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CHICAGO – As National Homeownership Month comes to a close, the Illinois Housing Development Authority (IHDA) wants to remind individuals that free assistance is available to overcome the financial barriers to owning a home. IHDA currently offers up to $10,000 to help individuals, families, veterans, and others realize that the dream of homeownership is achievable and more than within reach.

“Every Illinoisan deserves the opportunity to become a homeowner regardless of their zip code,” said Governor JB Pritzker. “That’s why my administration is committed to helping prospective homeowners—especially those from historically disadvantaged communities—overcome the financial barriers of owning a home. Through IHDA’s Access Mortgage programs, Illinoisans who would otherwise not be able to afford a down payment or closing costs can apply for forgivable or deferred assistance loans.”

Launched in 2018, the IHDA Access Mortgage programs are open to both first-time and repeat homebuyers. Available statewide, each mortgage option comes with an affordable, fixed interest rate and up to $10,000 to assist eligible borrowers with their down payment and closing costs for the purchase of a new or existing home. The unique program offers three tiers of assistance depending on the needs of the homebuyer.

“Last year, one in every thirteen people who bought a home in Illinois utilized an IHDA program to help overcome down payment costs and other hurdles,” said IHDA Executive Director Kristin Faust. “Homeownership helps foster strong communities, create generational wealth, and provide family stability. Everyone in this state deserves the opportunity to buy a home for their families and IHDA is ready to help make that a reality.”

Eligibility for an IHDA mortgage is based on the borrower’s credit profile, household income, and the purchase price of the home. In addition, potential homebuyers are required to complete pre-purchase homeownership counseling to ensure they are making the best decision for them.

Roushaunda Williams, a resident of Chicago utilized IHDA Access Mortgage in 2023. “If I hadn’t received assistance from IHDA, this purchase would not have taken place for some time,” said Williams. “Everyone was very helpful throughout the purchase of the property. I am now a homeowner, and this dream may have been deferred if it wasn’t for IHDA.”

“The IHDA Access program gave me the opportunity to give my kids a better life,” shared Jose Alberto Gonzalez Ramirez of Crestwood. 

All IHDA Mortgage programs are offered through a vast network of more than 180 lenders throughout Illinois. Many of these loan officers have worked with IHDA for years and are experts in affordable mortgage financing. IHDA programs can be stacked with local assistance programs to add even more value to the homebuyer. If you are interested in buying a home with help from IHDA Mortgage, you can find a participating lender near you to discuss your options at www.ihdamortgage.org.

Additionally, for those still uncertain if owning a home is the right step, IHDA has partnered with the Federal Home Loan Bank of Chicago to administer the Community First® Housing Counseling Resource Program (HCRP) who can help answer those questions and determine if it is the right time for you. HCRP is a three-year program that provides grants to nearly two dozen HUD-approved housing counseling agencies in Illinois to expand service to minority and low- and moderate-income homebuyers. These agencies have already provided free counseling to more than 15,250 individuals and helped 1,955 households purchase a home in Illinois after receiving housing counseling services.

About the Illinois Housing Development Authority

IHDA is a self-supporting and mission-driven state agency dedicated to financing the creation and preservation of affordable housing in Illinois. IHDA offers affordable mortgages and down payment assistance for homebuyers, provides financing for the development of affordable rental housing, and manages a variety of assistance programs to create communities where all Illinoisans can live, work, and thrive. Since it was established in 1967, IHDA has delivered more than $27.8 billion in state, federal, and leveraged financing to make possible the purchase, development, or rehabilitation of more than 327,000 homes and apartments for low- and middle-income households. For more information on IHDA programs, visit www.ihda.org.

New YorkCNN — 

Help may not be on the way for first-time homebuyers frustrated by high mortgage rates and even higher home prices.

Economists at Bank of America warned this week that the US housing market is “stuck and we are not convinced it will become unstuck” until 2026 — or later.

The bank said home prices will stay high and go even higher. The housing shortage will persist. And mortgage rates may not fall much — even if the Federal Reserve finally delivers long-delayed interest rate cuts.

“This will take many years to work itself out. There isn’t a magic fix,” Michael Gapen, head of US economics at Bank of America, told CNN in a phone interview. “The message for first-time homebuyers is one of patience and frustration.”

Housing affordability is a major problem in America.

Home prices spiked during Covid-19 and then the Fed’s war on inflation sent mortgage rates surging.

The one-two punch has made it a historically unaffordable time to buy a home.

“It’s been a weird combination. Mortgage rates rose substantially but so did home prices. That typically doesn’t happen,” said Gapen.

The supply of homes simply cannot keep up with demand. Prices have had nowhere to go but up.

The median price of a previously owned US home climbed in May for the 11th month in a row to a record $419,300 — up 6% from a year earlier.

Bank of America expects home prices will climb by 4.5% this year and then by another 5% in 2025 before eventually dipping by 0.5% in 2026.

‘Lock-in effect’ could persist for eight years

One major problem hurting supply is the “lock-in effect.”

People who already own their home are effectively locked into their property after refinancing or getting a mortgage during the pandemic when ultra-low rates were available. Buying now at current rates would require them to pay hundreds of dollars more per month on interest alone. Plus, home prices have gone up.

For many, it just doesn’t make sense to move. And because those homeowners are not moving, the supply of existing homes on the market is limited.

