What is Debt Coverage Ratio?

You may have seen the term “DCR” or “DSCR” while learning about flipping properties and had no idea what it meant. One of the downfalls of property investors is that we use far too many TLAs – three letter acronyms.

DCR stands for debt coverage ratio. DSCR stands for debt service coverage ratio and means the same thing. Understanding your debt coverage ratio is an important part of understanding whether your house flipping or buy and hold investment is actually a good deal. It will also be important for securing house flipping loans.

Your debt coverage ratio is used to measure your ability to pay a property’s monthly mortgage payments with income generated by the property. It’s a simple guide for assessing how much you can make on a property each year (or how much you’ll lose).

To calculate the debt coverage ratio, you need two numbers. First, you need to know the net operating income (NOI) of the property. This is the total amount of money that you can make off of the property every year by renting it out. Next, you need to know the annual debt service (this is where the S in DSCR comes from). The annual debt service is the total cost of your mortgage payments for one year including any accrued interest but excluding any escrow payments.

To get your debt coverage ratio, simply divide the net operating income by the annual debt service.

Here’s an example:

Say you’re renting out a small single family home, and you’re bringing in $38,000 annually in net income from the property, but your mortgage payments are $28,500 annually. When you divide 38,000 by 28,500, you get a debt coverage ratio of 1.33. That means that you are making 33% on the property every year.

Why does the DCR matter if you’re planning to flip a property? Because you always need a backup plan. If you’re unable to resell an investment property quickly, the best backup plan is usually to rent it out for a while in order to keep paying off your house flipping loans and avoid major losses. Most private lenders look for a debt coverage ratio of at least 1.25. The higher the ratio the better, generally speaking.

To get more helpful house flipping tips or to learn more about how to properly calculate your DCR, give our office a call at (559) 326-2509.

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Posted in House Flipping

Numbers Show The Bay Area is in Demand

The fact that the Bay Area is one of the hottest housing markets in the country isn’t exactly ground-breaking house flipping news. But you may be surprised to learn just how much home prices have increased here over the last five years.

According to The Mercury News, home prices in the Bay Area have effectively doubled over the last five years. You now need to make at least $179,390 per year in order to afford a median price home in the region. That median price point sits at $895,000.

The numbers get even more extreme when you focus in on the Bay Area’s most desirable areas. For example, the median home price in San Francisco is currently $1,450,000; in San Mateo it’s $1,469,000; and in Santa Clara County it’s $1,183,440. Put in terms of buyers, only 12% of potential buyers in San Francisco can afford a median priced home, only 14% can buy in San Mateo, and only 17% can buy in Santa Clara.

Affordability is a problem for buyers all over the state. When you look at California as a whole, the minimum family income needed to buy a median priced home is $110,890. The statewide median price is $553,260.

What does this mean for the house flipping industry?

The Bay Area still has some of the most lucrative markets for house flippers. The biggest gross profits routinely come out of San Francisco and Santa Clara. But traditional house flipping strategies may not be as effective here. There aren’t exactly a lot of underpriced properties or homes in a state of extreme disrepair. You can’t really focus on the low end of the market in the Bay Area, because the whole market is at the high end.

What house flippers can do is look for luxury homes that are out of date or in need of some smart remodeling. By opening up floor plans, updating fixtures and décor, and making some simple cosmetic fixes, house flippers can make excellent profits in the Bay Area.

The trick is getting your foot in the door. To be competitive in this market you will absolutely need to be able to make a cash offer, so having your financing in place ahead of time is a key part of being able to come out on top when an ideal property comes on the market.

Give our office a call today to secure your rehab loan pre-approval and take advantage of this exceptionally strong housing market.

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Posted in Real Estate News

What’s Going on with California Foreclosures?

House flipping and foreclosures: they generally go hand-in-hand. People who are new to the business often think that house flippers depend entirely upon new foreclosures. But foreclosures are way down in California, and house flipping is up. How can that be?

