Anchor Blog

Don’t Confuse Today’s High-Performing Fix-and-Flip Market with a Decade Ago

According to Scotsman Guide News, today’s fix-and-flip market shouldn’t be confused with the one that overheated and crashed a decade ago.

 

Back then it was about inexperienced investors who were betting solely on price appreciation by buying properties in markets that they didn’t live near or understand.

 

Today on the other hand, it’s about people finding good properties at a discount in markets they carefully focus on, and then doing the necessary renovations.  Their reward?  Average profits last year of $62k above the median sales price of $127k according to Attom Data Solutions.

 

chicago-skyline

In places like Chicago where there are still numerous properties, rehabbing and flipping for a profit are the norm vs. tear-downs.

Tight inventories and rising home prices have contributed to the lift in activity, but that presents other challenges – like needing to look at off-market inventory sources to find good properties, and/or considering whether a market’s location and accessibility level dictates that total tear-downs are more the norm versus rehabs.

 

The article offers perspective from several different participants in the fix-and-flip market, including Daren Blomquist, senior vice president with Attom Data Solutions. “The easy part of flipping these days is selling the property. The hard part is buying it.   When we talk to flippers, the buzzword for them is to find inventory that is off-market.”

 

With over 125k businesses and individuals completing a flip in 2016, financing for those deals has reached a 9-year high at just under 33%. This growth is fueled in part by more sophisticated lenders and lending platforms that make cash available quickly, and on great terms, based on the merits of the property and not the borrower.

 

To learn more, you can read the full article here.

 

Are you interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step-by-step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 14,000 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit.  Click here to apply for a loan or get a quick estimate.

 

by Blog Admin

What is Fix-and-Flip Financing and Why Should You Consider It?

Fix-and-flip financing (hard money loans) are simply a short-term loan secured by real estate. Sometimes referred to as “private money,” these loans are funded by private investors (or a fund of investors) as opposed to funds available from conventional lenders such as banks or credit unions.  They typically feature higher interest rates compared to longer-term bank loans, and interest-only monthly payments followed by a balloon payment to retire the note when the property is sold after being successfully rehabbed.  The higher rates, however, are more than offset by the short-holding period, combined with the ability to add leverage to the investment, both of which increase ROI and scale for a fix-and-flip business.

 

key-benefits

The fix-and-flip lender must also consider the borrower’s plan for the property being funded, including its estimated After Repair Value (ARV). The borrower must present a reasonable plan that shows how they intend to ultimately pay off the loan after the property has been repaired or renovated.

 

Why consider a fix-and-flip loan? Commercial bank loans often come with strict borrower and property qualifications, daunting amounts of red tape, and slow funding timelines that often make these loans impractical for the professional fix-and-flip investor.

 

Experienced flippers with successful track records who are looking to grow while further leveraging or conserving their capital should consider the benefits of private direct loans.

 

Fix-and-flip financing gives investors the flexibility and agility they need to quickly execute purchase contracts, compete at foreclosure auctions, close cash-only deals, and fund construction.  Note that if a property is attractive to you, it will be attractive to other flippers in your area, so the ability to act fast can be a crucial ingredient towards success and profitability.

 

If you are looking to scale up your volume, snap up quick deals and increase your ROI, short-term fix-and-flip financing may be the right choice for you.

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step-by-step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

by Blog Admin

2016 U.S. Home Flipping Report Shows Highest Activity Levels in a Decade

Home flipping activity at the end of 2016 set 8-year, 9-year, 10-year, and even some all-time highs.  According to ATTOM Data Solutions March 9 report that looked across 950 counties representing 80% of the U.S. population, highlights for what ended up being a banner year included:

 

* 193,009 single family homes and condos were flipped (highest since 2006)

* 7% of all single family home and condos sales were flips (338,207)

* 126,256 individuals and institutions flipped homes in 2016 (highest since 2007)

* 5% were purchased by the flipper with financing (8-year high)

* Average gross-flipping profit of $62,624 (record high)

*49.2% ROI (also a record high)

 

According to Darren Blomquist, SVP at ATTOM Data Solutions, “Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital — both foreign and domestic — searching for the returns and stability available with U.S. real estate.  The combination of more home flips and a greater share of financing for flip purchases resulted in a 19 percent jump in the estimated dollar volume of financing for home flip purchases, up to $12.2 billion for the flips completed in 2016 — a nine-year high.”

