The days of investors being gun-shy about house flipping following the recession are over. One needs to only look as far as the latest data to see that this is true. The MBA’s latest figures show U.S. mortgage applications increased by 1.7 percent in early May – the highest level on record since October 2015!
The National Association of Realtors also noted that demand for homes is outpacing supply, with inventory staying on the market for an average of just 29 days in late April. High demand and fierce competition for little product has caused investors hoping to cash in on the housing market to get creative. Yes, it’s back to the days of fix and flip.
When Opportunity Knocks…
This can be a great opportunity for our industry, as these homebuyers are typically experienced landlords who are well-versed in the loan, construction and real estate processes. While this is not always the case, working with fix-and-flippers can almost take the form of a peer-to-peer relationship. These borrowers see their purchase solely as an investment and not the place where they plan to spend the next 30-plus years of their lives.
Finance of America is happy to provide short-term loans to this elite clientele at rates as low as 6.99 percent. There are even options for rehabilitation funding, should your prospective borrower find a true diamond in the rough. These loans can range as high as $10 million for a multifamily asset, or between $50,000 and $3 million for a single-family investment. Funding can also cover up to 90 percent of the acquisition cost and 95 percent of renovation expenses.
Helping You Help Them
The best part of FAM’s fix and flip product is that we allow the investor to close quickly, freeing them up to immediately begin their renovation or start scouring for new opportunities. While the past recession put house flipping on hold for many, fixer-uppers have become unique opportunities for those who do not want to compete with all-cash buyers for new homes.
The popularity of house flipping is also due to the success much of the public has witnessed on television shows like Good Bones, Fixer Upper, Genevieve’s Renovation, Flip or Flop and Flipping Out. While these shows do not guarantee an easy path to profits, they do give the average American looking for an investment opportunity a bird’s-eye glimpse into the home-flipping arena.
More borrowers are likely to dip their toes into this endeavor – whether it be through the actual purchase of a home or simply asking a few questions to determine if it’s for them – as this television trend has taken off. Now is the perfect time to anticipate their questions and come prepared with answers. Home flipping can be a great, profitable endeavor for many. It is our job to make sure both seasoned and new investors know Finance of America is here, ready to help, no matter their stage in the game.