The Numbers: Foreclosures & Flips in California

In 2016, foreclosed homes represented about half of one percent of all housing units in California. Altogether, that’s 78,646 foreclosure filings in the state last year, according to ATTOM Data Solutions. As a point of reference, those figures represent a 15% decrease in foreclosures from 2015 and a staggering 85% decrease from their all-time high in 2010.

Alternatively, across the country house flips made up 5.7% of all single-family home and condo sales in 2016.  In California, the rate of house flipping was substantially higher. Home flips made up 10.1% of all California home sales in 2016, also according to ATTOM Data.

Factors Driving the House Flipping Market

With so few foreclosed properties, the house flipping market is being driven by a variety of other factors. First, home prices are still on the rise thanks to low supply and a strong economy. Second, flippers are expanding their horizons and looking into a wider array of market types. And third, the amount of available capital for house flipping loans has gone up substantially in recent years.

More and more house flippers are turning to outside sources for financing, making it possible for them to invest in bigger flips and more of them. In 2016, 31.5% of all rehab properties were purchased with financing, a six-year high. Altogether, there was about $12.2 billion in financing invested in house flips, a nine-year high.

The house flipping tips that made sense in the 1990s and early 2000s are a thing of the past. The market no longer relies on foreclosures but instead relies on smart investors ready to look for unique opportunities and take part in advantageous financial partnerships.

If you’re considering getting into the growing house flipping market, give us a call to learn more about the current market trends. Our experienced team can help you get a sense of what exactly goes into a house flip and provide you with fast, reliable funding if and when you’re ready.

Posted in Real Estate News

Guide to Using Our Deal Analyzer

All the house flipping tips in the world won’t save your flip if you don’t take the time to do the math before you make your investment. Being diligent about the numbers upfront can save you a great deal of time and energy, as well as a great deal of money.

But where to get started? If you’re new to house flipping, the necessary math might feel a bit overwhelming. Fortunately, the ZINC Financial Deal Analyzer can help.

You can find our free Deal Analyzer tool here or from the homepage of our website. It’s the first link under the “Quick Links” section on the upper righthand side. Be sure to bookmark the Deal Analyzer for easy access in the future.

Using the Deal Analyzer is as simple as plugging in numbers and pressing “Calculate.” The analyzer will ask for some key financial information, including:

  • The purchase price
  • The estimated total rehab costs
  • The expected after repair value (ARV)
  • The estimated time it will take to flip the property in months
  • The size of the home flipping loans you’ll be needing
  • The interest rate on the loan
  • The loan points
  • The estimated property tax
  • And a few estimated fees

The more accurate you can be with these numbers, the more useful the Deal Analyzer will be. You may want to start by trying different number combinations to hone in on an appropriate investment range. But as you get closer to actually investing in a property, you will want to be precise with your numbers.

Once you plug all of your numbers in, the Deal Analyzer will generate a report for you including all of your inputted information and some key calculations about the proposed flip. You will get an estimate of the total holding costs, the selling costs, the total amount of cash needed to complete the project, and the estimated net profit. To keep everything simple and organized, you can print your results or save them as a PDF to look at later.

If you need help using the Deal Analyzer or if you’re ready to take next steps, give us a call at (559) 326-2509.

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Posted in Fix & Flip Tips, House Flipping, Rehab Loans, Rehabbing Tips

Acquisition Strategies Used by Experienced House Flippers

If your only method for finding new investment properties is surfing the MLS, you’re likely far behind your competition in terms of deals. We can provide you with all the house flipping tips in the world, but if you can’t find a property to rehab in the first place, they’ll all be moot.

Experienced investors don’t wait for properties to come on the market. They make properties come to them, and then they have their house flipping loans ready to go so they can move fast and make the best possible ROI. Here are four strategies for acquiring investment properties that you should explore:

  1. Direct Mailers

Top house flippers send out direct mailers that are targeted at owners of distressed properties. They hone their list and invest in direct marketing every month so that when people in their targeted areas are ready to sell, those sellers call them directly.

  1. A website

Best used in tandem with a direct mailer or other advertising campaign, a website lets people find out more about you without actually calling, which is a big step that most people aren’t willing to make without more information. A website gives them another way to reach out and for you to show how easy you can make it for the seller to get cash quickly for their run-down property.

