REI INK

Mortgage Lending to Real Estate Investing

Focus on Honesty and Customer Service Dean Bendall/Bendall Properties, LLC is an independently owned and operated franchise business owner with HomeVestors® of America, Inc. (HVA) in the Metro Atlanta market. He started his franchise, Bendall Properties, in 2019, but earnestly began working the HVA system in 2020. Today, he and his wife and business partner, Sandy, are purchasing over 20 houses per year in the Metro Atlanta area. From Mortgage Lending to Investing Working in the mortgage lending industry from 2009 to 2019, Dean always had an interest in buying homes, rehabbing them, and then selling them. In 1996 while in another business, Dean and Sandy had bought a commercial property and decided to sell it in 2019. The money they made from that transaction gave them the money and the “choices” to leave the mortgage industry and begin investing in residential real estate. He discovered the HomeVestors opportunity while driving through a neighborhood and seeing a HomeVestors yard sign. Realizing he now had choices, he left his position and bought his franchise in 2019. Becoming a HVA Business Owner “In my first year I was ‘way over-confident’ in my sales abilities,” said Dean. “I really started gaining traction when I learned to leverage the HVA system. As a result of working with my Development Agent (DA), John Holman, I had a great second year.” In Dean’s second year, he bought and sold 15 houses and continued to grow his business year after year, buying and selling over 20 houses each year. “I never forgot the importance of having a great coach and mentor. Today, I still rely heavily on the guidance and mentorship of my current DA, Brandon Hagins.” One of the benefits of being a HomeVestors franchisee is being part of the Advertising Council. Dean explained the value of the Advertising Council by saying there are no competitors within the HomeVestors system and that everyone works together. “The interactions I have with other franchisees in the Advertising Council are amazing. We help each other out and readily offer advice to each other without expecting anything in return.” Today, Bendall Properties has a full staff and are hiring more people this year. “Sandy manages the money, I have an office coordinator, a buyer, and may soon be hiring a project manager. My role is to focus on money-making opportunities and to steer the ship.” The Future “The Atlanta Metro market is huge and just full of opportunities. The housing market is very good with starter homes selling for around $300,000.” Dean and his team focus primarily on fix-and-flips, but Dean has also started working on his personal buy-and-hold portfolio. Looking at 2025, Dean says it will be the same as 2024 unless interest rates start coming down into the 5% range. “A mentor (John Holman) once told me that the real estate business will continue to be good as long as people like living indoors.” “There is so much to love about HomeVestors. Yes, they have a great lead generation program, but more importantly, the company centers around honesty and customer service. Buying a person’s home always comes second…our first mission is to help people out of ‘ugly’ situations, even if that means just giving advice and not buying the home. I still love doing deals around the kitchen table.” HomeVestors Whether you are curious about real estate investing or you have dabbled in it and want to make it a full time job, HomeVestors helps entrepreneurs from all walks of life build their own real estate business. Our franchise owners enjoy independence while also benefitting from the famous We Buy Ugly Houses® brand and our best-in-class real estate investing tools, software, and mentorship. If you are interested in a franchise, call 866-249-6932, email Sales@homevestorsfranchise.com or visit www.homevestorsfranchise.com. Each franchise office is independently owned and operated.

