide them through acquiring their next properties using creative financing.
And I'm setting them up with operating capital, motivated seller leads, and one-on-one assistance in closing their deals.If you'd like to join us, go to EpicApprentice.com for the details.Enjoy.I'll see you next time.
Take care. And that wraps up the epic show.If you found this episode valuable, who else do you know that might too?There's a really good chance you know someone else who would.
And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here, and I'll take great care of them.God loves you, and so do I. Health, peace, blessings, and success to you.
I'm Matt Theriault, living the dream.
Yeah, yeah, we got the cash flow.You didn't know, homeboy, we got the cash flow. This podcast is a part of the C-Suite Radio Network.For more top business podcasts, visit c-suiteradio.com.
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