rehab wallet loans is the focus of this guide for passive real estate investors. First, it highlights the main idea behind the topic. It also outlines the risks and questions worth reviewing. As a result, you can approach the discussion with a clearer framework.
What to know about rehab wallet loans
When we started Rehab Wallet several years ago, it was methodically built, one loan at a time. We started doing most of our loans in the Charleston tri-county area of South Carolina. In addition, we knew the local real estate market very well. We knew Charleston had solid economic indicators to help support home values over time, which benefited our loan portfolio performance.
In addition, Charleston’s housing market over the last twenty to thirty years has been relatively slow moving. In addition, with smaller ups and downs in values compared to other markets like Las Vegas. NV, that have high up-and-down swings in home values.
Charleston was and still is experiencing population growth, job growth, and a stable housing market. Having a place where people want to live. In addition, a growing local economy provides a reasonable probability that home prices will remain stable for a while. With our typical loan having a six-month term from origination until it gets paid off.
It’s a short period of time where home value changes should not have a major impact on loan performance. In addition, also, as the lender, we don’t need the home values to increase. We just want them to stay the same or. At a minimum, not go down too much in a six-month window. In addition, our loan origination
Key factors in rehab wallet loans
Moreover, strategy has paid off with low-leverage loans for short six-month durations. In addition, the Charleston market economics have proven to be successful for our loans originated in the area.
As we’ve grown the loan business and generated about $100,000,000 per year over the last two years. We’ve had to add more areas to do loans in. In addition, the Rehab Wallet business model has two important factors we look for when deciding where to generate loans in a specific location. One factor is the borrower. If we know, like, and trust a borrower.
In addition, then we would evaluate a loan in several different markets for that borrower. Their track record proves they likely have an excellent investment opportunity that needs a loan.
The second factor is the market and what the market economics are like. We’ve recently expanded into Charlotte, NC, because it has excellent macroeconomic factors and is growing even more than Charleston. In addition, charlotte is a great market for us because it has strong population and job growth. The housing market is growing as the Charlotte MSA (metropolitan statistical area) expands.
When we expand to a new area. In addition, we do it strategically to ensure we have more borrower demand versus loans we originate. We hired a Charlotte resident to be our brand ambassador. This person is out in the market building relationships with local professional investors.
In addition, going to real estate networking events, and making sure the Rehab Wallet name is known in the market. We have done a good job of always having more loan request leads than we generate loans. This allows us to pick the best deals, locations, and borrowers for the select few loans we fund.
Moreover, 2024 has been off to a great start. We see strong fundamentals to continue originating loans through the rest of the year.
Risks to review
Key takeaways for rehab wallet loans
- Start with the goal and timeline that fit your wider financial plan.
- Next, review the assumptions, risks, fees, and possible outcomes.
- Finally, compare the opportunity with other ways to use your capital.
Put rehab wallet loans in context
Every investment decision depends on the investor, the deal, and the market. Therefore, use the ideas above as a starting point for deeper due diligence. Review source documents, ask direct questions, and seek qualified advice when needed. For more guidance, explore our passive real estate investing education.
Related passive investing resources
Continue your research with these related guides:
- For a broader overview, see Real Estate Debt Fund.
- Next, review Debt Fund Investing: An Insight into Rehab Wallet’s Strategies.
- To compare the options, read Navigating Investment Risks: How We Manage Risk in Our Real Estate Debt Fund.