How To Weather Real Estate Investing Challenges

Until recently, real estate investing was so unrestricted that real estate investors could do most types of transactions with no restrictions. Things have changed with the real estate bubble forcing real estate investors to re-discover themselves to succeed.

Here are a few things that affect real estate investing business.

1) Taking over mortgage payments

This business model earns real estate investors lots of money. Deals with lease options, rent to own, owner financing, form a big part of most real estate investors income.

Lately more and more states are implementing tight rules that require that you disclose to the lender before taking over payments.

They also require you to disclose to the buyer. Some states force you to less than 180 days for lease options. You must therefore be ready to do a lot of paperwork.

2) No stated income loans
Gone are the days when self employed people could easily get loans. Previously you just needed to provide proof of assets like bank statements and you could get funded for a mortgage.

This is no longer possible, so if you are self employed, you must have an alternative way of buying properties.

3) Hard money credit based?
Surprising, even hard money lenders are lending based on credit and income.

The rules are more relaxed, but you have to shop for good hard money lenders.

4) Limit on number of properties you can finance
Currently you can finance up to 10 properties if your income is fully documented and have a credit score of 720 or more.

For each property you buy, you must show cash reserves equal to six months your monthly payment.

Of course if you are self employed you cannot document your income!

5) Seasoning rules
You cannot refinance a property to cash out until you keep it for 12 months even if you bought it with cash. In other words you cannot just move on to the next deal when you want!

If you buy rental properties, you have to take this into account.

If you are self employed, can you refinance if you cannot document your income?

6) No refinancing properties held in an LLC
You must hold a property in your personal name in order to refinance. If they are held in an LLC, you must transfer them to your personal name for 6 months before you can refinance.

So what do these new limitations mean? Is it the end of real estate investing as we knew it?

The answer is no. Real estate investors know how to re-discover themselves and are flexible enough to adapt to changing market forces.

No matter what type of real estate investing business model you do, it is important to close as many deals as you can spending as little money, time and effort as possible to be profitable. Learn how an automated real estate investor website can simplify your business putting more money in your pockets.