Well, the numbers are in, and it turns out that 2017 was a banner year for house flipping.
According to the recently released Attom Solution’s 2017 Year-End U.S. Home Flipping Report, there were 207,088 single-family homes and condos that were flipped last year. This was the highest level since 2006—an 11 year high.
Wow.
And it also appears that more flippers are turning to lenders such as Navigator Private Capital to finance their projects. Attom finds that total dollar volume of financed home flip purchases was $16.1 billion up 27 percent from $12.7 billion in 2016, a rise of 27 percent and a 10 year high.
We know what you’re thinking—there must be a bubble brewing. But hold on. Before you start to worry that the market is getting too frothy for its own good, there is some reassuring data about the actual deals being done.
“The surge in home flipping in the last three years is built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Flippers are behaving more rationally, as evidenced by average gross flipping returns of 50 percent over the last three years compared to average gross flipping returns of just 31 percent between 2004 and 2006 — the last time we saw more than 200,000 home flips in consecutive years.”
In fact, recent returns have been very healthy indeed, especially in local markets. In the Baltimore area specifically, Attom reports the average ROI (return on investment) for a flip last year to be 97.7%. That is significantly higher than the national average and indicates a market ripe for flipping.
Not too shabby, right?
So that means that real estate investors are making wise decisions when it comes to choosing and renovating their properties. When evaluating deals here at NavCap, we always advise our clients to make sure that the numbers make sense right from the start. That’s the reason that we cap our LTV (loan to value) ratio at 70% of the ARV (after repair value). House flipping can be an arduous process so the potential profit should be high enough to compensate you rather handsomely for your efforts.
Are you considering taking the house flipping plunge? Wondering just how to evaluate a deal? Not sure whether or not the project you’re considering has enough upside potential to work? We can help you run the numbers and present you with flexible financing options tailored to you and your particular project.
Reach out to us at info@gonavcap.com or call our office at 443.603.0193 to find out more.