Are massive private equity firms and hedge funds becoming the best ally of real estate wholesalers in 2014?
The last few years have seen both buy and hold real estate investors and those wholesaling houses naming giant funds as one of their biggest complaints. With mega funds like Blackstone dropping in excess of $7 billion dollars to buy thousands of homes, and often paying top of the prices they were often seen as the enemy and biggest hurdle to greater deal flow and profits.
They swarmed on foreclosure auctions, REOs and left many others empty handed, while wielding all the cash, at the same time banks and hard money lenders pulled the plug on smaller investors.
However, this all seems to be turning around as we enter into 2014.
Mid-way through 2013 these massive market forces began announcing diversifying into different market niches. This range from talking about land to portfolios of new homes, buying up in Europe and Ireland.
In the fourth quarter of last year giants Cerberus and Blackstone moved to open up major new lending units which have been designed to fill the gap in the mortgage market for investors, while diverting more cash to help smaller investors versus competing with them.
These new lending arms like FirstKey Lending and B2R Finance are now getting into the full swing of pushing out millions of dollars to investors, and even in some cases becoming proactive in contacting smaller investment firms to offer them money.
These new loan programs are filling the void that banks haven't been willing to fill and hard money lenders haven't been able to. Commercial mortgage lenders might have been trying to step up recently, but these new programs are specifically tailored to those acquiring and refinancing pools of single family homes. More importantly they are coming in to offer loan amounts in the horribly underserved $500k to $10M, though will loan much more too.
Of course these loans are really designed for buy and hold investors with single family rental properties. So what is the advantage for those more interested in wholesaling properties?
Technically loans like these could be used for wholesaling. They may typically come with pre-payment penalties but that doesn't mean there aren't ways to use them. They can be used to leverage properties investors are holding to tap capital, may be assumable, and everything is negotiable in this game. However, even more significantly, simply connecting your ทาวน์โฮมมือสอง ราคาถูก end buyers with these lenders could mean flipping masses of deal flow and bulk deals like never before.
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