Below is a short video of how we protect investors with equity. We do this by targeting properties purchased from 2009-2014 and then purchase the underlying mortgage at a discount.
SECURE YOUR INVESTMENT WITH REAL ESTATE
This strategy allows us to control off market properties at a fraction of its value. Since we only purchase 1st position liens our investment is secured in the case of default. Should the borrower default on their mortgage and no other options are available we would receive the property back from forfeiture (land contracts) and foreclosure for mortgages.
We own every one of our investments for fraction of what others are paying for similar properties. Since we only use cash when purchasing properties and loans, we can afford to wait out any economic storm that may come.
Expand Capital’s Investment Strategy
100% Fair Market Value (FMV)
The top blue arrow is the properties value if sold on the open market in Multiple Listing Service (MLS) in sales ready condition.
80% Loan to Value (borrower/homeowner)
We want the borrowers to be 80% or less of the loan to value (LTV). Therefore, we target loans where the borrower also has equity. This way the borrower/homeowners are vested in the property and are less likely to default.
Total Investment of Less than 60% of After Repair Value (ARV)
We budget approximately 20-30% of the value back into the property for rehab expenses to properly protect our investors capital. This leaves us with a large equity position that allow us to either sell for profit or create another mortgage with the property.
If property values in the area experience a downturn, we have a large cushion of equity to protect our investment.
Mortgage loan pool acquisition (20-40%)
My investors and myself have found this to be the best way to hedge against the risks in the open market. If your investment margins are only 20-40% of the value, then it’s the safest position to be in real estate.
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