“Why would I sell unless I have to?” said Gapen. “Prices have gone up and the mortgage rate is a lot higher. So, I’m content to stay where I am.”

Bank of America warns the lock-in effect could persist for another six to eight years, keeping a lid on supply during that time.

That’s because the mortgage rate of people who already own is historically low. And the rate for new buyers is elevated. Bank of America doesn’t think that gap will shrink much for years.

This problem helps explain why pending home sales fell in May to a record low, according to data released on Thursday. Pending sales, tracked by the National Association of Realtors since 2001, are a forward-looking gauge of home sales that measures contract signings.

‘They can’t take their mortgage rate with them’

Dave Liniger, who co-founded real estate giant RE/MAX with his wife in 1973, said the lock-in effect means people who want to size up to a bigger home can’t, and the next generation can’t even get their foot in the door for a starter property.

“The move-up market does not exist,” Liniger told CNN. “Starter homes have doubled in value and the owners would like to move up but the problem is they can’t take their mortgage rate with them.”

Liniger agrees that the housing market is stuck, for now at least.

“We have to muddle our way through this for a period of time,” he said.

But Liniger urged first-time homebuyers to remain patient. “Don’t give up the dream,” he said.

In theory, a flood of supply of new homes would help unstick the market.

However, Bank of America expects housing starts — which is a measure of newly constructed homes — to remain flat for the coming years. And housing starts have still not recovered from the bursting of the housing bubble in the mid-2000s.

Divide between haves and have-nots

The forecast for a “stuck” housing market cuts both ways.

The spike in home prices has padded the net worth of existing homeowners and given them additional financial flexibility.

The longer they are prevented from buying, the more time they miss out on wealth creation.

In a recent Gallup poll, just 21% of Americans said it is a good time to buy a house, tied for the worst reading in Gallup history. An overwhelming majority — 76% — say it’s a bad time to buy.

Gapen, the Bank of America economist, said if the US economy achieves the soft landing that he expects, meaning that inflation cools without triggering a recession, there is a risk that home prices will rise even more than anticipated.

On the other hand, if the durability of the recovery has been overestimated and a recession is on the way, home prices could tumble and affordability would ease.

“But, obviously, you don’t want to go through a recession to have better housing affordability,” he said.

TAMPA, Fla. – A recent report is unpacking the impacts of rising homeowners insurance costs in Florida. 

According to a new report from online realtor Redfin, nearly three-quarters (70.3%) of Florida homeowners say they or the area they live in have been affected by rising home insurance costs or changes in coverage (e.g., their insurer dropped them) in the past year. This compares with less than half (44.6%) of homeowners nationwide.

The report is based on a Redfin-commissioned survey in February of this year. The survey was fielded to 2,995 U.S. homeowners and renters.

“Insurance is top of mind for homeowners in Florida and California because those states are the epicenters of the insurance housing crisis,” Kenneth Applewhaite explained in an April 17 news release. 

Applewhaite elaborated that many homeowners have seen their premiums skyrocket, and some have lost coverage altogether because intensifying natural disaster risk has prompted many insurers to stop doing business in Florida and California. 

In the Sunshine State, 11 insurers have liquidated amid growing flood and storm risk,” he wrote. 

Mounting insurance costs and natural disasters are prompting some people to relocate. According to Redfin, in Florida, 11.9% of survey respondents who plan to move in the next year cited rising insurance costs as a reason — roughly twice the national share of 6.2%. 

But while some people are leaving disaster-prone areas, there are still more people moving in than out, a separate Redfin analysis found.

Homeowners living in areas where insurance premiums are surging are at risk of seeing their properties gain less value than homeowners in areas with stable premiums — and in some cases, they may even lose money,” said Redfin Chief Economist Daryl Fairweather. “Homes with low disaster risk and low insurance costs will likely become increasingly popular, and thus more valuable, as the dangers of climate change intensify.”

Condo prices in some parts of Florida have already started to fall amid an increase in insurance costs and HOA fees.

As a property developer or home builder, you know that time is money. While you can choose from many construction loan lenders, private or hard money lenders offer significant advantages over a traditional mortgage lender. Here are just some of the advantages of hard money loans:

• Loans close much faster than traditional mortgage loans.
• Programs range from home construction loans to condominium and multi-family construction loans.
• Terms are based on your experience and the project’s prospects for success.
• Loans come with interest-only payments and a balloon payment on completion.
• There are no prepayment penalties.

Interested? Read on…or contact us for details or book an appointment to learn more.

When financing construction projects, whether you are building or renovating, it is important to thoroughly understand your construction loan – its features, how you benefit, what’s required to qualify, and the application process. Financing a construction project is different than financing a home purchase with a standard mortgage loan. Your real estate investment in the lot, construction costs, and activities in each construction phase will affect your profit. Therefore,when choosing a lender for your construction loan, you must know your options and what considerations to weigh to help you select the right one.

At Muevo, we’re committed to educating borrowers about the financing alternatives available for their projects and helping them secure the right hard money loan to meet their unique needs. In this blog, we’ll review the ins and outs of construction loans – how they work, why they can be advantageous, what you’ll need to apply and be approved, and why you should consider a private lender like Us as your financing partner. We’ll also share some potential challenges and how to overcome them as well as several tips to ensure you successfully qualify for our construction loan program.