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Secure Your Investments

4 Strategies to Help Mitigate Title Issues by Radian Title Services Don’t let title problems slow you down. While title challenges may hold some people back from reaching their investment goals, you do not have to be one of them. Mastering the art of resolving title issues may be your key to success in a competitive market. By tackling title problems head-on, you are not just clearing obstacles; you are uncovering hidden opportunities that less prepared investors could miss. Here are a few strategies that can help you navigate the complex world of title issues with confidence and ease. 1. Conduct Thorough Due Diligence Your best defense against title issues may be a good offense. Do not wait for problems to surface, take more control by:  »            Ordering comprehensive title searches  »            Reviewing chain of title documents  »            Investigating any gaps in ownership history  »            Checking for unresolved liens or encumbrances Knowledge is power in real estate investing. The more you know about a property’s title history, the better equipped you will be to handle any surprises that may come your way. You may even consider obtaining a third-party title review throughentities like Radian Real Estate Management. 2. Build a Team of Title Specialists Do not tackle title challenges alone. Assemble a trusted network of professionals, including knowledgeable escrow agents and experienced real estate attorneys. Having these knowledgeable professionals at your fingertips can make all the difference when you are racing against the clock to close your deals. When you work with an experienced title company like Radian Settlement Services, you will have access to cutting-edge technology, expedient claims processing through Radian Title Insurance Inc., and an experienced team to help you navigate title issues. A trusted title company can help turn potential roadblocks into opportunities. 3. Implement Curative Action It can be easy to pivot and abandon a deal when title issues arise. Instead, consider implementing curative action. Not all title issues are necessarily complex or time-consuming impediments to a real estate transaction. Some title defects may be resolved swiftly and with minimal effort, presenting a strategic opportunity for investors. In such scenarios, an astute investor may be able to use a minor title issue as a negotiation lever, opening a potential opportunity, for example, to secure a reduced purchase price by highlighting the needed curative work. After closing the deal at a potentially more favorable price, the investor can then address and resolve the title irregularity, turning a potential obstacle into a value-adding investment strategy. 4. Leverage Title Insurance to Your Advantage Do not underestimate the power of title insurance in your investment strategy. Here is how you can make it work for you:  »            Consider purchasing owner’s title insurance for added protection  »            Carefully review policy exceptions and exclusions  »            Negotiate for expanded coverage when needed Smart investors understand that the right title insurance policy can be the difference between a deal-breaking problem and a minor speed bump. Turn Title Challenges into Investment Triumphs Every title issue you resolve is not just a problem overcome — it is an opportunity seized. By implementing these four strategies, you are not just clearing the path to closing; you are helping to set yourself apart as a skilled and resourceful investor. When navigating difficult title issues, know that you can turn to the professionals at Radian Title Services. With a team of experienced professionals spearheading the closing, you will be able to focus on growing your portfolio. These strategies can help you be well-equipped to turn potential deal-breakers into golden opportunities.

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Hedging Loan Commitments with Eris SOFR

Capital Market Innovations Make Swaps Available to Anyone by Geoffrey Sharp As lenders experienced in Q3-Q4 of 2024, locking rates on loan commitments results in the assumption of interest rate risk that can adversely impact the final profitability of those loans: If interest rates rise after a loan commitment, the resale value of that loan falls, as shown in Exhibit 1. And the longer the final maturity of the loan, such as with 30-year Debt Service Coverage Ratio (“DSCR”) loans, the greater the loss from an increase in interest rates. In the conventional 30-year Agency Guaranteed Residential Mortgage (”Agency”) space, this risk can be hedged by selling To-Be-Announced (“TBA”) Mortgage-Backed Securities. These are over-the-counter (”OTC”) commitments to sell a pool of loans for a certain price on a future date, and the TBA sale can be satisfied by delivering eligible loans into the settlement of the TBA sale. As Agency originators lock loans, they effectively sell them for future delivery into the TBA market, anticipating loan closing and funding. They then deliver the closed loan(s) into the TBA delivery. No such market exists for Residential Transition Loans (“RTL”), DSCR and Non-Qualified Mortgage loans, and it is unlikely that any such TBA market for these loans will develop; however, these loans may still be hedged using interest rate swaps (“swaps”) indexed to the Secured Overnight Financing Rate (“SOFR”). While SOFR is not the loan rate, SOFR is the index rate used in the financing terms supporting these loan originations. As the benchmark interest rate, changes in SOFR and the expectations of the path of future SOFR rates are the principal driver behind changes in loan rates. SOFR’s role as the benchmark lending rate index is behind the development of a liquid and actively-traded market in swaps. As swaps may be traded to benefit from rate increases that decrease loan values, they are, therefore, widely used by bank and non-bank lenders to hedge the interest rate risk exposure from their lending operations, with swap hedges offsetting loan values as shown in Exhibit 2. Historically only tradable bilaterally with bank swap dealers, swaps were harder to access, credit-intensive, and operationally cumbersome. However, capital market innovations today now make swaps widely available to anyone as listed, exchange-traded contracts that are centrally cleared as futures contracts: Eris SOFR Swap futures (”Eris SOFR”). Traded at CME Group in standard tenors from one year to 30 years and in units of $100,000 notional, Eris SOFR is accessible to even the smallest hedgers. Trading Eris SOFR Swap futures to mirror lending operations  »            As one locks loans, one sells the matching maturity Eris SOFR contracts to pass the risk on to the market  »            Trade in sizes as small as $100,000 notional to protect the resale value of originations  »            Accumulate larger pool of loans and improve execution through bulk sales, rather than selling single loans, small pools or working best efforts Sample hedge with Eris SOFR Swap futures  »            Lock $250,000 of loans daily, closing $5,000,000 of DSCR loans each month  »            Sell 2-3 matching maturity Eris SOFR Swap futures contracts each day, or 10-15 contracts each week, accumulating Eris SOFR positions to offset the interest rate risk of committed loan originations  »            Close loans and accumulate larger pools for improved execution through bulk sales  »            Unwind or transfer Eris SOFR hedges at time of bulk loan pool sale  »            Cost: Approximately 1 basis point on the loan rate (0.01%), covering exchange fees, broker commissions, futures account clearing fees, and market bid/ask costs

