Investors gobble up top fixers despite scarce inventory
Investors are increasingly looking for repairers to tip over, hoping the business will be anything but a flop.
Even if they are encouraged by yields between 8 and 12%, they are struggling to find available homes as a hot real estate market limits opportunities according to the Wall Street Journal.
Another factor: the moratoriums on foreclosures that have been in place for much of the pandemic.
Typically a pipeline for those looking for renovators, this market has been closed by moratoria. A nationwide ban on evictions was recently lifted.
Now the flips are stuck at an all-time low. Real estate data firm Attom reported that 2.7% of first-quarter home sales were flips, defined as a sale within one year of the previous sale. This is the lowest percentage since at least 2000 and the lowest number of flipped homes and condos in a quarter since 2003.
A study by CoreLogic found that the house flip rate in 2006 was 11.3%, down from 10.6% in the fourth quarter of 2018, which means that the house flip market has seen a big slowdown.
That hasn’t stopped investors looking for quick cash by pumping money into businesses and people who are remodeling homes for renovation.
Lender Roc360 received $ 2 billion from Athene Holding last week to provide more palm loans. The New York Mortgage Trust had $ 622 million in flip loans at the end of June. Investors also bundle the loans into massive securities.
Two years ago, KKR invested an additional $ 250 million in Toorak Capital Partners, which at the time had over $ 1 billion in home loans.
[WSJ] – Holden Walter Warner