Thursday, 24 August 2017

“Fix & Flip” Housing Market Remains Strong in 2017

Written by Posted On Thursday, 10 August 2017 17:44

“Fix & Flip” Housing Market Remains Strong in 2017

Distressed properties and foreclosures lead growth in private lending

SOUTH WINDSOR, Conn. (August 10, 2017) – RCN Capital®, a nationwide direct private lender, is reporting it has issued nearly $74 million in private loans during the first half of 2017, signaling a continuing strong demand for “fix & flip” real estate. Among the hottest markets in the nation are New Jersey, New York, Connecticut, Florida, and Massachusetts, which are leading the way. The majority of RCN Capital’s 366 loans have been used to fund single-family properties that were flipped and sold as part of an arm’s-length sale for the second time within a 12-month period. This growth in the “fix & flip” housing market comes at a time when increased regulations within the mortgage industry have greatly reduced the availability of short-term commercial loans for investors in competitive real estate markets. Private lenders, like RCN Capital, have been filling a niche that conventional financing sources have ignored for years, including providing renovation loans to contractors in underserved communities such as the south side of Chicago, Buffalo, New York and Washington, D.C.

“It’s shaping up to be a phenomenal year in the fix and flip housing market,” said Jeffrey Tesch, Managing Director of RCN Capital LLC. “Private money is in high demand, and our creative funding solutions are paving the way in a tight market. We’re helping to yield profitable returns for both developers and communities as unique real estate scenarios are falling outside of traditional bank lending. We’ve been able to step in and fill a drastic need to help keep economic development projects moving in some of the nation’s most challenging suburban and urban centers.”

In 2016, RCN Capital initiated more than $87 million in private loans with a majority of its 452 loans used to fix and flip single-family properties. This year, the national private lending firm is on pace to nearly double its total 2016 loan amount.

According to RCN Capital’s internal research from 2016, 80-percent of borrowers invested in 1-4 family homes to fix and flip, which only 13-percent invested in 1-4 family home as a buy to rent. In addition, the 2016 research showed that 56-percent of investors utilized hard money, while 26-percent funded their project with cash and only 12-percent used bank financing. Among the top states for funding for RCN Capital in 2016 were Connecticut, New Jersey, New York, Florida, Massachusetts, Illinois, North Carolina, Maryland, Texas, Indiana, Pennsylvania, and Ohio.

“Our survey has allowed us to set a strong baseline of our investor activity in 2017 and something to compare portfolio trends against as we make our way through this year,” said Tesch. “After taking a look at the survey results and comparing them to what we’re already seeing in the first half of 2017, we’re seeing that home flipping remains a strong business.”

RCN Capital is also reporting that there is a significant lack of new construction across the nation, which continues to provide a large customer base for the firm. This, in conjunction with the fact that foreclosures and housing inventory are generally low, is causing investors to take a hard look at existing housing for fixing and flipping for a profitable return. Investors no longer have the luxury of having numerous opportunities to pick from, and they have to get creative in terms of what properties they are looking to flip and how to get the most profit out of each property.

“We’re seeing investors looking for outdated homes that they can modernize,” said Tesch. “This often translates to our borrowers having larger rehab budgets or in many cases, borrowers are trying to hold their properties for rental income once renovations are completed. These scenarios are much more common in 2017 than in 2016 and as such we have had to craft new products or adapt our existing products in order to meet customer demand.”

Since its inception in 2010, RCN has underwritten more than 2,500 loans and overseen more than $500 million in originations throughout the country. Its programs have revitalized communities across the country through the purchase and rehabilitation of single family, multi-family, and commercial properties. Each project has created and supported new jobs while injecting money into local businesses that supply the necessary materials and services. RCN’s renovation funding has also increased home values and decreased vacancies, further revitalizing communities on a nationwide scale.

Through RCN’s unique private lending resources, borrowers have access to more creative funding solutions, which yield more profitable returns on real estate transactions. And while these distinct scenarios may have typically fallen outside traditional bank lending, RCN’s solutions lead to greater success despite the rules and regulations of Dodd-Frank.

As a direct, private lender, RCN Capital takes a common sense approach to underwriting, with all approvals made in-house. It is dedicated to providing a quick response to time-sensitive loans by offering speed unmatched by conventional lenders, often closing loans in as few as 10 business days. Through bridge or gap funding options by RCN Capital, an investor can start the process of applying for a conventional mortgage, get short-term financing from RCN to close quickly, and then refinance conventionally. This would prevent investors from losing out on particular deals because of timing issues.

About RCN Capital

RCN Capital® is a national, direct private lender. Established in 2010, RCN provides short-term commercial loans ranging from $50K to $2.5M+ to fund the purchase of non-owner occupied residential and commercial properties, financing of renovation projects and bridge funding. RCN lends to experienced real

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