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Understanding Residential Transition Lending

A Double-Edged Sword by Radian Real Estate Management Residential Transition Loans (RTLs), also known as fix-and-flip mortgage loans, are short-term bridge, construction or renovation loans designed to help real estate investors looking to purchase and renovate properties.  The primary advantage of RTLs is in their speed and efficiency over traditional lending processes. According to National Lending Pro, RTLs can provide funding within a week whereas traditional loans can take 30-45 days. Quick funding helps to allow investors to act on properties in hot markets. RTLs offer flexibility conventional mortgages can’t match. These loans often consider the property’s potential value after renovation rather than its current condition, making them ideal for properties that may not qualify for traditional financing. Some RTL lenders also provide interest-only payment options during the renovation phase. These advantages come with considerations. Interest rates are typically higher, ranging from 7% to 15%. If a renovation takes longer than expected or market conditions shift unfavorably, these higher rates could affect potential profits. Also, borrowers must repay the entire loan amount when they (1) sell the property with the goal to generate a profit or (2) refinance to a term loan and rent out the property to earn income. Investors must also consider the specific underwriting criteria of RTL lenders which includes substantial down payments, detailed renovation plans and timelines, and proven experience in similar projects. While protecting the lenders underlying capital, they can create barriers for newer investors or those with limited cash. Entering the RTL space can be both rewarding and risky. As a Morningstar DBRS acceptable due diligence provider, Radian Real Estate Management provides lenders in this space with confidence to help with diligence requests, draw reviews, and valuation services provided by homegenius Real Estate. Learn more by clicking HERE

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Home Prices Are Rising in Every Major Metro…

