Market Anomaly - Investors Listen Up

[Richard Allen]

Over the past 6 months, I've noticed a significant chance to purchase discounted real estate and sell it with owner financing. I see a unique market situation that offers substantial returns without the need for bank lending. Due to the FED's rate hikes, retail buyers' purchasing power has decreased significantly. As a result, cash buyers are sitting on the sidelines and are hesitant to invest in fix-and-flip deals due to the risk of losing money or being stuck with the property.

I believe that owner financing is the solution to these problems. However, I should note that not all real estate investment deals are suitable for owner financing, although most of them meet the criteria. I see an opportunity right now to buy clean houses and provide owner financing to buyers who may not be "bankable" but have significant income and large cash down payments. I'm referring to deals where traditional investors would typically invest in fixing up the property with new kitchens, bathrooms, floors, and paint, but they pass because the price is too high, and they fear a downturn. These are homes that have newer roofs and AC systems, are livable overall, and could be classified as "Scratch and Dent."

There are two key factors to consider, the rent in the area and how much can you sell the note to create liquidity.  Once those two factors are established, it's very easy to execute and make insane returns in very short periods of time.  Aiming for elevated rents in undervalued markets usually means high-interest rates on the originated loan (think 8.5% - 9.5%).  These higher rates make it much easier to sell the note on the back end. 

Happy Investing