My advice is to get in, get your money and get out like a Phat Cat. This is almost impossible to do, especially if you’re just getting started. New comers and seasoned veterans are finding the plethora of governmental regulation obstructing their economic plans.
Dodd-Frank has succeeded in virtually chocking the small mortgage out of existence. In a misguided attempt to protect the little guy lawmakers have restricted the lender's ability to make money. By reducing the amount a lender can charge on notes under $100,000 lenders find small notes are not worth their time. It takes just as much work to do a $50,000 loan as a $500,000 loan except the lender doesn’t make much money on the small loan.
That makes me think of the story of the fisherman who was out on the lake fishing. He heard a bump on the side of his boat and looked over the side to see what it was. He was surprised to see a snake with a frog in its mouth. The fisherman felt sorry for the frog so he grabbed the snake and made it turn the frog lose.
The frog swam ashore and the fisherman was feeling pretty good about the good deed he had done, but then he looked at the sad snake in his hand he began to feel bad about the snake. He looked around for something to feed the snake, but he had not brought any food. He had, however brought along a bottle of fine whiskey so he poured a little into the snake’s mouth and put him back in the water. The snake swam off quite content and the fisherman again felt pretty good until he heard
another bump on the side of the boat. When he gazed over he was surprised again to see the snake was back, but this time it had 2 frogs in its mouth. You need to be careful of what you do even if you have a good intention because you get the behavior that you reward. Dodd Franks reward banks that make big loans and punishes banks that make small loans.
The 3 Fs
The new thing is called "The 3 Fs;" which stands for Fix, Flip and Finance. In the old economy with liberal banking regulation, investors would simply fix and flip. The buyers didn’t have much trouble getting loans. There is no way that can be said today. There are plenty of opportunities to buy, fix and flip properties, however, getting someone to qualify for a loan is as tough as the back end of a shooting gallery. Many Fix and Flippers have been beating their heads up against the "Banking Regulatory Wall" but with very little results other than a bloody head. The new regulations have made it almost impossible for a small home buyer to buy an affordable house. This makes it very hard to flip a fix and flip house. Time is money when you are a Fix and Flipper and waiting for someone to be approved for a loan can become expensive quickly.
After the recent economic downturn, millions of people now have such poor credit it is a chore to find a qualified buyer. There are very few people in the lower income bracket that escaped the recession with good credit.
A lot of Fix and Flip investors have come to the conclusion that flip part of fix and flip didn’t pay so well any more. Bank underwriting guidelines
severely restrict the amount that the Fix and Flipper can charge for the house. Banks have high jacked the flippers right to set his own price. The Flipper can’t sell a property for what the market will bear but must sell it for value from an appraisal. Since the banks control the appraisals the banks are in fact controlling the price flippers can charge. If you owner finance the property, you become the bank then you can find out for yourself what the true market value is.
SELF FUNDIND FOR FIX & FIXER'S!
This strategy will help Fix and Flippers get into Partnerships with a note Investor group.
Not only can a Fix & Flipper finance his or hers next project without using a bank or hard money lender.
They can fund the next rehab property very quickly using JW's newest innovative concept in Performing Note's (PPN) Partial Payment Note's for Fix & Flipper's without jumping through hoops to fund the next project.
"A Fix & Flipper can create a Partial Payment Mortgage Notes that he/she can sale".