… for the First Time Since 2022 by Lily Katz, Redfin Home prices rose from a year earlier in all 50 of the most populous U.S. metropolitan areas in December — the first time that has occurred since May 2022, when the pandemic homebuying frenzy caused prices to skyrocket. By comparison, home prices rose in 41 metros in December 2023. “Places that have long been known as affordable places to live, like Cleveland and Milwaukee, are now seeing double-digit price increases — and that’s after home prices skyrocketed during the pandemic,” said Redfin Senior Economist Elijah de la Campa. “Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up. Many people looking to move this year will likely opt to rent because it’s the more affordable option and rental affordability is expected to improve as more supply comes on the market.” Home prices soared during the pandemic as record-low mortgage rates fueled homebuyer demand, and then fell in 2023 when rates climbed back up to a two-decade high. In April 2023, prices only rose in just 19 metros — the lowest number since 2012. But prices have recovered over the last year as buyers have grown accustomed to elevated mortgage rates. They are also climbing because there is a shortage of homes for sale. Last month, home prices posted their biggest gain in nearly a year, jumping 6.3% year over year to a median $427,670. Home Prices Are Rising Fastest in the Midwest, Slowest in Florida In Cleveland, the median home sale price rose 15% year over year in December — the biggest increase among the 50 most populous metros. Next came Milwaukee (14.5%), Philadelphia (14%), Miami (11.8%) and Chicago (11.1%). “A lot of sellers have a very specific number in mind because they saw their neighbor sell for $40,000 over the asking price during the pandemic. They’re willing to walk away if they don’t get that number, which is one factor keeping prices high,” said Bonnie Phillips, a Redfin Premier real estate agent in Cleveland. “With affordability so strained, buyers are feeling empowered to ask for discounts, but they’re often getting shut down by sellers — even for small asks.” Phillips continued: “Cleveland may still have a reputation as an affordable-housing haven among out-of-staters, but not so much among locals. Many families have been priced out, and those who can still afford to buy have to move to neighborhoods they do not really want to live in. Their dream of owning a beautiful farmhouse on 1.5 acres has shifted to a reality of a small home in an urban area.” In Tampa, FL, home prices rose just 0.5% year over year in December—the smallest increase among the top 50 metros. Next came Orlando (1.3%), Jacksonville (1.3%), Austin, TX (1.5%) and San Antonio (1.6%). Up until December, it was common to see home prices fall in Florida and Texas. In November, for example, prices fell in two of the top 50 metros: Tampa (-1.3%) and Dallas (-0.6%). Texas and Florida have been building a lot of homes, which is limiting price growth. Buyer demand is also lackluster because many people have been priced out of the two pandemic homebuying hotspots. And in Florida, an insurance and climate crisis have put many house hunters on edge.

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Home Selling Profits Slide Again in 2024