 

2016-home-flipping-year-end-trend

 

Among the over 100 metropolitan statistical areas with at least 250 home flips in 2016, there were 11 with an average gross home flipping profit that exceeded $100,000 last year.  They included:

 

* San Jose ($145k)

* Boston ($140k)

* San Francisco ($140k)

* New York ($127k)

* Los Angeles ($127k)

* San Diego ($111k)

* Oxnard-Thousand Oaks-Ventura CA ($105k)

* Seattle ($102k)

* Vallejo-Fairfield CA ($101k)

* Baltimore ($100k)

* Washington D.C. ($100k)

 

In addition, the highest home flipping ROI’s could be found in these markets in 2016:

 

*  East Stroudsburg, Pennsylvania (241%)

* Pittsburgh, Pennsylvania (130%)

* Cleveland, Ohio (116%)

* Philadelphia, Pennsylvania (107%)

* Toledo, Ohio (102%)

* New Orleans, Louisiana (101%).

 

To see the full report from ATTOM Data Solutions, click here.

 

Looking to work with the largest hard money lender hard finance your next fix and flip property?   Click here to apply for a loan or get a quick estimate.

 

by Blog Admin

The Nation’s Largest Hard Money Lender is Anchor Loans

Anchor Loans is the largest hard money lender to the “fix-and-flip” industry with over 14,000 short term loans totaling over $4.1 billion dollars since 1998.  These are totals that no other private money lender can match, including Anchor Loans becoming the industry’s first hard money lender to originate over $1 billion in a single year in 2016.

 

Anchor Loans has continued to build on its rapid growth since successfully navigating the 2008-9 economic downturn – when many other real estate lenders experienced devastating losses.

 

Last year was yet another indicator of Anchor’s record setting success.  “The $1 billion-dollar threshold was a milestone for our organization and a first for the industry,” said Anchor Loans’ CEO, Stephen Pollack. “As far as we know, we are the only direct private money lender to the fix and flip market that has achieved this goal.”

 

Anchor Loans has been profitable every year since its founding in 1998 and has shown exceptional performance for its entire history – especially through the real estate downturn and housing crisis of 2008-9.   It’s experience, relationships and proprietary Fintech platform set it apart from other lenders in its ability to rapidly evaluate, underwrite and fund loans, typically in as few as 5-10 business days.

 

Anchor Loans works with qualified developers looking for quick bridge financing for non-owner occupied properties (the “fix-and-flip” industry).  Headquartered in Southern California, the company originates loans in 25 states across America.  They include:

 

largest-hard-money-lender

Alabama | Arkansas | Arizona | California | Connecticut | Florida | Georgia | Iowa | Illinois | Indiana | Massachusetts | Maine | Maryland | Missouri | North Carolina | New Jersey | Nevada | New York | Ohio | Pennsylvania | South Carolina | Texas | Virginia | Washington | Wisconsin

 

Looking to work with the largest hard money lender hard finance your next fix and flip property?   Click here to apply for a loan or get a quick estimate.

 

 

by Blog Admin

How to Qualify Your Next Fix-and-Flip Seller

 

In our last blog post we talked about the importance of qualifying a property.  In this post we want to focus our attention on identifying ideal sellers that might help you make a profit on your fix-and-flip investment.

 

As mentioned before, a number of factors help determine the profitability of fix-and-flip investments, and one of them is finding motivated sellers.

 

In terms of qualifying potential sellers, we look for three important characteristics:

 

* They want you to provide the means.

* They have the motivation.

* You can help them address unexpected “life factors”.

 

Let’s look at each of these in a bit more detail.

 

sold

You have the means.

 

The ideal current seller wants someone who can come forward and give them cash the cash they need to pay off their loan

 

They have the motivation.

 

They also want someone who can help them sell the house quickly so they don’t have to hassle with selling the property themselves.

 

Unexpected life factors.

 

Finally, they want someone who can either step in to address unexpected life events, alleviate a financial hardship that prevents them from making their payments, allows them to sell a property “as is”, or frees them up at a time when they are either too busy to fix a property up to the right standard, or literally can’t afford to make the repairs themselves.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

by Blog Admin

Qualifying Tips for Selecting Your Next Fix-and-Flip Property

Making a profit on a fix-and-flip investment requires that a lot of things get done right the first time, and that includes qualifying the property you want to buy.

