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Everyone Wants in on Housing Flipping

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Market Data + Trends

Everyone Wants in on Housing Flipping


September 8, 2021
home remodel
Photo: spatesphoto | stock.adobe.com

One Long Island-based house flipper says now is the best time to be in the business, but finding inventory to rehab is the hard part. Fixer-uppers are fighting over limited stock as the foreclosure moratorium closes off a usually solid stream of inventory. On top of that, buyers with low mortgage rates inspired by HGTV rehabbers are trying their own hand at it, says The Wall Street Journal. And fixer-uppers face rising building material costs and scarcity. All these factors resulted in the lowest quarter since 2000 for flipped home sales, with 2.7% of home sales coming from flips.

That was two housing booms back and long before measured-in-months loans to house flippers became some of the hottest properties on Wall Street. Mortgage trusts, pensions, hedge funds, private-equity firms, investment banks and insurance companies all want so-called flip loans, drawn by yields in the range of 8% to 12% at a time when one-year Treasurys pay less than 0.1%.

Mr. Stock’s lender, Roc360, last week received a $2 billion infusion from insurer Athene Holding Ltd. to make more loans to house flippers as well as landlords, who buy a lot of rehabbed houses. Arvind Raghunathan, Roc360’s chief executive, said his firm would have little trouble raising several billion more given the hunt for yield that has sent investors into less-familiar pockets of fixed income.

“These notes have done extraordinarily well the last eight years,” Mr. Raghunathan said. “There have been hardly any losses, and 8% for one-year paper is extraordinary.”

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