Understanding Construction Loans

Construction loans are used to finance the building of a range of property types. At Muevo, we offer them for the construction of:

• Condominiums
• Single-family residences
• Two-to-four units
• Multi-family homes
• Townhouses
• Other property types (on a case-by-case basis)

There are several distinct advantages of obtaining a construction loan for these particular projects. First, a construction loan provides the necessary funds to cover embedded costs including labor, materials, permits, and other related expenses. Securing such a large amount of capital upfront for a construction project would be challenging without financing.

Second, a construction loan ensures proper cash flow management via the draw process, which we’ll explain in greater detail later in this blog. Third, these loans make it possible to seize construction opportunities in high-demand areas – which yield higher returns once completed. You also stand to benefit from increased property value and rental income (if you are planning to rent once the project is completed). Finally, financing via a construction loan will help you build equity for your next project.

Qualifying for a Construction Loan

Once you’ve determined that a construction loan is the best way to get your project off the ground and ultimately completed, you must prepare to qualify with a lender.

Before all else, become familiar with the credit score and financial requirements necessary to be approved for the construction loan from your lender. And know that both your personal and business financials will be thoroughly reviewed. As such, your lender will require you to provide related documentation and paperwork for verification purposes. They will make an assessment of your financial situation by also weighing income and debt considerations.

Other important financial requirements to be aware of are the required down payment amount and your loan-to-value ratio. These also factor into whether you can qualify.

In addition, you will need to furnish information about your project and those involved in its construction, such as:

• Contractor credentials
• Property information and proof of lot/land ownership (title deeds, zoning info, property surveys, etc.)
• Insurance coverage
• Any legal contracts with the construction team, architect/engineers, or other parties involved

You may also be asked to provide even more documentation as the information a lender needs can vary by project. At Muevo, we use this property data to properly assess its value and ensure compliance with local regulations.

The Construction Loan Process

When applying and obtaining approval for a construction loan, the process is fairly straight forward.

1. Pre-application phase – Borrower investigates requirements, gathers necessary documentation
2. Loan application and approval – Application and documents are submitted, reviewed, and approved
3. Construction contract and plans review – Lender reviews all required property-related information
4. Loan disbursement and draw schedule determination – Funds are distributed in accordance with outlined draw schedule
5. Inspections and project monitoring – Lender conducts necessary inspections and continually monitors the progress of the project
6. Transition to permanent financing – Draw schedule concludes and regular payment schedule commences

Finding a Private Lender for Construction Loans

When it comes to construction loans, there are some district benefits in working with a private lender. Private lenders offer more flexible terms and loan amounts than traditional lenders.

Their loan application and funding process is much quicker too. Private lenders are also well versed in the local real estate markets in which they operate. In addition, once you have established a partnership with a private lender, there is the potential for additional financing opportunities once your project is successfully completed.

However, to select a private lender that is a good fit for your project, you must consider a number of factors:

• Reputation
• Experience
• Loan terms
• References
• Financial stability

Research and compare private lending companies in your area based on these factors to identify where you can most easily navigate the application and approval process. For example, loan terms can vary considerably. At Muevo, our standard new construction loan terms are as follows:

• Max Loan Amount: $10,000,000
• Max LTC/ARV (Loan to Cost / Loan to After Completed Value):
  – Experienced Investors: The Lesser of 82.5% LTC or 70% ARV.
  – Inexperienced Investors: The Lesser of 65% LTC or 55% ARV.
• Rate: Starting at 10.5%
• Term: 12-24 months
• Payments: Monthly Interest Payments with Balloon at Maturity
• Prepayment penalty: None

Managing Construction Loan Funds

One of the most important steps that must be taken to complete a construction project successfully is to create a detailed budget. This is where the draw process comes in. Rather than receiving a lump sum check, construction loans pay out the loan amount over the course of the project. The installments are called draws, as the lender draws funds from the account. A draw request is necessary to ensure disbursement of the funds.

Many lenders do prorated draws, typically 80% financing/20% equity ratios on every draw. Our loans start once the 20% has been completed. Should you have investors, it is important that they understand the draw process and the difference between money spent and job completed.

In the end, the draw process ensures the proper allocation and use of funds and allows for contingency planning in case there are any unexpected costs.

You have questions. We have answers.

Who are the best hard money lenders in Florida?

Are you looking for private or hard money lenders for your construction loans? Do your research! The best private lenders, whether in Florida or anywhere else, have proven track records that are easily accessible on your County Recorder of Deeds website. Don’t just take their word for it. Ask your lender to show recent transactions they have funded and provide a link to the recorded documents. Beware of companies that advertise as lenders but are just brokers, adding additional fees. As a builder or investor, take your time to research potential lenders and ensure they are legitimate before proceeding. Experience counts. Muevo has brokered over 3,000 loans totaling more than $300 million in the last 10 years. Our loan programs have financed thousands of projects with attractive construction loan rates, reasonable closing costs, and, most crucially, flexible loan terms and speed!

Will the bank or private lender let me be my own general contractor?

Yes, many home builders and contractors utilize construction loans to fund their own construction projects. You will be subject to the same requirements as those developing investment properties using a third-party general contractor. Acting as your own general contractor should not affect your hard money loan as long as you have experience and a history of successfully repaying your construction loans.

Tips for a Successful Construction Loan Experience

Inherent to the construction process are several potential challenges that can impact your financing. These include construction delays and cost overruns, changes in market conditions and interest rates, and unexpected construction issues all of which require contingency plans. To that end, there are several things you can do proactively to mitigate these risks.