  1. Wholesalers

There is a whole world of wholesalers who buy distressed properties and resell them to flippers in a matter of days. This essentially works as a finding service. (Wholesaling is also a good way to learn more about the house flipping business and make some quick cash before jumping in on your own flips.)

  1. Referrals

Networking is a key component of house flipping, especially if you want to flip houses on a large scale. The more realtors, contractors, and fellow house flippers you get to know, the more properties will start falling into your lap. Always have business cards on hand, and let everyone you meet know what business you’re in – you never know where your next referral might come from.

To learn more about any of these acquisition strategies, give our office a call at 559.326.2509. We’d be happy to answer any questions you may have and tell you more about the current terms of our house flipping loans.

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Posted in Fix & Flip Loans, Fix & Flip Tips, House Flipping, Rehab Loans, Rehabbing Tips

How to Find Top-Notch Contractors for Your Flip

In the battle for worst people to work with, contractors give lawyers a run for their money. It seems that every house flipper has horror stories about contractors who fell way behind schedule, delivered shoddy work, or simply didn’t finish the job. Finding a great contractor is like finding the golden ticket – it can make all the difference in the success of your flip.

Fortunately, finding a great contractor isn’t nearly as hard as it used to be thanks to the wonder that is the internet. Now, you can use free resources like Angie’s List to compare multiple contractors side by side, read reviews, and check business licenses.

So the challenge these days isn’t necessarily finding a good contractor but finding the right contractor for your job. Here are our top suggestions for choosing a great contractor:

  • Shop around. Don’t hire the first contractor that you contact. Get in touch with at least three contractors and compare prices. You should also compare their terms – will they sign a contract, or do they work based off of handshake agreements? How long do they say the work will take them, and how precise are they with their projected costs? Remember that there is a huge difference between “it should cost” and “it will cost.”
  • Read reviews. Be wary of reviews that might be written by the contractor themselves. Look for a variety of reviews that are honest and thorough, not just singing praises but actually discussing details. The best reviews come from people you know, so ask around.
  • Check their work. Ask to see pictures of similar jobs. If they’ve never done a project quite like yours before, that should be a red flag. If they’re not willing to show you pictures, that’s another red flag. In any samples that you look at, pay close attention to detail. Look for what they might not be showing you.
  • Consider breaking things up. It might make the most sense to hire one person for the floors and another for the cabinets. General contractors are convenient because they can handle everything, but you’ll likely end up spending more by using a general contractor over specialists.

If you have more questions about how to choose a contractor or want more house flipping tips, give our office a call anytime at 559.326.2509. We can also tell you about our current house flipping loans and the latest market trends.

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Posted in Fix & Flip Loans, Fix & Flip Tips, House Flipping, Real Estate Investment Blog

Guess Which Room Generates the Most ROI When Remodeling?

Which room would you think has the potential to generate the best ROI in a house flip? The master bedroom? The kitchen?

The answer is actually the bathroom. A mid-range bathroom remodel during house flipping has the great potential return on investment. If you put $3,000 into a bathroom, the expected return is $1.71 for every dollar spent.

If you think about it, it makes a lot of sense. Fixing up a bathroom doesn’t take all that much work if you know what you’re doing, but it’s an intimidating enough project that, if left undone, potential homebuyers won’t want to handle it themselves. Plus, tastes are usually pretty generic when it comes to bathrooms. A nice neutral tile, a pale color on the walls, and a nice big shower head will please just about anyone who walks in.

Compare that to a kitchen. Doing a full remodel on a kitchen during your fix and flip can cost anywhere from $10,000 to $30,000. For that huge investment, you might end up creating a kitchen that doesn’t suit the tastes of half your potential buyers. Perhaps you went too modern or too dark with the cabinetry or too small with the storage space. People have very particular tastes when it comes to kitchens, and the value added to the home simply isn’t enough to make a huge kitchen re-do worthwhile.

