"Where's my next deal coming from?"
As a Hard Money Broker, I speak with hundreds of house flippers annually, and in our age of unlimited high LTV funding, inventory is now our key concern. Seems only yesterday we were twising arms for one off deals for 65%LTV purchase-only money.
Off-market inventory is today's mantra. It seems that the low hanging fruit has been stripped from the trees and they want to know where to find their next deal; auction, short sale, REO, asset managers or even direct marketing to homeowners. Most believe they can make unlimited money with access to unlimited 'secret' inventory.
Mention the MLS or an inventory source as primitive as Zillow, Realtor.com or Redfin, if you want a sneer and a chuckle. If it's not secret, you can't make money right?
Not necessarily....
Ask me why I love SUPER-JUMBO fix and flip deals? Inventory. Lots of it. Luxury homes are selling again, and many neighborhoods have been partially redeveloped during the past 15 years, leaving many small homes ready for expansion.
Take it out, up or down to a wall and out and up. My neighbors are selling for $1,000+ft2. It costs me a lot less to build. Buy a luxury home at market value, increase the size, make money from the build. If you have cash and skill, you can make a million bucks a deal. No kidding.
Get it? My Clients do; Recently closed: $3.158M in Orange County, $2.8M in Hollywood Hills ($1.9M rehab funds!), $1.410M in San Jose, $1.275M in Hermosa Beach, $1.173M in San Carlos, $1.044M in San Jose. In process; $1.9M in Woodside, $1.7M in San Diego...many more pending. Simple, really.
Maybe not so simple, but with 15% of project cost, a GC and architect with the right pedigree, and some patience (12-18 months), you can make it happen. If you find a failed project, an approved project with appeal, or can fund entitlements and are working in a 'friendly' city, turn times are better.
It's best to fit the acquisition, rehab, debt service and costs under 65% ARV after your capital injection.
A parting note; refinancing existing income producing portfolio assets is usually the safest bet as it will preserve liquidity.
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