First and foremost, be sure you are engaging with professionals, such as seasoned architects and experienced contractors. And do all you can to communicate clearly and constantly with your lender and construction team. Closely monitor the progress of your project and resolve any issues that arise as promptly as possible. Finally, stay organized. One of the best ways you can do that is by maintaining accurate, up-to-date documentation throughout the course of your construction project.

Now that you have a good understanding of how construction loans work, how to qualify, how you benefit, how to select a private lender and how to ensure a smooth experience, you can confidently move forward and secure the financing you need for your construction project. Take the next steps in obtaining a new construction loan with RBI! Click here for more information.

Distress reared its head in Texas last year, and foreclosures are skyrocketing.

In March, commercial foreclosures in the state increased by 129 percent year-over-year and 31 percent from the previous month, Bisnow reported, citing property data company Attom Data Solutions. California, New York and Florida were the only states with more foreclosures last month.

Commercial foreclosures in Texas totaled 55 last month, following 42 in February and 56 in January. Nationwide, there were 625 in March, up 117 percent year-over-year and 6 percent month-over-month. 

There’s been a gradual uptick in commercial foreclosures since spring 2020, when pandemic-related moratoriums and financial aid safeguarded property owners. But with these measures now largely unavailable, landlords are facing a harsh reality.

Foreclosures and other signs of distress have been especially apparent in the office sector, which continues to get hammered by the remote-work movement that’s driving up vacancies and available sublease space to historic highs. Foreclosures are on the rise across all asset classes, though. 

 Office vacancies in Texas’ major metros were among the highest in the nation to start the year, according to the report. Notable foreclosure cases this year involve the iconic Oil & Gas Building in downtown Fort Worth, the Scanlan Building in downtown Houston and the office building at 211 North Ervay Street in downtown Dallas.

Multifamily foreclosures have been most evident in Houston and San Antonio markets, with syndicators Applesway Investment Group and GVA being on the wrong side of numerous cases. 

Top Five Reasons to Invest in Texas

Diverse and Desirable Locations

Texas is a treasure trove of diverse locations that attract both tourists and residents. From its stunning coastline to its rich cultural experiences and natural parks, Texas offers a wide range of options for investment in vacation rentals. Moreover, with the state experiencing significant population growth, it presents an excellent opportunity for long-term rental and fix and flip investments. When considering investment locations, it’s crucial to evaluate what makes an area attractive and sustainable in terms of tourism, job opportunities, and overall desirability.

Thriving Economy and Job Market

Texas consistently ranks high in terms of economic growth, boasting a strong employment and income forecast for the foreseeable future. The state is home to a plethora of major companies, including over 100 of the largest public and private companies in the U.S. These factors contribute to a stable and appreciating real estate market. It’s worth keeping a close eye on established businesses and new enterprises moving into the area, as they indicate sustained residential demand and potential investment opportunities.

Continuous Population Growth

Population growth is a crucial factor for real estate investors as it signifies a robust demand for housing. As the second most populated state in the U.S., Texas projects continued growth in the future. By analyzing population growth data at the city or county level, investors can identify areas with the highest potential for investment and capitalize on the growing demand for housing.

Robust Rental Market and Attractive Rental Rates

Texas offers a thriving rental market with a wide range of rental rates across different locations, counties, and neighborhoods. Conducting thorough research on rental rates specific to your target area is crucial for maximizing profitability. Data from Zillow shows a significant 5.8% increase in the median rent in Texas over the past year, with rental rates projected to continue rising according to the Dallas Fed report. 

Supportive Legal and Regulatory Environment

Texas provides a landlord-friendly legal and regulatory environment, offering protections for property owners and favorable landlord-tenant laws. This ensures that investors have the necessary legal framework and support to manage their properties efficiently and protect their investment interests.

Investing in the real estate market in Texas offers a vast amount of exciting opportunities, particularly in select cities that shine as prime options. When considering real estate investment in Texas, it’s essential to take into account various factors that contribute to the overall appeal and potential profitability of each city. In this section, we will delve into some of the top cities in Texas for real estate investment.

In the dynamic landscape of real estate investment, the build-to-rent (BTR) sector is emerging as a robust and resilient opportunity for investors. The BTR boom is fueled by a shifting demographic landscape, changing work patterns, and evolving housing preferences. As we look ahead to 2024, the opportunities in BTR real estate are poised for continued growth and adaptation to the demands of the market.

Meeting the Changing Needs of Home Seekers

The surge in BTR housing demand can be attributed to a diverse range of demographics, including young families, remote workers, and empty nesters. These groups seek the benefits of homeownership but face barriers in the traditional real estate market. With high occupancy rates and steady rent growth, the BTR sector is an increasingly attractive investment avenue.

Blending Work and Home Life

With homes serving as workplaces, there is an increasing demand for multifamily communities that offer spare bedrooms and shared workspaces. BTR properties can capitalize on this trend by providing spaces and amenities that seamlessly blend work and home life. Communities located farther from major job centers may experience growing demand as renters prioritize flexible work arrangements over daily commutes.

The build-to-rent sector presents lucrative opportunities for real estate investors in 2024 and beyond. By staying attuned to market trends, focusing on property versatility, and embracing the changing needs of renters, investors can position themselves for success in this evolving landscape. As the real estate market continues to transform, BTR stands out as a resilient and forward-looking investment choice.

