Although home prices have been rising steadily over the past year, house flipping is still extremely popular among investors. And it’s the banks that are being credited with helping investors jump back into the flipping game.
Numerous banks are providing investors with flexible financing vehicles for flipping properties, the Wall Street Journal reports. Larger banks like Wells Fargo & Co., Goldman Sachs Group Inc., and J.P. Morgan Chase & Co., for example, have begun extending credit lines to firms that specialize in lending to home flippers. J.P. Morgan reportedly is lending an estimated $60 million to 5 Arch Funding, a company that offers financing to home flippers in Irvine, Calif.
“The floodgates have opened,” said Eduardo Axtle of Oakland, Calif., an investor who has taken out around 50 home loans over the past five years.
In the first nine months of 2016, the number of investors who flipped a house reached the highest level since 2007. Further, about a third of the deals in the third quarter were financed.
Private lenders reportedly are even, in some cases, offering debt in excess of the value of the home (also known as a high loan-to-value ratio). Lenders reportedly also are loosening up their documentation rules. They may still require bank statements to get a loan but not a W-2 tax earnings statement. What’s more, home flippers are finding greater financing opportunities through online lenders, such as LendingHome Corp. and Asset Avenue Inc., or crowdfunding websites, such as Groundfloor Finance Inc.