SFI Loans - Blog #investing in real estateSFI Loans - Blog #investing in real estatehttps://www.sfiloans.com/blogs/tag/investing-in-real-estateSun, 30 Nov 2025 06:28:10 -0800http://zoho.com/sites/<![CDATA[Are Recent Homebuyers in Trouble?]]>https://www.sfiloans.com/blogs/post/are-recent-homebuyers-in-trouble

Who Originated the Most FHA Loans Currently Underwater?

An analysis of lenders with the largest percentage of underwater FHA mortgages that originated between 2022 and 2204 found that the mortgages originated by Lennar Mortgage, the mortgage arm of Lennar the homebuilder, during that period now has 27% of their loans underwater.  27% of the 28,300 loans they originated now have a balance greater than the value of the home they secure.  D.R. Horton's lending arm originated 55,000 FHA loans during that period.  Of those loans 18% of the borrowers are underwater.  By comparison, Quicken Loans, a non-homebuilder mortgage originator has merely 10% of its FHA originated loans underwater after originating a similar volume of loans.  

Why Are Builder Loans so Bad?

Big builders are offering the cheapest mortgages in the market.  Bargain mortgages are helping more people get into new homes.  However, there is a hidden cost to these cheap mortgaqes -- inflated housing prices.  Homebuyers that take advantage of these low mortgages may soon find themselves with a house worth less than the value of the mortgage.  Newly built homes are generally clustered in areas with plenty of new supply, which exacerbates the problem if values fall.


But the cheap loans are probably inflating property values.  Between 2019 and 2024, prices for new homes bought from large builders, who are more likely to use buydowns, increased 6% more than both existing homes and new homes purchased from smaller builders.  Buyers overpay for their homes in return for a lower monthly mortgage payment.  

Is This Bad?

The financial resilience of a a subset of borrowers has been weakening as people stretch to afford a home.  Last year, nearly two-thirds of FHA borrowers had a monthly mortgage payment that ate up 43% of their pretax income, which is considered quite high.  Most of these FHA buyers are funding 97% of  their purchase using the FHA loan. 


Is this a problem? 


If there is an increase in unemployment, these unemployed FHA homeowners will soon find the need to unburden themselves from a bad economic investment..  If an underwater homeowner can't make mortgage payments and is forced to sell their house, the Great Financial Recession of 2008-2009 proved that homeowners will hand over the keys and deed to the lender and let the lender take the loss.  If the number of these transactions or other forced sale transactions turn into more than a trickle, home prices will naturally decline.  


A decline in housing prices will only exacerbate the unemployment problem by making the mortgages even further underwater.     

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]]>Fri, 28 Nov 2025 14:59:57 -0700<![CDATA[How Great is the Texas Economy?]]>https://www.sfiloans.com/blogs/post/texaseconomyMar2019The following information is provided by The Real Estate Center at Texas A&M University.  All links contained in this blog will redirect you ]]>

Thanks to the Real Estate Center at Texas A&M University

The following information is provided by The Real Estate Center at Texas A&M University.  All links contained in this blog will redirect you to their website www.recenter.tamu.edu



Toto we are not in Kansas anymore.

When we moved to Dallas in 1970, the US population was 203,000,000 today it is 325,000,000.  60% increase.  There were 11,000,000 living in Texas in 1970.  Today there are 28,000,000.  There were 2,400,000 in the DFW area.  Today, there are 7,400,000.   That's a 150% increase statewide and a 208% increase in the DFW area.  Compare that to most northern states where population increases are in the low double digits.  Where is everybody moving?  South and west.  Think California, Arizona, Texas, Georgia, and Florida.  It is nearly awe inspiring.


I look around and think about what is here now that wasn't when we moved here.  It's a lot!  McKinney Avenue is now Uptown, where you can walk across a grass covered park built over a freeway that connects a booming arts district.  Northpark Mall is bigger than ever.  Not so much for Valley View, Prestonwood, Richardson, and many other indoor malls.  


The North Dallas Tollway ended at LBJ.  It cost a quarter from downtown to LBJ.  You had to throw the quarter into a coin basket at the toll booth.   With practice, you could hit it going 10-15 MPH.  The tollway now goes to US 380 and costs $5.50 with a tolltag.  What used to be a two lane dusty farm to market road that led to Lake Dallas now takes you past Addison, Plano, and Frisco.   Along with McKinney, Allen and the other northern suburbs, some of the fastest growing cities in the United States are in north Texas.


The Great Recession is behind us and the real estate business has had an amazing run over the past few years.  What is ahead of us beyond the horizon?  Read on.


Outlook for the Texas Economy

Texas' economic expansion continued but with less momentum. Falling oil prices and signs of weakness in the European and Asian economies weighed on domestic activity. While growth is moderating, the outlook remained positive among a healthy labor market. Rising wages, lower inflation, and a slowdown in home-price appreciation boosted real purchasing power. The goods-producing sector calmed after substantial growth in 2018, but service providers picked up the slack. Texas trade continued to flourish as products shifted from China to other economic partners, but the ongoing dispute between the world's two largest economies could contribute to waning global activity. Political tension and gridlock in Washington added to the current state of uncertainty.  Click here for more...