Versatility in Exit Strategies

One of the key advantages of investing in BTR properties is the flexibility in exit options. Investors can choose between renting or selling to individual home buyers, depending on market conditions and investment goals. This exit optionality provides a strategic advantage and enhances the overall resilience of BTR investments.

Remote Work’s Impact on Housing Preferences

The remote work trend, prompted and accelerated by the pandemic, continues to influence housing preferences. Hybrid work arrangements are becoming more prevalent, with 28 percent of all workdays still being conducted from home. This shift creates new opportunities for BTR operators to cater to the needs of high-earning and highly mobile renters.

Rental as a Practical Housing Option

As paths to homeownership become increasingly elusive for many Americans, renting is gaining traction as a more practical housing option. Even those who can afford to buy may find that renting aligns better with their financial goals. This shift in mindset is likely to continue, bolstering the demand for well-designed and amenity-rich BTR communities.

Navigating Affordability Challenges

Affordability remains a significant challenge in the real estate market, affecting both potential buyers and long-term renters. High home prices and spiking mortgage rates have kept many families in the rental market. BTR properties become an attractive option for those seeking a single-family home lifestyle, but are unable to afford a home in the current market, fostering continued rental demand.

The most relevant commercial real estate lending basics offer far more than the chance to develop key professional relationships and avoid tenancy issues that often coincide with residential rental properties; it offers lucrative income potential that can dwarf more traditional forms of real estate investing. However, as any commercial real estate investors will tell you, the trick isn’t always finding a commercial property, but rather acquiring one of those ever-essential commercial real estate loans that let you bring a property into your portfolio.

While many lending principles apply equally to both residential and commercial real estate loans, there are some key distinctions (and tricks-of-the-trade) about the commercial real estate loan process that can save you time and money, if understood before plunging ahead.

COMMERCIAL REAL ESTATE LENDING BASICS

Commercial property loans, not unlike their single-family counterparts, are the foundation of a great real estate investment. The loans are just as important as the assets themselves—if not more so. At the very least, there are many types of commercial real estate loans which award savvy investors with unique advantages for their particular situations. That said, it’s not enough for investors to simply take the first loan that comes across their table; they need to mind due diligence and get to know the ins-and-outs of commercial real estate loans before making any decisions. The more an investor knows about their own CRE loan and how it applies to their situation, the better.

Individuals Vs. Entities

It is commonplace for residential loans to be made to individuals. However, commercial real estate loans are usually made to entities. Otherwise known as business entities, entities can represent a number of business: corporations, developers, limited partnerships, funds or trusts. It is common for entities like these to receive commercial real estate loans. If for nothing else, receiving a commercial real estate loan may even be why the entity was created in the first place.

Unlike a residential loan where money is given to borrowers based on things like their credit score, en entity won’t have a credit rating. Instead, the entity will have the owners guarantee the loan. That way, the owners of the entity will provide the credit history. In the event of a default, the owners will also give the lender an idea of who they need to recover from. 

For more information on not only how to get a commercial real estate loan, but also today’s commercial real estate lending basics, here are some answers to today’s most common questions on the subject.

WHAT IS A COMMERCIAL REAL ESTATE LOAN?

A commercial real estate loan, or “CRE loan” as it sometimes called, is a debt-based agreement set up between a borrower and financial institution in which the borrower uses funds to acquire commercial (non-residential) property.

One common misconception is to assume the terms “commercial loan” and “commercial real estate loan” are interchangeable. This is not the case. Commercial loans refer to the securing of funds that can be used for non-real estate purposes, such as equipment purchases or operating expenses. As an investor, your aim is a commercial real estate loan; it’s important when navigating the loan process to look for lending institutions that specialize in loans of this kind.

Types Of Commercial Real Estate Loans

Not unlike their single-family counterparts, commercial real estate loans can be found with countless terms and underwritings. The sheer volume of available commercial real estate loans is to help buyers acquire deals with favorable terms and rates. There is practically a loan for every situation a commercial real estate investor could think of. Let’s take a look at some of today’s most popular commercial real estate loans:

• SBA 7(a) Loan For Commercial Real Estate: As their names suggest, SBA 7(a) loans are backed by the U.S. Small Business Administration. While there are several types of SBA loans, this particular one is specifically tailored to those who want to purchase or refinance owner-occupied commercial properties up to $5,000,000.
• CDC / SBA 504 Loan For Commercial Real Estate: Also backed by the U.S. Small Business Administration, CDC / SBA 504 loans are best suited for those who need more than the $5,000,000 offered by SBA 7(a) loans.
• Traditional Commercial Mortgage: Traditional commercial mortgages are offered through institutionalized banks and lenders. Traditional loans tend to range from five to 20 years, but are great for those with good credit and in need go longer loans.
• Commercial Bridge Loan: Commercial bridge loans help investors secure immediate financing, giving them a chance to search for a more long-term solution in the interim. Bridge loans help investors bridge the gape between when they need immediate funding and when they can find a more permanent solution.
• Commercial Hard Money Loan: Commercial hard money loans are reserved for those with a need for short-term loans. They tend to come with higher interest rates, but the price comes with a benefit. Since hard money lenders aren’t associated with an institutionalized bank, borrowers can receive the money fast, and without a perfect credit score.

HOW LONG ARE COMMERCIAL REAL ESTATE LOANS?

Commercial real estate loans can be as long as 30 years or as short as a few months. But generally they’ll have a term, on average, of between 5-30 years.

