NORTHBROOK, Ill., March 4, 2014 (GLOBE NEWSWIRE) -- According to RealtyTrac Inc., house flipping is making a comeback; house flips in 2013 rose 16 percent from 2012, and increased 114 percent from 2011. Furthermore, the average gross profit for a flip was $58,081 in 2013, up from an average of $45,769 in 2012.
Hilco Real Estate Finance, a private money lender for real estate rehabbers, is experiencing the uptick in the fix and flip market first-hand. The business unit has issued over $75 million in lines of credit since its inception in July of 2013, enabling fix and flip investors and realtors to acquire, renovate, sell and lease properties at a higher volume and a faster pace. The average of all approved lines of credit is approximately $800,000.
In 2013, approximately 20% of all home sales in the U.S. were to investors, who collectively purchased over 1 million homes with an aggregate price of over $150 billion. Fifty percent of these sales were paid for in cash, with no financing. Many thousands of professional investors purchased multiple properties. According to the National Association of Realtors, from 2002 – 2012, investor purchases averaged 1.1 million homes ($175 billion) annually. On average, from 2002 – 2013, investors purchased 22% of all homes sold. In today's revved up housing market, competition for properties is fierce, as many investors are snapping up properties in desirable markets to sell to consumers, and other investors buy homes and reposition them as single-family rentals.
"There is money to be had in the home flipping business," said Mark Filler, CEO of Hilco Real Estate Finance. "However, the hedge funds and larger investors have the advantage on the best properties because they can outbid the smaller guys because they have the cash. Our goal is to help independent investors and realtors increase their buying power (and compete as cash buyers) while also assisting them through the whole house flipping process."
"While the business opportunity is ripe in the home flipping market, there are several ways to optimize your success," said Filler. "Our senior management team has over 50 years of real estate lending experience and has financed over $150 billion in real estate. Below are some of the main financial tips independent investors and realtors should think about.
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Do Your Homework. Find Credible Lending Sources to Increase Buying Power - As a result of the real estate and mortgage "meltdown," most traditional lending sources exited this market. Therefore, investors have less access to credit and often look to private investors such as friends and family. These cash sources can be limited in quantity, very expensive and unreliable. Instead, look for lenders that can provide a consistent, dependable source of capital that can provide you with the cash needed to purchase properties with the greatest after repair value potential. At Hilco Real Estate Finance, for example, we issue lines of credit up to three million dollars to help investors maximize their purchase potential.
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Take Your Time in Sourcing the Right Property - Buyers are looking for turn-key, remodeled properties in desirable areas, therefore it is important to take your time in sourcing the right home in the right location and making sure you fully understand the updates that need to be made. For example, if you purchase a home for $50,000 in a neighborhood with an average home value of $100,000, and then try to sell it for a profit when it's finished for over $200,000, this is not going to be successful for you. At Hilco Real Estate Finance, we help investors source and sell the best properties, in addition to providing the financing.
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Don't Let Unforeseen Costs Surprise You - Don't forget about potentially unforeseen renovation costs. If you plan to fix the house up and sell it for a profit, the sale price should exceed the combined cost of acquisition, the cost of holding the property and the cost of renovations. Hilco Real Estate Finance can serve as a second pair of eyes for investors helping them identify potential shortfalls and avoid costly mistakes.
- Understand Your Credit Score - Credit is still highly misunderstood and credit scores can hurt your chances of obtaining any loan, including a real estate loan. Getting your credit report from a federally mandated site does not affect your credit score and they are free on an annual basis. Make sure to review the report and fix any mistakes to increase your score before going to lenders. Hilco Real Estate Finance can refer you to firms that will best assist you.
For more information on Hilco Real Estate Finance, or to request an information packet, click here.
About Hilco Real Estate Finance
Hilco Real Estate Finance, a market leading multi-state private money lender, is uniquely dedicated to providing our clients with more buying power. Our financial strength combined with our experience affords us the ability to deliver for you like no other finance company. We understand the importance of your profit and growth goals, and share the interest of improving communities and neighborhoods. HREF's management has successfully financed hundreds of thousands of properties, worth over $150 billion. HREF's primary focus is "fix and flip" investors. In addition, Hilco lends to investors that acquire and lease properties and will lend on single and multi-family properties. HREF also offers cash-out refinances and expects to make construction loans.
About Hilco Global
With worldwide Headquarters located in Northbrook, Illinois, Hilco Global is an independent financial services company and the world's preeminent authority on helping companies to derive maximum value from their assets, providing both healthy and distressed companies with creative insights, solutions, advice and even capital. The company has over 500 employees and offices located in 18 major international cities in the United States, UK, Mexico, Canada, the Asia Pacific and Australia. For more information, please visit www.HilcoGlobal.com.