Just last week I wrote about the coming “Eye of the Storm” that seems to be favoring those real estate investors who are taking action now! As mentioned in the article, there is a window of opportunity open to those investors who are in the rehabbing business and the wholesalers that support them; it also explores how cheap mortgage rates, continued foreclosures, and the Homebuyers Tax Credit are all helping rehabbers to profit.
Then, late last week comes word that the Federal Housing Administration is seeking to tighten their lending requirements, to shore up their required reserves which have taken some huge hits due to increased loan defaults. The new rules, while requiring Congressional approval, will require higher FICO scores, tighter underwriting, larger down payments (maybe), and one or more requirements imposed by Congress. This article in the Seattle Times captures a good portion of the discussion.
Other potentially critical news bouncing around includes the recent extension of the Homebuyer Tax Credit; the Governments push to speed up the short sale process; Fannie’s proposed new rules requiring investors to have two years of property management experience as part of the approval process; and there will be much more.
What Impact Will All of this Have on Investors?
The big question for investors has to be this: what impact will these actions have on my business? The reality is that everyone of these actions will affect some aspect of what you could potentially be doing as a real estate investor, creating turbulence within your business. And, while all of this turbulence in our market may increase perceived risks, I believe instead, that for a select few, this turbulence only creates greater opportunities and profits!
My point here is this; one of the great strengths each one of us has as real estate investors is that we have the ability to move very quickly. When the market or some part of it either shifts or is redirected by Government action we are able to quickly shift with it, make the needed adjustments and continue reaping our profits.
Can you expect continued redirection by the Government? Yes!
Can you expect further declines in housing values? Yes!
Can you expect that your favorite strategy may not be effective in 6 months? ABSOLUTELY!
Bottom line, stay limber and flexible, with more then one trick up your real estate investing sleeve. These times and our profits demand it!