This doesn’t mean, however, that you necessarily will be paying a monthly commercial mortgage for the full term of the loan. Unlike residential loans, which are fully amortized—or have the balance of the loan broken up in regular, monthly payments—commercial real estate loans often have a set monthly payment period (usually the first five to seven years), and then require a large balloon payment at the end.

This can be either a benefit, or catastrophe, for commercial real estate investors. It’s vital you mind your due diligence to ensure the terms of a commercial real estate loan fit in with your overall real estate investing needs.

CRE Loan Repayment Schedule

The repayment schedule of a commercial real estate loan can last anywhere from five years to 20 years. There are, of course, exceptions, but that seems to be the industry standard. It is worth noting, however, that the amortization period is traditionally longer than the loan itself. Not unlike a residential loan, a commercial real estate loan’s rate can change depending on the length and amortization of it. Investors with a good credit standing may have ore negotiating power than those without.

WHAT ARE COMMERCIAL REAL ESTATE LOAN REQUIREMENTS

There are universal criteria that come into play when approaching a lender about a loan, no matter what type. But when applying for a commercial real estate loan, it’s vital you focus on these key CRE loan requirements:

• Credit History: This has less to do with your credit score, which should be at least 680 or higher, and more to do with ensuring your credit history doesn’t contain recent tax liens, foreclosures, and recent bankruptcies. Otherwise you might find the commercial real estate loan process quite difficult.
• A Low Loan-To-Value (LTV) Ratio: LTV ratio calculates the amount of equity, or collateral, a borrower has in a given property by dividing the loan amount by the appraised value (or purchase price) of a property. (Example: If your loan amount is $97,000 and the property is worth $100,00, your LTV is 97%.) Home buyers securing a residential loan can have an LTV as high as 100%, though usually somewhere in the 80-97% range is more common. Investors seeking a commercial real estate loan will most likely have to sit somewhere in the 65-80% range, at a minimum.
• Business Entity: This is a common mistake many first-time commercial real estate investors make when applying for a loan. But having your business entity set up, before filling out that application, can sometimes make a huge difference to lending institutions.
• Organized Paperwork: This is another overlooked area of the loan application process for many first-time commercial investors. But making sure that every document (and packet) you send to a lender is organized, tidy and doesn’t set off “alarm bells” can sometimes make the difference between getting rejected, and that large commercial real estate loan you need to make your investing dreams come true.
• Online Marketplace Loan: Otherwise known as a “soft money” loan, an online marketplace loan will match borrowers with private investors who help finance commercial properties for a return. These loans will come with an interest rate between conventional banks and hard money lenders, which people often call a “soft” loan. These loans are traditionally short for commercial real estate, as they can last from six months to a few years.
• Joint Venture Loan: In the event a single entity isn’t able to secure a loan by itself, it can join forces with another entity. By seeking a joint venture loan, the loan will be given out based on two entities instead of one, effectively making them partners, but also making it easier for entities who would otherwise not qualify.

Do CRE Loans Have Fixed Or Variable Interest Rates?

This depends on the type of commercial real estate loan you secure. (There are numerous kinds of CRE loans, including a traditional commercial mortgage, bridge loan, hard money loan, and joint venture loan, etc.)

As a general rule, a commercial real estate loan will most likely have a variable rate — that large amount of money borrowed comes at a cost — and be considerably higher than residential real estate loans (sometimes as much as two-three percentage points).

CAN YOU GET A COMMERCIAL REAL ESTATE LOAN WITH NO MONEY DOWN?

It is entirely possible to get a commercial real estate loan without putting any money down. However, it is important to note that the less an entity puts down, the harder it will be to qualify. That said, a down payment is not necessary; there are a number fo different financing methods to use instead.

For example, if an entity can’t come up with the money, they can perhaps partner with another entity and form a joint venture. In that case, the other entity could front the money. Another way to get away without putting any of your own money down is to get a bridge loan. Bridge loans can help investors secure short-term funding for a down payment so that they may negotiate a longer-term loan through a more traditional lender. 

HOW LONG WILL IT TAKE TO GET A COMMERCIAL REAL ESTATE LOAN?

As the commercial loan brokerage Whista detailed in a column recently: “Everyone is going to tell you it should take about 30-45 days to get a commercial loan. Not in this lifetime…if your broker or lender is being honest with you, they will tell you to expect about 45-120 days.”

This doesn’t mean there won’t be exceptions; there may very likely be situations in which you’re able to reduce this commercial loan process considerably. But if your investing strategy depends on a quick timeline, go in knowing you may need to be flexible until you hear back from a lending institution.

HOW TO CALCULATE COMMERCIAL REAL ESTATE LOANS

No calculation can be made until a number of metrics are already in hand. That said, to calculate a commercial real estate loan, an entity will need to obtain the possible loan amount, interest rate, amortization term, and any balloon payments if applicable. With all of the numbers in hand, simply visit an online mortgage calculator and fill in the blank fields. 

HOW TO CALCULATE LOAN-TO-VALUE RATIO

As the name suggests, a loan-to-value ratio gives entities a way to measure the value of a loan against the value of a property. In order to calculate the loan-to-value ratio, or simply LTV, divide the amount of the loan by the property’s appraised value or its purchase price, whichever is lower. 