Instead, if the existing kitchen is in reasonable shape, you can add a fair amount of ROI by simply painting the cabinets and replacing the hardware. Upgrading the appliances might be worth your while, but that’s a judgement call.

Another room to avoid is the unfinished basement. Unfinished basements are right up there with kitchens as the worst return on your investment.

What should you do if your flip has an unfinished basement? Don’t touch it. Leave it unfinished, and potential buyers will love it. They’ll walk in and see endless opportunity. Maybe this buyer would make it a man-cave and that buyer would make it a giant playroom for their kids. If you leave it alone, they can do whatever they want with it. The same principle applies to backyards.

Whatever your rehab plans, ZINC Financial can help you achieve them with competitive rehab loans funded quickly and reliably. Give us a call at 559.326.2509 to learn about our current loan terms.

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Posted in Fix & Flip Tips, House Flipping

House Flipping: Our Big Tips for Big Returns

House flipping is both a science and an art. There are mathematic principles that should be abided by, but there’s also a fair amount of gut instinct and taste involved, both of which are nearly impossible to teach. You’ve heard us harp on the importance of doing your research and making sure the numbers line up before investing in any property, but aside from the math and the research, what are some things you can do to improve your ROI? How can you make your flips the most desirable homes on the market?

Here are our top house flipping tips for adding an extra punch to your profits.

  1. Get to know your market and design with your buyer in mind.

This may sound like a no-brainer, but you’d be amazed how often we see flips that don’t seem to have any regard for the intended buyer.

Is the house you’re flipping going to be best suited to a young family or a pair of retirees? Would it make the perfect pad for a young professional, or is it an upgrade house for people mid-way through their careers? Each of these buying groups is going to have different needs. The young family might love to have an office that could turn into a bedroom when their next child comes along. A bachelor or bachelorette might be more interested in a great entertaining space than spare bedrooms.

Likewise, the renovations you make should reflect the neighborhood. If you’re flipping a home set amongst stucco and tile roofs, you probably don’t want to go with a Victorian look.

  1. Educate your buyer.

When they do initial searches, buyers rely heavily on pictures and the descriptions provided by the seller. Make sure you use a professional photographer to show off your work, then put care and detail in your home description. Make sure to point out all the positive changes you made, especially changes that won’t be visible in the pictures. If you took out the 1950s plumbing and replaced all the fixtures, write that down. If you put in new windows, let everyone who walks in know. You should also put together a list of local amenities and highlight the scores of the local schools, if they’re worth bragging about.

  1. Don’t overprice.

This is a big one. We often see flippers trying to make back time they lost or unexpected costs by cushioning the asking price. Unless the market is extremely hot, this will likely scare away potential buyers and cause your house to stay on the market longer than necessary.

Starting with a reasonable asking price brings much more attention, especially since buyers can compare your asking price to the Zillow and Redfin estimates. If the price seems good, people will come in, fall in love, and be willing to pay over asking if need be to secure the house.

Of course, you can also maximize your profits by securing the best house flipping loans. At ZINC Financial, we fund loans in as little as seven to ten business days. Our clients come back to us for flip after flip. Give us a call today at 559.326.2509 to learn why.

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Posted in House Flipping, Rehab Loans, Rehabbing Tips

Creating a House Flipping Exit Strategy

One of the biggest risks of fix and flip investing is the risk that you won’t be able to resell the home in a timely manner and at a price that you’re happy with. It’s essential to have a plan before you begin any house flipping project as to what your projected final value will be. But even with all of the planning in the world, investors can’t always predict what the market will do.

If there is a sudden housing market crash, an unexpected major problem arises with your flip, or buyers simply don’t take to your property, what can you do to save your investment?

The best course of action is to have a house flipping exit strategy in place before you even get started on your flip. You should be working with solid projections as to your final value, target listing date, and an appropriate initial asking price. You may want to start with an aggressive listing price that is a little above market value and slowly lower the price if no buyers bite. Or you might want to start with a low asking price with the hope that multiple bidders will swarm and ultimately boost the final offer.