 

When qualifying a potential home for a re-hap, consider these three criteria:

 

* Is the property in my target neighborhood?

* Is it in satisfactory condition?

* Is it an outlier in any way?

 

Let’s look at each in a bit more detail.

 

Target Neighborhood.

 

First of all, if you don’t have a target neighborhood that you focus on then your results are likely to be as random as the places you look.  Having a target neighborhood allows you to build up a level of expertise, contacts, and that “keen eye” that gives you the edge you need to make money or out maneuver potential bidders.  So be sure the property under consideration is in your personal neighborhood “zone of competence.”

 

Also make sure that neighborhood isn’t twenty miles from where you work or live.  Sure, maybe you “used to know” the neighborhood.  But if you don’t go there much anymore, someone who does will beat you to the best deals.

 

Qualifying Checklist

Experienced “flippers” know that a few simple qualifying checklist items can make a real difference

Satisfactory Condition.

 

Look for quick and obvious negating factors to eliminate a fix-and-flip candidate.  These include (but aren’t limited to) things like fire and/or water damage, lead paint or asbestos, foundation or termite problems, and aluminum wiring or collapsed roof.  Sure, you could fix these things.

 

But why take on that added challenge when your goal is to fix and flip that property quickly.

 

Avoid the Outlier.

 

People tend to gravitate a particular neighborhood because it conforms to a certain image or expectation.  If you end up picking a property that falls outside that expectation, go ahead and add a few more months of carrying costs to that investment, because your property is likely to sell a lot more slowly.  Ask yourself if that “great deal” is because there’s some sort of unusual architecture or lot configuration relative to other homes or the area.  Or if it is because the house is too large or two small, or the inside layout is too different, or the street is a lot busier than most, or it’s the only house near power lines.  Yes, being unique can add value to a painting or a piece of jewelry.  But when it comes to quickly extracting profit on a fix-and-flip investment, stick to the local script.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

by Blog Admin

27 Markets Saw Double-digit Home Price Increases in 2016

Fix-and-flippers will be interested to know about some newly released data from Realtytrac and Attom Data Solutions around home price increases.

 

Out of 201 metropolitan statistical areas they looked at (those with populations of at least 200,000 and sufficient home price data), 179 (or 89 percent) posted a year-over-year increase in home prices in 2016.

Home price increases leave many fix-and-flippers smiling

Rising home prices in 2016 is a bullish signal for the coming year, but the cost to acquire distressed properties is rising as well.

 

In addition, 27 metro areas (13 percent) posted double-digit year-over-year percentage gains, including:

 

* Tampa-St. Petersburg (up 14.0 percent)

* Denver (up 11.3 percent)

* Portland (up 12.1 percent)

* Orlando (up 10.1 percent)

* Jacksonville (up 12.9 percent).

 

Curious which markets had the highest median home prices?  They were:

 

* Manhattan New ($1,400,000)

* San Francisco County, California ($1,175,000)

* San Mateo County, California ($1,075,000)

* Marin County, California ($950,000)

* Santa Clara County, California ($860,000)

 

Not surprisingly, strength in the overall market in 2016 led to distressed sales falling to a nine-year low, and a record high in foreclosure sales to 3rd party buyers.  All of this resulted in a nine-year high in average home sale profits of 21%.

 

To see their full 2016 analysis, you can find it here on Realtytrac.com.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

by Blog Admin

Tap Others in Your Network to Get Fix-and-Flip Leads Faster

Finding your next fix-and-flip property doesn’t always need to fall squarely on your shoulders.  In fact, successful fix-and-flip businesses build a team of experts into their network that become their “eyes, ears, and feet-on-the-ground” when it comes to discovering the next great opportunity.

 

What does this network look like?  Well, it can include the following:

 

Realtors, appraisers, and home inspector are just some of the people you can leverage for new leads

Realtors, appraisers, and home inspector are just some of the people you can leverage for new leads

* Realtors

* Appraisers

* Realtors

* Appraisers

* Lenders

* Inspectors

* Lawyers

* Accountants

* Contractors

* Courthouse clerks

* Builders

* Developers

* Other investors

* And even local residents in your target neighborhood

 

Having these resources on your side can be a great, low-cost way to generate leads.  In addition, your network can tip you off to a potential deal before anyone else finds out about it.  When you combine that with quick and easy financing from a trusted source like Anchor Loans, you will begin to pull away from your competition.

