HEROLD FINANCIAL, LLC - (479) 282-1827
What should savvy real estate entrepreneurs do right now?
Written by Drew Herold on Jan. 26th 2022
Many real estate entrepreneurs are trying to figure out what to do in these volatile times.  It is quite clear that the era of historically low interest rates is likely over at least in the short- to mid-term.  One reason why these low rates are as good as gone is because the Fed will need to raise rates in order to control recent inflationary pressures caused in part by Covid and related supply chain issues.  The Fed has always been super afraid of inflation, and this is for good reason.  Inflation if not property controlled can wreck an economy.  

So, what to do now may you ask?  Well, real estate investors need to formulate an investment plan coupled with a financing strategy that will take advantage of both low interest rates and inflation.  One such investment plan that is quite doable for even small real estate investors is to buy single family homes and/or condos for long-term rent.  The financing strategy entails buying these properties with fixed rate debt.  Savvy investors will also look to see if they can make the debt assumable by future buyers if at all possible.  So as time goes by, the investor's debt costs are fixed, and rental revenue for most low- to mid- price point residential should increase significantly along with inflation.  Yes, you can have your cake and eat it too.  And it will be a mighty delicious cake at that if you're able to structure your debt as assumable by third parties since you will have crafted a quite valuable financial asset.  This is because future buyers in a presumably higher interest rate environment will pay more for your property if they can inherit the nice low rates on your debt.

If you're interested in the above, please contact one of the friendly sales professionals at Herold Financial, LLC about available mortgage programs that might work for you and this strategy.  One such program is called the DSCR program whereby the lender qualifies you based on the income generated by the target investment property (and not by your personal income and/or employment history).  Lenders will rely heavily on your FICO/credit score.  Excellent credit scores will result in more favorable debt terms.  Creditworthy borrowers can achieve 80% LTV.  Lower LTV options for these borrowers can result in fixed rates as low as 3.99%.  Amazingly there is a 40-year fixed rate option that is accompanied by a 10-year interest-only period.  While the DSCR ratio (net operating income divided by debt service) is important to the lenders, DSCR ratios of <0.75x or even no ratios at all can be achieved for borrowers with high FICO's and nominal LLPA's.  Lastly no rental history is required, and rental rates are determined based on what is determined to be market rents according to the appraiser.

Please call us at (479) 282-1827 to discuss more details.          
            

Drew Herold


Drew Herold helps people find the right mortgage for their situation given the constraints. He will use the latest technology and leverage his expertise to help his borrowers achieve this objective. Please do not hesitate to contact Drew regarding any questions you may have.
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NMLS: 2262347
1 S Sherwood Dr, Rogers AR 72758

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