Whatever your initial plan, you should also plan for the contingency that the house stays on the market longer than you’d like. Maybe you can afford to keep it listed at a set price for a few months. Maybe you’ll need to take the listing down and rent the property as soon as possible to avoid big losses. Your preferred course of action will depend upon just how much capital you have at stake and how much you can afford to gamble.

If you already have a flipped house listed that isn’t selling and you’re not sure what to do, you’ll need to weigh your options quickly. If you haven’t already, here are a few steps you should consider taking:

  • Consult with a realtor to get an assessment of whether your asking price is too high. A good realtor can help you choose an optimal asking price to attract offers. You can and should also have a professional realtor arrange open houses to help you promote the property to more potential buyers.
  • Consider staging the home with furniture and getting professional photos taken. Sometimes it’s difficult for buyers to imagine the potential of a property without any furniture inside.
  • Double check your listings on house hunting apps. Make sure that your featured image shows off the best asset of the home, whether that’s its kitchen, huge backyard, or lovely street.
  • Considering finding someone to rent the home. A renter can help protect your investment and pay down your rehab loans while you wait for a better time to relist the home.

For more advice, give our office a call at 559.326.2509 anytime. We’re always here to help.

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Posted in Fix & Flip Loans, Fix & Flip Tips

What to Expect for Summer 2017 Real Estate

Summer is upon us, and the house flipping market is as hot as ever. Despite foreclosures being at their lowest rate since before the Great Recession, flippers across the country are making excellent returns on their investments. Homes purchased in the last few months and weeks are turning over quickly as more people head out to look for their newest home.

The housing market follows a predictable seasonal pattern. Things always slow down in the winter and then get hotter and hotter through the summer. The summer is the preferred time of year for families to move because the weather is nice (making packing up easier), they can line up their moves with vacation time, and they don’t have to pull their kids out of schools in the middle of a school year.

This summer, prices aren’t going up at an ungodly rate like years past, but they are still going up. And as more potential buyers start their home searches, we’re seeing more homes sell in just a few days and often for more than the asking price.

The most successful house flippers this year seem to be the ones working on multiple flips at once and turning homes around in a matter of just a couple of weeks. The key is to find homes that are out of date but solidly built. Such homes can be quickly and affordably renovated, leading to substantially higher selling prices in very little time.

Of course, in order to successfully juggle multiple house flipping projects, investors need strong sources of funding. With ZINC Financial’s house flipping loans, our clients are able to move quickly on ideal investment properties and get to work without worrying about having enough cash on hand to finish necessary repairs.

The top renovations that we’re seeing buyers respond to this summer are updated kitchens with modern, light colors and clean quartz or butcher block counters; laminate wood flooring throughout living rooms and bedrooms; and updated bathrooms that look fresh and unused.

To learn more about the latest house flipping trends or to discuss your house flipping funding options, give our office a call today at 559.326.2509. We can fund your next loan in as little as seven to ten business days at a competitive rate.

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Posted in House Flipping, Real Estate News

Rent Statistics that Should Excite Buy and Hold Investors

When homes are as expensive to buy as they are right now, rental rates go up. Across the nation, many people who could buy are choosing to rent instead, and many others are renting because buying is simply out of the question. For a plethora of reasons, renters currently make up a huge portion of the housing market, and their share is only going up.

As rent prices are going up, home prices are going up, too, creating an ideal situation for buy and hold investors. For the uninitiated, buy and hold real estate refers to the process of buying a home or apartment building, renting it out for a few years, and then reselling the property at a time when the market is peaking. This allows investors to make both monthly income from renters and a nice profit on the backend when they resell their rental property.

If you’re considering buy and hold investing, here are a few statistics from the Rental Protection Agency (as of March 21) that should interest you:

  • More than 111,000,000 people in the United States are renters. That’s more than a third of the entire population.
  • The rental rate is increasing. Every day 2,654 people become new renters.
  • The largest portion of renters are aged 25-34 years old. 27.9% of renters fall into this category. The next largest category is 35-44 year olds (22.7%), but there are also a fair number of people over the age of 65 who go back to renting in their retirement (13.6%).
  • In every US state, at least 25% of residents rent. The lowest rental rate is in Minnesota (25.45%) and the highest is in New York (47.01%). California and Hawaii aren’t far behind (43.09% and 43.49%, respectively). In the District of Columbia, 59.24% of residents rent.