 

by Blog Admin

Top Criteria to Consider when Targeting Your Next Fix-and-Flip Neighborhood

Experts agree that targeting several key neighborhood criteria can lead to more successful fix-and-flip deals.  One of them is focusing on the right neighborhoods given your own personal location and intentions.

 

Here are several targeting items to consider:

 

* Proximity to your work and home – the closer the better.
* Selling prices – are they in a range that you can capitalize on?
* Sales activity – no sales for others could mean no sales for you.
* School district – unless all your buyers don’t have kids, pay attention here.
* Asking prices – when you are buying, the lower the better.
* Style of home – out of date can mean out of market.
* Construction materials – the better the inputs, the better the outputs.
* Square footage – it’s the ratio that matters relative to the neighborhood.
* Number of bedrooms and bathrooms – know the norm for the neighborhood and be careful not to fall short.
* Presence of basement – if people expect one, have one.

 

In addition, here are some additional key areas (from MLS information) to fold into your targeting calculations:

 

* Price per square foot – be in the fat part of the bell curve, not on the edges.
* Property taxes – it’s relative, but understand what people are getting.
* Year built – older homes typically offer better flipping potential, but not with asbestos.
* Days on the market and days to sell – the lower the better.
* Features and Amenities – the more the merrier.
* Neighborhood school ratings – bad ratings can dampen your return.

 

Finally, everyone is concerned about safety and neighborhood appeal factors in their targeting efforts, including:

 

* Established reputation – a bad reputation normally leads to a bad ROI.
* Clean and well kept yards – why work hard if the neighbors around you won’t?
* Low crime rate and good starter homes – if people don’t feel safe, your investment won’t feel safe.
* Close to schools, shopping, mass transportation, business centers, and parks and recreation.  Of course!

 

Net-net, if you are looking at fix-and-flip properties with these considerations in mind – your chances of success have just gone up.

by Blog Admin

Fix-And-Flip Financing FAQ – Your Top Four Questions Answered

If you are looking to scale up your volume, snap up quick deals and increase your ROI, short-term fix-and-flip financing may be the right choice for you.  At Anchor Loans, we get asked a lot of questions about flip financing projects, and below are four that we probably hear most often.

 

1) Borrowing money means more project overhead. Won’t that lower my ROI?

Fast, reliable funding opens new doors of opportunity and greater access to bargain properties. In an industry where “cash is king,” the savvy fix-and-flip investor will find that the cost of borrowed capital can be well worth the leverage benefits.

 

Flip Financing Example

2) What is fix-and-flip financing and how is it different from a standard bank loan?

Fix-and-flip or “private direct” financing is a short-term loan secured by real estate. Sometimes referred to as “hard money,” these loans are funded by private investors and typically feature higher interest rates (and lower qualifying restrictions) compared to bank loans. The borrower makes monthly interest-only payments followed by a balloon payment at the end of the term when the rehabbed property is sold.

 

3) Aren’t private loans expensive?

A private direct loan typically carries a higher interest rate than a conventional bank loan, but it also comes with benefits a bank loan doesn’tlike higher leverage, funding for renovations, easy qualifying and no red tape.  An experienced flipper with a successful track record who needs cash in hand in under two weeks can offset the cost of a private direct loan with the enhanced ability to compete for bargain properties—as well as faster project turn-around times.

 

4) I need funds right away. Can I really get a fix-and-flip loan in a matter of days?

Yes. While a conventional loan takes up to 45 days to fund, a reputable private lender can fund a qualified borrower’s loan in 5-10 days.

 

Interested in faster loan closings, lower risk, and growing your fix-and-flip business?  Get our free step by step Fix-and-Flip Borrowers Guide for driving ROI and growth.

 

Ready to finance your next fix and flip property?  Anchor Loans has funded more than 13,900 short-term loans totaling over $4 billion— the majority of them to borrowers with less than perfect credit and on properties in need of repair.  Click here to apply for a loan or get a quick estimate.

 

by Blog Admin