In 2016 the number of investors fixing and flipping homes hit its highest level since 2007. 2017 is expected to see continued growth with estimates of $48 billion in total sales. Rising home prices, low interest rates and favorable lending terms have helped fuel the resurgence. Big banks, including J.P. Morgan Chase & Co, Wells Fargo & Co, Goldman Sachs Group Inc., increased credit lines and arranged financing vehicles for home flippers in 2016.
Online lenders and crowdfunding sites have also contributed to the growth in the fix and flip business enabling lenders to provide loans in less time. LendingHome says it’s extended over $1 billion in loans over the last 2-1/2 years.
However, a few concerns are being raised: investors have been offered high loan-to-value ratios and looser documentation requirements through smaller finance companies which aren’t subject to the post-crisis rules; investors are experiencing profit pressures with mortgage rates rising since the election and the increased number of home flippers.
Yet with ample sources of capital and average profits of about $61,000 per flip, many investors remain optimistic. Let’s see what 2017 brings.
