Episode 3: Financing Single-Family Rental Properties
This episode of The Real Investor Podcast covers the ins and outs of financing single-family residential real estate investments. Dennis kicks the episode off with a then and now of financing. Traditionally, investors were only able to get financing through Fannie Mae or Freddie Mac. These financing options significantly limited the ability of investors to grow their portfolios both because of limits to how many loans they offer per borrower as well as the fact that they evaluate the borrower personally instead of the asset itself. However, when large hedge funds started buying up Main Street and investing in real estate, banks and lenders began to see the validity in real estate as an asset class.
Quickly, lenders began financing smaller investors and underwriting loans more like commercial finance, focusing on the asset potential rather than personal income. This shift in financing has opened the investment real estate space to investors at any size- one of the many reasons why now is the best time in history to be a real estate investor.