Florida real estate investors and rehabbers will see a major impact come this week, on Thursday, June 29, 2017, because that’s when a new law will go into effect that changes the rules for investors who work with private hard money lenders. The Short Sale Gal Kristine Zelazo explores what this change will mean for rehabbers and real estate investors in Florida.
If HB 747 Isn’t Vetoed, Florida Private Hard Money Lenders May No Longer Be Able to Issue Loans
In what some have categorized as a “well-meaning but misinformed” move, legislators have imposed a new law that would prohibit private hard money lenders from working with borrowers in Florida. Currently, there is an exemption that fix-and-flippers and other residential real estate investors leverage, that allows private lenders to work with non-owners on occupied properties with one to four units.
This new piece of legislation — House Bill 747 (also known as Florida HB 747) — will eliminate this exemption, drastically transforming the scene for real estate investors and lenders alike.
For real estate investors — particularly rehabbers and investors who work on lots of fix and flip projects — this means that you’ll be paying a lot more to borrow since you’ll have fewer (and generally, more expensive) outlets to borrow the funds you need to succeed.
In short, you’ll be forced to work with the far smaller pool of non-private hard money lenders, who will have virtually no competition. This creates a condition where they can lend at far higher interest rates.
Florida’s Governor Rick Scott has until Thursday, June 29, 2017 to veto the law, making it extremely difficult, if not impossible for private hard money lenders to continue to lend in the State of Florida. This would have a disastrous impact not only on these citizens who serve as private lenders, but also on the rehabbers and investors who rely upon this funding source to maintain a viable, sustainable business model.
This is bad news for real estate investors and private lenders alike, as they’ve both played a major role in promoting the recovery of the state’s economy and real estate market. These lenders have stepped in to offer financing for distressed properties and foreclosed homes that are often avoided by the traditional banks. So by making this change, lawmakers are eliminating an exemption that has really led to significant housing market recovery and major neighborhood revitalization in many cases.
Florida House Bill 747 would make this state’s regulations even more stringent than the federal guidelines, which offer an exemption for “loans primarily for personal, family or household use.”
Alternative Funding Options if Florida HB 747 is Enacted
Working with an experienced real estate investing mentor or coach can go a long way toward helping you overcome the obstacles and challenges associated with this kind of legislative change. An experienced industry professional like The Short Sale Gal Kristine Zelazo can guide you down the path toward finding a solution, even in the event that HB 747 is enacted.
Kristine has even launched a new program, called The Bird Dog Program, which is designed to help individuals get involved making money on real estate deals and short sales.
Based in Florida, Kristine works with both buyers and sellers and she is an experienced negotiator. So if you’re an investor seeking to get started in buying short sales and need a great mentor or wish to pursue a short sale transaction for the sale of your property, turn to Kristine Zelazo, the Short Sale Gal!
To get started with selling your home, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Then, call 800.664.0616, x802.