In our work lending to investors, we’ve already observed that we now lend on average $70,000 to $80,000 for rehab costs compared to our previous earmarks of $40,000 to $50,000. With rental demand at an all-time high, longer-term rental investments are more and more attractive to investors. We expect to see the growth continue here. As always, the key to investors earning profits will be these three factors: 1  Identify the right property project. 2  Find a finance partner committed to your success through well-designed financial products to maxi - mize liquidity while offering responsive service. 3 C onnect with a qualified contractor. If you follow these three golden rules in combination with current housing market forces, the ongoing economic environment will offer profitable opportunities for real estate investors. •

What we have here is not a bursting bubble of home values. It’s a deceleration—a market slowdown that might include pockets of corrections in markets where prices have been inflated. For instance, we might expect to see adjustments in coastal beach towns where the prices have gone up by 30% in recent years. That type of growth is not sustainable, and especially not in these conditions. Several experts suggest 80%+ of housing will experience a low likelihood of price declines. At the same time, interest rates cannot rise forever and will eventually stabilize housing market demands. Right now, we’re carefully monitoring foreclosure rates. In 2010-, foreclosures peaked at around 2.9 million per year. In 2018 and 2019, before COVID, they dipped to about 500,000 to 600,000 per year. During COVID, foreclosure filings plummeted to less than 200,000, given the forbearance agreements and foreclosure moratoriums that were put in place during that period

to support homeowners. The silver lining for some of those in trouble is home values have spiked, so many people have been able to modify their loans with willing servicers to bail them out of the foreclosures. In early 2022, foreclosure moratoriums ended, and the floodgates are open. Filings are up 39%. If, by the end of the year, the numbers revert only to the lower end of the previous normal of 500,000, we’ll see 300,000 added houses on the market. We anticipate that it will likely be more. WHAT DOES THIS MEAN FOR INVESTORS? For investors, this means more demand and inventory. And, often the inventory will have greater renovation needs. Whether for a fix-and-flip or a long-term rental investment, people are acquiring properties that need renovation, and they require more liquidity to navigate that process and to outbid larger investor conglomerates.

Susan Naftulin founded RFG with Jeffery Goldberg in 2009. In addition to serving as president of RFG, Naftulin also serves on the American

Association of Private Lenders’ Ethics Advisory Committee, where she upholds the real estate industry’s values and supports professional conduct in private lending. Before becoming president of RFG, Naftulin held several senior management positions in the mortgage industry, including general counsel, managing attorney, chief operating officer, and senior vice president for both privately and publicly held mortgage lenders. Before entering the mortgage industry, Naftulin was a creditors’ rights attorney with the Philadelphia law firm of Fox Rothschild LLP.

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