Fix-and-Flip Mortgages Are Still Fab for Brokers
According to new research from ATTOM Data Solutions’ 2017 Home Flipping Report, house flipping in the U.S. increased to an 11-year high in 2017, creating an excellent opportunity for brokers who offer fix-and-flip mortgages. In fact, for the second year in a row, more than 200,000 homes were flipped.
The report found that 207,088 single family homes and condos got flipped in 2017. That’s up one percent from the 204,167 home flips in 2016 and represents the highest level since 2006. The figure of 207,088 homes flipped represents 5.9 percent of all single-family home and condo sales during 2017, up from 5.7 percent of all sales in 2016.
“Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 percent over the last three years compared just 31 percent between 2004 and 2006,” said Daren Blomquist, senior VP at ATTOM Data Solutions.
With an average gross profit of $68,143 in 2017, flipping is proving to be a sound strategy for investors, as well as an excellent growth opportunity for brokers and lenders who offer fix-and-flip mortgages. In fact, the total dollar volume of financed home-flip purchases was $16.1 billion in 2017, up 27 percent from $12.7 billion in 2016 to the highest level since 2007.
Velocity Offers a New Fix-and-Flip Mortgage
In response to the growth in flipping, Velocity Mortgage Capital now offers a new ARV Pro Loan program to meet the needs of fix-and-flip investors who are seeking a short-term, interest-only loan to acquire and improve a property based on its “as repaired value” (ARV).
Velocity’s ARV Pro Loan program allows brokers to finance improvements, is great for borrowers who need a quick close, and offers a higher LTV value than hard money lenders. Since the loan is asset-based, it provides a means for brokers to service the needs of W-2, self-employed and small business owners who are often tough to qualify.
Because flipping is done best by investors who understand construction and remodeling trends, it’s not for everyone. But if the growth in flipping continues, offering fix-and-flip mortgage programs like Velocity’s ARV Pro loan could provide an excellent opportunity for mortgage brokers to participate in a highly profitable market trend.