Texas Housing Insight

Texas housing sales kicked off the year with a 1.2 percent increase but remained on a flat trajectory. At the regional level, North Texas continued to adjust after several years of explosive growth, while the Central Texas expansion continued. Supply-side activity inched forward amid temperate weather and falling material costs. A break in mortgage rate increases provided some breathing room for prospective purchasers, but housing affordability remained a challenge across the state. Overall, the healthy labor market, population growth, and the economic expansion supported housing demand.  Click here for more...

Texas Housing Market Reverts to 'Normal'

In 2019, single-family housing sales are projected to increase by only 1 percent after averaging 4.6 percent per year since 1991. Housing permits for new single-family residential units are expected to slow to a 2.1 percent increase from nearly 6 percent in 2018. Lot availability, labor shortages, higher interest rates, and the inability to build homes in the more affordable price ranges will constrain new-home construction.  Click here for more...

]]>Fri, 22 Mar 2019 15:59:38 -0600<![CDATA[What You Should Know Before Investing In Real Estate]]>https://www.sfiloans.com/blogs/post/what-you-should-know-before-investing-in-real-estateReal estate is a tricky business with a lot of ins and outs that can be difficult to navigate. Getting informed is the key to battling information overload and fatigue. We wanted to know more about what first-time investors should consider when looking for properties to put money into.]]>

Real Estate Can Be a Tricky Business.



Real estate is a tricky business with a lot of ins and outs that can be difficult to navigate. Getting informed is the key to battling information overload and fatigue. We wanted to know more about what first-time investors should consider when looking for properties to put money into.


I want to share some information and tips I have learned through the years working in the real estate industry, consider this advice if you're in the market for your first property investment.


1. Don't Speculate 
All too often, I see first-time real estate investors speculating on a home or condo with an eye toward a price appreciation. My advice is for a first investment property to be one that generates cash flow. 


2. Don't Over-Improve Your First Flip 

Investors need to reexamine the "Why?" of their first investment. Who is your target demographic and what are their limitations? If you are improving for the purpose of renting, choose a simpler and replaceable finish. If you are buying to resell, look at what is working best in the neighborhood where you sell and use it as a guide.


3. Dig Deep 
Take your best three available deals and compare them. Be realistic in costs, your expected return and holding time frame. If there are existing leases on the property, read each one and make sure there are no requirements for the landlord to reinvest down the road or other obligations. 


4. Find an Expert 

Take your time and really understand the market. You don't have to buy near your location, but you do need a trusted advisor that is local. Be careful, and don't blindly trust the numbers. 


5. Establish Your Budget 

Always establish the amount of money that you are willing to pay before looking and deciding on the best place to buy. Sticking to a budget is key for an investment, and it can be easy to get carried away with emotional or aesthetic attachments when looking at homes or picking out details for the renovations. If possible, when choosing an investment, select somewhere near where you live so that you can easily keep an eye out and work on the property. You will also be very in tune with what is happening in the neighborhood and local property trends.


6. Keep Your Eyes Open 
Do it, but be prepared for the unforeseen costs involved. Rehab or not, there will always be upkeep on the property; city, and possibly county, taxes (with the occasional re-assessment); capital gains taxes; etc. Be prepared for what you are getting into.


7. Carefully Screen Tenants
Your property will only be as successful as the rent-paying tenants who sign the lease. To find a qualified tenant utilize tenant screening resources. A credit report gives you a look into a renter's bill-paying habits, a criminal report sheds light on a renter's rule-abiding behavior and an eviction history report show if a renter has a court record of an eviction. Don't cut corners here!


8. Value Your Time
If you go buy-and-hold, make sure you're properly forecasting all the costs of managing a property. Many first-timers only check that the rent will cover their mortgage. Don't forget about vacancy and maintenance costs. You'll also spend 200+ hours per year managing the home, so consider hiring a technology-enabled property manager if you value your time at anything more than minimum wage. 


9. Know Your Exit Strategy
Are you looking to hold the property and rent it for positive cash flow, or are you seeking to fix and flip for a quick profit? If renting, understand the rental market. If flipping, check your rehab estimates and your after repair value (ARV). Can you still profit if costs are higher or the sales price is not the full ARV, if you need to drop the price for the property to sell? 


10. Start Small
My best advice to first-time real estate investors is to start small. Make sure the mortgage payment is one that you could pay on your own in the event that a tenant stops paying rent. Find a property that is easy to manage and has low operating costs. 

Real Estate investing is exciting, challenging, and highly rewarding, but it also takes a lot of work. Call Mike to discuss your plans for investing and how SFI Loans can help you on your next project.  

Mike Burkett -  214-912-4531.


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