Home flipping is hitting record levels as the sector remains solid despite the recent surge in borrowing costs.
ATTOM reports its Q1 2022 U.S. Home Flipping Report revealed that 114,706 single-family houses and condominiums in the U.S. were flipped in Q1 representing nearly 10% of all home sales in Q1 2022. That’s almost 1 out of 10. The 10% is up from 6.9%, or one in every 14 home sales in Q4 2021 and from 4.9%, or one in 20 sales, in Q1 2021.
The good news for flippers is that there is still strong demand for homes on the market from buyers.
With conventional rates rising and borrowing money is getting harder and harder, a Private Money loan could be very beneficial for you. We help many home flippers in California and throughout the entire country. Below is how we break out our loans to help you finance your real estate goals:
Private Money: Higher rates (needed to attract investors to fund them), but more flexible on the underwriting front, making them a valuable tool for investors that can’t or don’t want to document income, and those borrowers that have solid current income but don’t fit into the underwriting “boxes” imposed by FNMA/FHLMC, and other institutional sources. When you get into this lending realm, you have two general types of private money loans:
Consumer Purpose: Would include loans to finance a personal residence. A refinance the remodel of a primary residence. A loan against real estate to pay off consumer debt (i.e., student loans, credit card balances, car loans, etc.). These require the borrower to prove their “Ability to Repay,” meaning they have to document enough income to qualify for this financing and their other debt. Underwriting is much more flexible on these loans, and therefore, some borrowers that can’t get institutional financing can get private consumer purpose financing. In addition, borrower credit blemishes play an much less critical role in qualifying compared to their institutional counterparts.
Business Purpose: Would include loans to buy a rental property, to flip a home, to borrower against the clients real estate to fund a business, etc. Credit and proving income play minor roles in qualifying on these loans. As long as you will have the required equity position (30-35% equity typically) in a property, the borrower typically qualifies for this type of loan.
Talk to us today about the opportunity to look into a Private Money loan.