Investors pile into house-flipping

Earnings on home sales rise but so do prices

National /
Mar.March 19, 2021 11:15 AM
(iStock/Illustration by Kevin Rebong for The Real Deal)

(iStock/Illustration by Kevin Rebong for The Real Deal)

The number of investors backing house-flippers jumped 50 percent in two months, as low interest rates continue to drive the hunt for higher profits.

Research firm Attom Data Solutions found that the gross earnings on a fix-and-flip home reached a little more than $66,000 in 2020, the highest since 2005, Bloomberg reported. But prices have increased for such homes, slightly reducing the profit to 40.5 percent last year compared with 41.5 percent in 2019.

House-flipping mortgages, meanwhile, carry an average annual rate of 7.9 percent, more than twice the 3.09 percent rate for a 30-year mortgage. Talk show host Ellen DeGeneres has become one of the most prolific luxury home-flippers in Los Angeles. Less than two years ago, DeGeneres paid $42.5 million for Maroon 5 frontman Adam Levine’s Beverly Hills mansion, and recently listed it for $53.5 million.

Financial firms backing the flippers are not, however, the most-recognizable names on Wall Street. Many of those firms invested heavily in single-family rentals after the foreclosure crisis, but the firms investing in house-flipping today are primarily regional banks and alternative lenders.

[Bloomberg] — Georgia Kromrei


Related Articles

arrow_forward_ios
1440 Broadway and One Park Avenue (Google Maps, Vornado)
These were the largest Manhattan real estate loans in March
These were the largest Manhattan real estate loans in March
Better CEO Vishal Garg and SoftBank CEO Masayoshi Son (Better.com, Getty)
Better.com lands $500M investment from SoftBank
Better.com lands $500M investment from SoftBank
1209 Dekalb Avenue in Brooklyn. (iStock, Kutnicki Bernstein Architects)
Industry suffers setback in 421a class action suit
Industry suffers setback in 421a class action suit
An index tracking applications for mortgages to purchase homes decreased 5 percent. (iStock)
Frenzy ending? Mortgage requests fall 5%
Frenzy ending? Mortgage requests fall 5%
(iStock/Illustration by Kevin Rebong for The Real Deal)
March madness: Homes sold faster than ever last month
March madness: Homes sold faster than ever last month
February were 10.4 percent higher than last year. (iStock)
Home price growth hits 15-year high
Home price growth hits 15-year high
(iStock/Illustration by Kevin Rebong for The Real Deal)
Foreclosures and evictions could be halted for rest of 2021
Foreclosures and evictions could be halted for rest of 2021
The four-bedroom home in Silver Spring, Maryland (Photos via Realtor)
Overheated? DC-area fixer-upper gets 88 offers — 76 all-cash
Overheated? DC-area fixer-upper gets 88 offers — 76 all-cash
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...