National Median Home Price Climbs to $350,000 by ATTOM Staff ATTOM released its Year-End 2024 U.S. Home Sales Report, which shows that home sellers made a $122,500 profit on typical sales nationwide in 2024, generating a 53.8% return on investment. But even as both measures remained near record levels, and home prices kept rising around the country, the profit margin on median-priced sales nationwide decreased from 56.9% from 2023. The drop-off marked the second straight annual decline — a pattern of consecutive downturns that had not happened since the aftermath of the Great Recession in the late 2000s. While the gross profit on median-priced single-family home and condo sales did inch up about $2,000 from 2023, the typical profit margin stood eight percentage points below a peak hit in 2022. The downward investment-return trend continued despite the median national home price rising 5% to yet another annual record of $350,000. Margins fell back as the increase in home values failed to keep up with larger price spikes recent sellers had been paying when they originally bought their homes. “After a weak 2023, the U.S. housing market mostly rebounded nicely in 2024. Prices went back up at a healthy clip and homeowners continued to make some of the best profits on sales in the past 25 years. The renewed shine, however, did not come without a bit of tarnish as margins took another turn for the worse,” said Rob Barber, CEO at ATTOM. “Amid the generally good news, that’s something worth following closely in 2025.” He noted that “home prices are stretching household budgets more and more, and mortgage rates have been going back up in recent months even as other forces put more upward pressure on prices. So, there are certainly major factors that could propel the market up or settle it back down. Either will have a significant effect on seller returns.” The price-and-profit picture, while mixed, reflected an ongoing housing market boom that has continued for 13 years in a row. Last year’s scenario emerged as buyers buoyed by rising wages, a strong investment market and mostly receding mortgage interest rates competed for a historically tight supply of homes. Nevertheless, the resulting price gains were not quite enough to push profits upward. Among 127 metropolitan statistical areas with a population greater than 200,000 and sufficient sales data, sellers in more expensive markets around the U.S. generally reaped the highest returns on investment in 2024. Geographically, the Northeast, South and West regions led the way with 29 of the 30 highest ROIs. They were led by San Jose, CA (105.8% return on investment); Knoxville, TN (94.3%); Ocala, FL (87.1%); Seattle, WA (85.6%) and Scranton, PA (85%). National Median Home Price Rises Another 5 Percent After a weak annual gain of just 1.1% in 2023, the U.S. median home price increased another 4.9% in 2024, hitting the latest all-time high of $350,000. The typical 2024 price was almost twice the nationwide median in 2011, a point in time right before the housing market began recovering from the Great Recession. Amid the tight supply of properties for sale, median values went up last year in 115, or 91%, of the 127 metropolitan statistical areas around the U.S. reviewed for this report. Those with the biggest year-over-year increases were:  »            Evansville, IN (median up 13.4%)  »            Augusta, GA (up 13.2%)  »            Albany, NY (up 12.3%)  »            Fort Wayne, IN (up 12.2%)  »            Scranton, PA (up 12.1%) The largest median-price increases in metro areas with a population of at least 1 million in 2024 came in:  »            Hartford CT, (up 11.1%)  »            New York, NY (up 9.6%)  »            Rochester, NY (up 9.5%)  »            Detroit, MI (up 9.5%)  »            Providence, RI (up 9.4%) Typical home prices last year reached or tied records in 108 of the metros analyzed (85%), including:  »            New York, NY  »            Los Angeles, CA  »            Chicago, IL  »            Houston, TX  »            Washington, DC Metro areas where median prices dropped most in 2024 were:  »            Birmingham, AL (down 8.3%)  »            Ocala, FL (down 5.9%)  »            Fort Myers, FL (down 4.3%)  »            Lakeland, FL (down 2.8%)  »            Sarasota, FL (down 2.7%) Profit Margins Decrease in Three-Quarters of Nation Profit margins on typical home sales went down from 2023 to 2024 in 93 of the 127 metro areas with sufficient data to analyze for investment returns (73%) The 10 largest decreases in investment returns were all in the South, led by:  »            Fayetteville, AR (ROI down from 71.9% in 2023 to 51.3% in 2024)  »            Ocala, FL (down from 105.7% to 87.1%)  »            Sarasota, FL (down from 80.6% to 64.6%)  »            Chattanooga, TN (down from 80.6% to 65.9%)  »            Crestview-Fort Walton Beach, FL (down from 60.1% of 45.9%) The largest ROI losses from 2023 to 2024 in metro areas with a population of at least 1 million were in:  »            Birmingham, AL (ROI down from 44.3% to 33.5%)  »            Tampa, FL (down from 80% to 69.8%)  »            San Antonio, TX (down from 34.4% to 26.4%)  »            Austin, TX (down from 46.5% to 39.5%)  »            Portland, OR (down from 70% to 63.6%) The biggest increases in investment returns from 2023 to 2024 came in:  »            Syracuse, NY (ROI up from 56% to 69.3%)  »            Rochester, NY (up from 61.9% to 72.3%)  »            Evansville, IN (up from 34.6% to 44.7%)  »            Cleveland, OH (up from 51.6% to 61.2%)  »            Akron, OH (up from 50.3% to 59.2%) Sellers Reaping Gross Profits Above $100,000 Despite the decline in profit margins across much of the country, gross profits on median-priced home sales in 2024 still topped $100,000 in 79, or 62%, of the metro areas with sufficient data to analyze. The east and west coasts had 18 of the top 20 gross profits last year, led by:  »            San Jose, CA ($782,750)  »            San Francisco, CA ($500,000)  »            San Diego, CA ($372,000)  »            Los Angeles, CA ($366,500)  »            Seattle, WA ($332,000) The 20 smallest gross profits in 2024 were in the South and Midwest, reflecting lower home

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