For many real estate investors, access to credit isn’t the problem. In fact, it’s the cost that matters. Fortunately, costs for hard money loans and real estate loans have been coming down and mortgages may be getting even cheaper in the new year.
This is a big benefit for the real estate development and rehabbing industry. In the past, the potential return on a project was often too low relative to the cost of borrowing. For example, if you had an investment opportunity that would yield a 5% return on capital, but the cheapest mortgage you could get was going to cost you 6% in interest. In this case, the investment just didn’t make much financial sense. This has been the problem for a lot of independent real estate investors seeking to rehab property.