SUMMARY

Learning today’s commercial real estate lending basics isn’t as hard as many would assume, but they do require far more diligence, preparation, patience, and paperwork then a residential mortgage loan; that’s because of the large amount of funds being requested. It is a good to remember that commercial real estate financing is more complicated and logistically challenging; they have to be due to the increased risk. There are many moving parts—both legal and financial. However, if you’re able to stay persistent and focused through the process, you might find a life-changing transaction just around the corner.

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Key Takeaways

• Understanding how to finance commercial real estate is one of the first steps for investors looking to break out of the residential industry.
• With a firm grasp on the commercial real estate financing basics, investors should have a slid commercial foundation to build off of.
• Commercial real estate loans are a bit more complex than residential loans, but they are necessary for larger projects further down investors’ careers.

Successful house flipping requires careful planning, hard work, and a thorough understanding of the real estate market. In this blog post, we’ll guide you through the essential steps to flip a house the right way, ensuring you maximize your chances of a profitable outcome.

Step 1: Research Your Market

Before you dive into the world of house flipping, it’s crucial to research your local real estate market. Understanding current trends, property values, and neighborhoods with potential for growth is essential. Look for areas where homes are in demand and likely to appreciate in value. Conduct thorough market research to identify your target audience and what they’re looking for in a home.

Step 2: Set a Realistic Budget

One of the most common mistakes in house flipping is underestimating costs. Create a detailed budget that includes the purchase price, renovation expenses, holding costs (property taxes, utilities, insurance), and selling costs (agent commissions, closing costs). Be sure to leave room for unexpected expenses, as they often arise in the renovation process. A realistic budget is key to avoiding financial setbacks.

Step 3: Secure Financing

Unless you have significant personal funds, you’ll need to secure financing for your house flipping project. Options include traditional mortgages, hard money loans, private investors, or partnerships. Choose the financing option that aligns with your budget and timeline. Be prepared to present a solid business plan to potential lenders or investors.

Step 4: Find the Right Property

Locating the right property is a critical step in the house flipping process. Look for homes with good bones, in desirable neighborhoods, and with the potential for value appreciation. Pay attention to the property’s condition and the extent of renovations needed. It’s often better to start with a cosmetic fixer-upper for your first flip, as major structural issues can be costly and complex.

Step 5: Renovate Wisely

Effective renovation is the heart of successful house flipping. Create a renovation plan that balances cost-effectiveness with aesthetics and functionality. Focus on kitchen and bathroom updates, fresh paint, flooring, and curb appeal. Be sure to obtain the necessary permits and hire reputable contractors. Keep a close eye on the renovation process to ensure it stays on schedule and within budget.

Step 6: Market Strategically

Once the renovations are complete, it’s time to market the property effectively. Work with a real estate agent who has experience in selling flipped properties. Invest in professional photography and staging to make the home look its best. Price the property competitively to attract potential buyers while still ensuring a profit.

Step 7: Sell at the Right Time

Timing is crucial in house flipping. Pay attention to the market cycle in your area and aim to sell when demand is high. A well-timed sale can maximize your profit potential.

Step 8: Learn and Adapt

Even if your first flip isn’t as profitable as you hoped, it’s essential to learn from the experience. Evaluate what went well and what could be improved. House flipping is a learning process, and each project provides valuable insights for future success.

Flipping a house can be a rewarding and profitable venture when done correctly. It’s essential to approach it with careful planning, realistic expectations, and a willingness to adapt and learn. By conducting thorough research, setting a budget, securing financing, choosing the right property, renovating wisely, marketing effectively, and timing your sale strategically, you can flip a house the right way and set yourself up for success in the world of real estate investment. Muevo is your partner in achieving success in the world of house flipping. Contact us today to learn how our expertise and resources can help you navigate the challenges and opportunities of house flipping, ensuring that you flip houses the right way and achieve your financial goals. Your success is our priority, and together, we can turn your house flipping dreams into a profitable reality.

So, you’re tossing around the idea of packing up your bags and moving to Florida.

If you’re thinking about moving to the home of Disney World, the Daytona 500 and a 200-foot alligator named Swampy (yep, that’s a real thing), you’re probably wondering about the Florida housing market. Well, you’re in luck! We dug into the latest news on the housing market in Florida to give you a heads-up on what to expect in the Sunshine State.

Now, the best way to learn about Florida’s market is to talk to a real estate agent who actually lives in Florida (you can find one through our RamseyTrusted program), but these numbers and predictions will give you a good idea of what to look out for.

Ready to dive in? Let’s go!

What’s the Florida Housing Market Like?

Just like pretty much everywhere else in the U.S., housing prices in Florida went up in 2023—though not by a whole lot.

Here’s a look at Florida’s numbers from Q4 2023 compared to Q4 2022:

Florida Housing Market*	October 2023	October 2022	Percent Change
Median Sale Price**	$410,000	$401,990	+2.0%
Inventory (Active Listings)	74,703	68,813	+8.6%
Closed Sales	19,729	20,837	-5.3%
Median Time to Sale***	71 days	70 days	+1.4%1
Average Mortgage Rate(15-Year Fixed)	7.03%	6.36%	+10%2

_{*Numbers in this chart represent data on single-family homes only.**Median Sale Price refers to the midpoint—half the homes were sold for more, half for less.***Median Time to Sale is the number of days between the listing and closing of a home sale—half of homes selling this quarter took more time to sell, half took less.}

Florida Housing Market in Major Cities

Sometimes, looking at an entire state’s housing situation doesn’t paint a complete picture of what it’s like in individual cities. So, here’s a look at some housing market numbers in three of Florida’s biggest cities: Orlando, Tampa and Jacksonville.

