Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
In the business world, everyone speaks about getting the best “return on investment” (ROI). An ROI is the ratio between the net profit and cost of outlay resulting from the initial investment. A high ROI means the investment’s gains compare favorably to its cost. For the fifth year in a row, real estate has come out on top as the “favored” best long-term investment.
Every year, Gallup surveys Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26%. The study does make a point to draw attention to the contrast in the sentiment over the last five years compared when gold was on top with 34% of the votes. Real estate and stocks took second and third place, respectively, while still in recovery from the “Great Recession.”
We just passed the 10-year mark since the great recession, and much has changed in the marketplace, and especially with consumer sentiment regarding housing. The real estate market worked very hard to bounce back and has now regained and surpassed high values in most areas. All this, with first time home buyers sitting on the sidelines during much of this time.
Part of the real estate recovery was led by large-scale institutional firms who began buying up tens of thousands of properties. Many of these homes were renovated and put on the market for rent. Investment properties – single and small multi-family homes were the target of these ventures, which proved to be extremely lucrative and rewarding as home prices as well as the cost of rents increased.
What was once available only to large players like Blackstone, Goldman Sachs, American Residential and the like, is now accessible to the ambitious investor who is competent and comfortable in today’s marketplace. It is now possible for the average “Joe Investor” to start building their real estate portfolio, without the typical “high net worth balance sheet” that was once demanded by local banks.
In fact, with as little as a twenty percent down payment, mortgage bankers, such as Approved Funding can get investors the funding that they need to buy these investment property homes, or to cash out on properties that they own – with little to limited documentation requirements. That’s not to say the old “liar loans” are back, but affordable loans are being made to properties that have positive cash-flow without the typical red-tape paperwork that local banks traditionally have required.
This is proving to be a tremendous resource and source of funding for those who capitalize on the right loan terms from the right lenders. Many savvy investors maintain that this sect has the best of both worlds in that the homes can be rented when prices are stagnant, and then sold when the homes appreciate, as the market goes through its natural cycles. A great return on investment indeed!
I would be remiss if didn’t also add that with the few remaining days left before Yom Kippur, the “return on investment” for any good deeds, charitable acts, or any efforts in improvement that bring us closer to G-d are immeasurable and should not be squandered! Gmar Chatima Tova to all.
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