Renovation loans may require a little more education than that, but still, they can be a fairly compelling product once people understand them and how simple they these days.
“Reno lending is hot, and it is very interesting work,” said American Financial Resources Chief Operating Officer Laura Brandao. She said she has at least one originator-client who has taken the need for education to heart.
This originator hosts seminars and webinars for real estate agents in order to teach them about renovation loans. “He says ‘this how you should sell houses. When you have a couple looking to purchase a home, you say where do you want to live? What town do you want to live in? What schools do you want to be close to? Do you want to live by the park? What neighborhood do you want to be in? Then you find them a home in that area knowing that it can always be renovated. It can always be made to meet their needs if it is in the area they want to be in.’ He’s 100% correct. Being able to find someone a house in the neighborhood they want to be in and using a renovation loan to make it the house they want it to be is so powerful, and it is such a simple process today,” she said.
Indeed, every successful real estate investor knows that you can fix houses a lot easier than you can fix neighborhoods, and that buying a house that needs work in a good neighborhood is almost always a better investment than buying a perfect house in a sketchy area.
Brandao said only one originator has told her about teaching seminars on the subject, but she clearly thinks other lenders who want to build this business should do the same. “If everyone thought that way, think how much faster fixer uppers would sell. Right now a lot of them are bought by investors to flip, but if young families just starting out could do it, many of them would. Right now, most first-time buyers don’t know about these loans, because their real estate agent doesn’t know about them or thinks they are too much trouble. Agents and originators should embrace renovation loans because it is a way to get a win for everyone.”
She said many buyers prefer buying fixer-uppers, especially for a first home, when building equity is so important. “Fixer-uppers are how people start. I looked at a house on Saturday with my son and his girlfriend who are looking for their first house, and I saw a house that oh my goodness it needed work, but it is the perfect scenario for how powerful renovation loans can be. It is in a good neighborhood, it is a strong value, so you’re going to pick up that equity. It is a short sale, and it is not in the best shape, but it has good bones. It’s on a good block, so you have to ask ‘what would it take to make it worthwhile’ and you realize there is no reason not to do it.”
This article is from our sister title Mortgage Professional America.