	Orlando	Tampa	Jacksonville
Median Listing Price	$447,450	$425,000	$412,000
Year Over Year % Change	+0.02%	+0.02%	+0.04%3

How Does Florida Compare to the National Housing Market?

Now, let’s see how Florida’s real estate market compares to the U.S. as a whole. At the national level, the median home listing price in November 2023 was $420,000. Florida’s median listing price during the same timeframe was a bit more expensive at $462,623—9.66% higher than the typical national price.

Still, Florida’s housing prices are more affordable than what you’d find in 19 other states—including Vermont, Nevada, Arizona and New Jersey.⁴

Florida Housing Market Predictions for 2024

We’ve looked at the numbers, so let’s shift into seeing what some real estate gurus are predicting about Florida housing heading into 2024.

1. Buyers and sellers will wait patiently.

Homeownership has gotten a lot more expensive over the last few years, with prices going through the roof back in 2021 and interest rates hitting 20-year highs throughout 2023. What will that mean for potential Florida buyers and sellers in 2024? Florida REALTORS® chief economist Brad O’Connor believes a waiting game is on the horizon.

“Inventory is increasing, which has helped slow price growth,” O’Connor said. “Many buyers and sellers are on the fence now, waiting to see what happens to mortgage rates.”⁵

That sounds about right. After all, the sky-high interest rates we’re seeing right now are keeping a lot of folks from being able to afford buying a home, and many would-be sellers don’t want to move if it means losing a low-interest mortgage they locked in before rates went through the roof.

Find expert agents to help you buy your home.

So, the best move for plenty of people heading into 2024 is sitting on their hands—at least until we get a clearer picture of what interest rates will do moving forward. Speaking of interest rates . . .

2. Interest rates should start going down.

So, what should you expect from mortgage interest rates in 2024? Most likely, rates will finally stop climbing and start dropping. That’s what National Association of REALTORS® (NAR) chief economist Lawrence Yun is predicting.

“I believe we’ve already reached the peak in terms of interest rates,” Yun said. “The question is when are rates going to come down?”⁶

While Yun is right that it’s hard to know exactly when rates will begin decreasing in 2024, virtually everyone agrees that they will at some point. How much will rates go down? NAR’s economic outlook from October 2023 predicts that the typical interest rate for a 30-year fixed-rate mortgage will drop from 7.5% at the beginning of the year to 6.3% by December.⁷

A drop of just over 1% wouldn’t be a game changer, but it would make buying a home a bit more affordable for Floridians by the end of 2024.

3. Inventory will still need a boost.

When supply is low and demand is high in the housing market, prices go up. That’s why they increased so drastically a few years back, and it’s why those high prices have held steady ever since. Even though inventory has steadily gone up since 2021—both in Florida and across the country—it hasn’t grown fast enough to keep up with increasing demand.

Will that trend continue in 2024? Almost definitely. Take it from Ken H. Johnson, an associate dean at Florida Atlantic University’s College of Business. He believes that South Florida could really use 200,000 new housing units per year, but the numbers say the area is currently only getting a tenth of that.

“We are having trouble building homes fast enough,” Johnson said.⁸

Even though Florida’s housing inventory is increasing, it’s not happening fast enough to have a major impact on price or to keep up with the state’s crazy population influx. After all, Johnson also predicts that all nine of Florida’s largest metro areas will see a population growth of 10% or more over the next 10 years—with Orlando and southwest Florida potentially growing at twice that rate.⁹

Moral of the story: Just like every other state, Florida could use a lot more homes on the market in 2024.

Will the Housing Market Crash in Florida?

If you’re concerned about a housing crash in Florida or anywhere else in the U.S. in 2024, you can take a deep breath. That’s because home prices aren’t going to drop substantially in 2024. In fact, prices are actually more likely to go up.

For example, NAR predicts that existing home prices across the U.S. will grow by 2.6% in 2024.¹⁰ Freddie Mac expects a 0.8% bump during the same timeframe.¹¹

So, if you’re waiting on home prices to come down drastically before you buy, you’re going to be waiting for a while—it’s not happening anytime soon.

Is It a Good Time to Buy or Sell a House in Florida in 2024?

Alright, we’ve looked at a whole lot of stats, trends and predictions for the Florida real estate market. As we wrap up, you probably have one important question on your mind: Should I buy or sell in Florida this year? Let’s talk about it.

Here’s the deal: You shouldn’t let the housing market control your decision on whether to buy or sell right now. It’s important to understand real estate trends so you have some context, but you should base your decision on your individual situation.

For example, if you’re buying a house, you need to make sure you’re financially prepared. That means being debt-free with a full emergency fund worth 3–6 months of your typical expenses, and having enough cash saved up to make a down payment of at least 5–10%. (By the way, a 20% down payment is best because it means you won’t have to pay for private mortgage insurance.)

And if you’re selling a house, you need to make sure you can afford the move and that doing so won’t hurt your financial situation. It also wouldn’t be a bad idea to line up a new place to live—though you never want to buy a new house before selling your old one.

Bottom line: You are in control of whether it’s a good time to buy or sell a house in Florida—not the market.

https://www.ramseysolutions.com/real-estate/florida-housing-market