Strategy: Diversified Retirement Portfolio
While our investment portfolios were designed with Self Directed IRA & 401(k) plans in mind, they are also well suited for the utilization of personal, after-tax funds. Since 2007, cash buyers have dominated the single family rental market.
Housing prices have increased in most of the U.S. and are likely to climb steadily. But, the biggest factor holding back the market is mortgage changes dating back to 2010 when the Dodd Frank legislation was enacted.
This legislation forces banks to issue what is known as “qualified mortgages”. This means that debt-to-income ratio cannot exceed 43% and that banks must independently verify that a borrower has the ability to repay via eight different criteria.
As a result, homeownership has already fallen to 63% from a peak of 69%, and going forward about 20% of people who want to finance a home will not be able to secure a qualified mortgage, forcing them into the rental market.
Bottom line? 2016 will be another good year for single family home investors and private lenders with cash.