Home/Condo Flipping as an Investment Opportunity
By Milo • 11/10/2021
Those home improvement shows make it all look easy. Just buy the worst house on the street, put in a little work, tear down those walls, and in the span of a 30-minute segment you’re ready to sell and make a big profit. Flipping homes is still a big business in the United States. According to the U.S. Home Flipping Report by ATTOM Data Solutions, 53,705 condos and single-family properties were flipped in the first quarter of 2020 alone. These are some of the most recent statistics, as more recent numbers continue to be collected and disseminated. But, the effects of the current pandemic caused changes in the real estate market that can last for years to come.
We all know that the market is moving quickly right now. Inventory is low, and this shortage makes it difficult for home flippers to find the properties at the right price to make maximum profit. This shortage, however, is also coupled with a surge in demand and some of the lowest mortgage rates in history (which you should take advantage of right now, as they are speculated to rise soon). As elements of the market continue to fluctuate and settle, fixing and flipping homes is still a good strategy for financial gain in most markets.
Finding the Financing
Obtaining the right home for the right price often means pursuing off market properties and searching through real estate auction listings, direct mail sources, public records, and expired listings as well as foreclosures, short sales, bank owned homes, and auctions. You need to have a quick funding source to compete in these markets, working with a leader that understands your specific needs and can help you close quickly.
This type of real estate investment has always been easier to attain for those with cash in hand and financing options are more readily available for those that are established within the U.S. financial system. Milo’s exclusive focus on mortgage solutions for international borrowers grants non-U.S. citizens access to loans from $150k – $3MM that have low doc requirements and offer remote, digital closings that happen in weeks, not months. Milo’s mortgage loans for non-U.S. citizens include both home loans for investment properties.
Condominiums as Smart Investments
With traditional mortgage lenders, condo loans can be harder to obtain, but Milo’s fintech solution, and our ability to operate as a private lender brings agility to lending options with competitive terms and interest rates as low as 3.75%.
Condominiums are typically assessed as higher risk by traditional mortgage lenders due to loan-to-value ratios. Commonly known as LTV, loan-to-value ratios are used to determine interest, down payment amounts and other loan details. As a direct lender, Milo’s team is able to assess your specific needs as opposed to letting an outdated algorithm decide the terms of your loan. Our mortgage loans for international borrowers provide a completely different experience that gives non-U.S. citizens the opportunity to compete in the American market on even footing.
Location, Location, Location
If you are just starting out in your home flipping journey, a condo is a great place to start the investment. Condos are typically placed in high-density locations that are desirable – close to a downtown, or a beach or other amenities. Their smaller size also makes condos ideal for flipping, allowing you as the investor to keep cost-per-square-foot lower than a single family home.
The greatest financial gain from investing in a condo will come from property value increases, so shop with the future in mind. This might mean looking at up-and-coming neighborhoods and following trends in location, as opposed to just seeking out a property for its purchase price.
In the past, buyers and renters were generally gravitating toward newer homes, but as inventory continues to remain low, and building supply costs skyrocket, lots of younger buyers are moving to the city, which often means purchasing an older home. But, they don’t want to sacrifice on the style, so a completely turn-key property (your flip!) is a wonderful, sought-after option.
Flipping a home is defined as buying and reselling a property within a 12-month period. Most often, extensive repairs are done within this period to further the profitability of the home and increase the likeliness of a quick sale. Close to 80,000 single-family homes and condominiums were flipped during the second quarter of this year, which represents nearly five percent of all home sales.
As families continue to move around and resettle into post-pandemic life, it’s easy to see trends in the metropolitan areas that are currently showing the largest home flipping returns on investment: Oklahoma City, OK (196%) Fargo, ND (185%) Pittsburgh, PA (154%) Omaha, NE (135%) Philadelphia, PA (100%) Buffalo, NY (93%) Baltimore, MD (91%)
According to the National Association of Realtors, the national median home price rose to $315,900 in the fourth quarter of 2020, up 14.9 percent from the same time in 2019. Inventory is low, so home and condo prices continue to remain high and properties are moving quickly.
The team at Milo stands ready to help you purchase an investment property with our robust suite of mortgage loans for Foreign National borrowers. If you are ready to compete in the fix and flip investment arena, you need to have the right tools at your disposal. That means knowing the market well and creating a partnership with a lender that can provide you with a quick closing and complete, digital solutions that will keep you from having to spend hours in a closing office, and can even save you on travel expenses with remote closings.
Contact Milo today to learn more about mortgage loans for non-U.S. citizens that will help you achieve your real estate investment goals.