Renters make up an important part of the real estate market. In both houses and apartments, renters make homes for themselves for the short term and for the long term. With the right buy and hold loans, investors can provide a beautiful home for a young professional, a family, or a retiree while earning monthly income and enjoying excellent tax breaks as a landlord. To learn more, contact the team at ZINC Financial by calling 559.326.2509.

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Posted in Buy & Hold Loans, Buy and Hold Real Estate, Rental Real Estate Financing, Rental Real Estate Investing

3 Ways to Market Your Flip

You can put all of the time and effort in the world into beautifully renovating a home, making sure every penny of your house flipping funding is used wisely and effectively; but if you’re not able to resell that home quickly, all of your profits will get eaten up.

House flipping is all about speed. You need to be able to garner offers within days – ideally hours – of putting your flipped property on the market. If you’re having trouble attracting buyers, here are a few simple tips to consider:

  1. Use every housing app out there.

Work with a realtor to create a beautiful listing for the home that has a ton of great pictures. Have a professional photographer take the photos to ensure that they are full of natural light and make the rooms look huge. Buyers know that rooms always look bigger in pictures, so if your images don’t make the home look flawless, every perspective buyer will move on.

Once you have your pictures and your perfectly worded description, make sure your home is listed correctly in all the most important apps – Redfin, Trulia, and Zillow. Check the listings regularly to make sure the information is up to date and complete. If things go slowly, occasionally take your listings down and put them right back up so that your house goes to the top of the new listings.

  1. Go all out at your open houses.

Have open houses often, and make sure they are professional and welcoming. Help people find your house by using signs on nearby street corners and a clear sign in front of the house. Have cookies, a healthy snack option, and water bottles for everyone who comes in.

Have a flyer for the home that is full color, beautifully designed, and full of useful information. Highlight the quality of the local schools, the proximity to amenities, or the fact that the house has its own solar panels – whatever makes the home stand out.

And don’t overlook neighbors who drop in to take a peak. Looky-loos tell their friends and relatives about houses near them so that they’ll move closer, and sometimes they buy second homes to rent out. Always be nice to the neighbors.

  1. Don’t underestimate the power of social media.

Make sure to post links to your listings on Facebook, LinkedIn, Instagram, Pinterest, Twitter, and any other social media service that you use. Links on social media get passed around, reaching people who may not even be actively looking for a new home. Social media helps you cast a wider net.

For more tips, or to learn about our current house flipping loans, give our office a call today at 559.326.2509.

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Posted in House Flipping, Rehab Loans

Flipping Houses: Can it Be Done with No Money?

The first question that most people ask when they explore the possibilities of house flipping is, “How much money do I need to get started?” As the old adage goes, it takes money to make money, and this is certainly true in the world of house flipping. However, you don’t need as much capital as you might think to get started as a house flipper.

While successful house flipping usually requires an upfront cash offer in order to secure a desirable property, no one expects house flippers to have that much cash on hand without any assistance. Even experienced house flippers who have made fortunes from their flipping pursuits rarely make a purchase using only their own money.

Most house flipping funding usually comes from bank loans, investing partners, or private money lenders. Private lenders tend to be the most popular choice because bank loans take too long and come with too many strings, and personal investment partners have a tendency to be unreliable.

So, if you’re getting house flipping loans from a private money lender, does that mean that you can purchase a house to flip without any money down?

The short answer is probably, but you shouldn’t.

If a lender is willing to give you 100% of the purchase price, they are more likely than not a hard money lender, and you are more likely than not getting yourself into a rather unwise situation. Unlike private money lenders who cultivate long-term partnerships, hard money lenders care only about getting the most interest they can, regardless of the outcome.

