With the upward trending of the real estate market, Arizona Fix and Flip Loans are on the rise.
According to a recent data study done by ATTOM Data Solutions real estate flip returns are down: “Homes flipped in the second quarter of 2018 yielded an average gross return on investment of 44.3 percent.” The article continues to state that these returns are “down from 47.8 percent in the previous quarter and down from 50.0 percent in Q2 2017 to the lowest average gross flipping ROI since Q3 2014.” In other words, flipping returns are at their lowest since 2014 according to recent data collections.
So, what is leading to the down turn in flipping returns? In answer to this, another publication from CNN states that “high home prices, hot competition and very, very few available homes to buy are combining to make this popular trade ever more risky.” In other words, the flipping market is getting oversaturated and there are not as many available houses as there used to be. Due to a limited supply of available housing, the market seems to be shifting towards building rather than flipping since retailing a spec homes can often hold a stronger return than flipping a home.
Adding to the difficulties for flippers, even the purchase of distressed property is down. Suggesting that it is harder to find these types of properties in the current real estate bull market. ATTOM Data Solution’s posting continues to iterate that: “32 percent of home flips purchased via distressed sale, down from peak of 68 percent.” Wow! That is a 36% drop in distressed purchases since 2010. This is concerning since the acquisition of distressed properties is often a great way to make a profit by finding real estate that needs minimal renovations to obtain favorable returns, rather than having to buy property at higher rates.
On the brighter side of things, financing is becoming more available to flippers which reduces risk and offers greater returns. ATTOM Data Solutions report goes on to state that in 2018 “39 percent of home flips [were] purchased with financing.” Over the past couple of years, the flipping market has seen an overall uptick in financing. The report reasons that this uptick in financing has to do with the fact that with higher market price for homes: “it’s now more difficult for investors to buy with cash than previously.” With the higher prices required to acquire property, it seems that it is more favorable for real estate investors to keep their cash flow and obtain Arizona Fix and Flip Loans from Arizona Hard Money Lenders.
While Arizona Fix and Flip Loans allow investors to maintain cashflow, this not the only reason real estate investors are financing. Real estate investors are getting consistent returns with less cash down. This means, according to ATTOM, that with the amount of cash to complete one flip, many flippers can net on average “$30,000 per flip after paying $5,000 to $10,000” in Arizona Fix and Flip Loans granting a net annual return of “$90,000.” Three for the price of one is not that bad!
Level 4 Funding LLC
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About: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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