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How will house-flippers fare post-COVID? Look to Cleveland
The city was already a profitable place to flip before the pandemic
Cleveland has been one of the most profitable places to flip single-family homes as rentals in recent years.
The coronavirus pandemic is likely to make it even more attractive to investors, according to the Wall Street Journal.
Economic uncertainty brought on by the pandemic means it is riskier than it’s been in years to take out a mortgage. Banks tightened mortgage lending standards.
Concerns about the concentrated nature of urban living appears to be fueling demand for suburban homes, not to mention the move toward remote working and suburban offices among major employers.
In Greater Cleveland, neglected homes can regularly be found for less than $100,000 and even as low as $50,000. The typical flip sells for twice the initial investment and rents are enough to make it a profitable investment for buyers.
Institutional investors and individual investors are hungry for those assets. One Cleveland-area house-flipping company, Prosper Cleveland, sold 200 fix-and-flip homes to investors last year and has 60 flips in the works.
Last month, JPMorgan Chase and Koch Industries committed a total of just under $600 million into single-family rental companies. [WSJ] — Dennis Lynch