Private money lenders are more careful about who they lend to. If they are reputable, they will care about the success of your investment. Thus, they will only lend to people who are serious about their investments, and the clearest way to show commitment to a project is to invest one’s own money.

At ZINC, novice investors are expected to put down 20 to 30% of the initial purchase price. More experienced investors who have cultivated a relationship with the firm can put down as little as 10%. Our most trusted investors can take out house flipping loans of up to $1,500,000, leveraging their experience and capital in ways that they would never be able to on their own.

Learn more about our loan programs by giving our office a call today at 559.326.2509!

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Posted in Fix & Flip Loans, House Flipping

How are 2017 Rent Trends Shaping Buy and Hold Investing?

Across the nation in 2016, rent prices leveled off. This is good news for renters and for the housing market in general. New construction finally started catching up with demand, and more Millennials who had been avoiding the housing market started to buy. So what does this mean for buy and hold investing professionals?

While prices have leveled, they are still incredibly high. Landlords across the country are not complaining about the income they are bringing in these days. It still pays to invest in buy and hold real estate, because housing prices are still going up and rent prices are expected to remain high, though steady.

In some major metro areas, rents are actually falling, but this isn’t the case across the board. According to Apartment List, rents are down in cities like San Francisco and San Jose, but this is primarily due to new development at the luxury end of the market. Landlords of new luxury buildings are being forced to cut their prices and offer extra amenities to draw new tenants in. However, in the low and middle income housing brackets, rents are still going up due to a lack of supply. In this area, responsible investors can both make a solid return and provide much-needed quality, affordable housing to underserved communities.

In other cities, rents are still going up at incredible rates. In Tacoma, WA, for example, rents rose 7.7% in 2016. In Long Beach, CA, rents rose 6.1%. These cities are considered “secondary cities” – cities that are not far outside of major metropolitan areas (in these cases, Seattle and Los Angeles) and offer many of the same amenities and job opportunities, but at a lower cost of living. Secondary cities around the country saw much steeper rent increases than their primary counterparts in 2016, and that trend is expected to continue. Hot markets like these are ideal strongholds for buy and hold investors to explore.

As always, the investors who do best in any market are those who are financially prepared and ready to act quickly. At ZINC Financial, we offer buy and hold loans to both novice and experienced investors, giving you the leverage you need to succeed in any market.

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Posted in Buy & Hold Loans, Buy and Hold Real Estate, Rental Real Estate Financing, Rental Real Estate Investing

Mortgage Rates Going Up in 2017: What Does It Mean for House Flippers

After the presidential election, federal mortgage rates went above 4% for the first time in two years. Given all of the upheaval that has occurred during the first weeks of Mr. Trump’s presidency, experts really aren’t sure what will happen to interest rates as the year progresses, but the best estimates suggest that the rate will continue to rise at a slow, steady pace. By the end of 2017, interest rates are expected to hit 4.6-4.7%.

At the same time, median incomes are expected to rise, as are home values. According to an article in Forbes, Redfin predicts the median home sale price to increase 5.3% compared to 2016, and Zillow predicts a more modest rise of 3.2%. These stats are good news for house flippers, but not all of the news is good. Home affordability is expected to go down in 2017, meaning that it will be harder for average Americans to buy.

So what does this mean for house flippers?

In 2016, home affordability was also incredibly low, and home prices were on the rise. There were very few foreclosures, and yet, house flippers managed to thrive. Those who did best were the flippers who made the most of smart residential rehab loans in up and coming neighborhoods. The competition was fierce, but those flippers who partnered with experience and did their research ended up with incredible gross profits across the board.

In 2017, we expect more of the same from ZINC Financial clients. House flipping and mortgage rates may never be the best of friends, but despite the expected increase in 2017, we believe that savvy investors will continue to find ways to be competitive, both through traditional flipping and through buy and hold strategies.

2017 is unlikely to be a conventional year in any sense, and that goes for house flipping as well. Our best advice for house flippers is to be open to new strategies and ways of thinking and to be especially careful with financial planning. Choosing a trustworthy private money lender should be among your very first steps to help ensure that you have the funding you need at an agreeable rate when you need it.

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