Recently we've witnessed a shift in the fix and flip loan requests we are receiving. For a number of years, while the market recovered, the majority of our rehab loans here in California were for entry level or step up homes. With the housing market recovering, however, we are now funding a lot more California luxury home fix and flip loans.
There are a number of reasons for this shift. One big reason is it is becoming increasingly difficult to get entry level homes under contract at a purchase price that makes rehabbing the property profitable. This is not to say that there are not profitable deals out there - we are still doing a great business on entry level homes for many of our clients - but finding the right deals is taking more legwork and time. In addition, location does play a part in this. For example, in the Central Valley we have clients doing multiple entry level homes at a time and being profitable, while clients in the greater San Francisco Bay Area seem to be having a much more difficult time locating profitable entry level deals.
A second reason for this shift is price-point. Many investors simply don't have the funds to work with homes in the higher end market, or don't want to tie up the larger amount of funds needed on the higher end homes. Due to this there is less competition at the higher end of the market, making finding and putting profitable deals under contract easier. In addition, the profit dollars are larger, meaning there is more flexibility on the amount of rehab work that can be done and on the price that can be paid for a property while still keeping the deal profitable.
There are many other reasons for this shift, but the bottom line is that we are seeing investors succeed with these luxury home fix and flip deals.
We are able to help finance these high end rehab deals here in California. Typically speaking we can help obtain debt financing for up to 65% of the as complete or after repair value of a property. In addition, we also have resources to assist our clients with gap funding or equity partner financing on these types of transactions. If the deal is profitable it is not out of the question to be able to finance most or all of the project, leaving our clients with little to no money out of pocket once the purchase has closed. For this type of financing on the higher end properties experience is a must, but with prior experience and a profitable deal we can help put together some very aggressive financing options for the savvy real estate investor.
For additional information you can read about our California rehab loans online or call us directly at 877 462 3422.