National Private Lenders Conference Makes Waves

The Rebranded Conference Made a Splash in Key Biscayne, Florida By Carole VanSickle Ellis Last month, a private-lending industry tradition went through an exciting evolution, making waves at one of the biggest conferences for private lenders in the country. On March 27, 2023, the first Pitbull Conference of 2023 started out with the announcement that new ownership would be renaming and repurposing the 21-year-old event. The Pitbull conference will move forward as the National Private Lenders Conference, and will continue to have three events yearly, with the second two of 2023 being hosted in Atlantic City, New Jersey; and Austin, Texas, respectively.  Jon Hornik, CEO of the National Private Lenders Conference and a founding member of the National Private Lenders Association (NPLA) as well as its executive director and general counsel, said of the change, “We are moving [the Pitbull Conference] forward with a new name, The National Private Lenders Conference, as of Monday, March 27, 2023. With this change, we hope to attract more institutional participants into this space as well as increasing collaboration and growth among our members and within the industry.” Amy Kame, who serves as managing director for the National Private Lenders Association (NPLA), said the association is excited to bring its mission of supporting, protecting, and growing the private lending industry to bear in the National Private Lenders Conference. “What we’re trying to do is bring the foundation from NPLA to the conference.” “This organization is about how to go to the next level,” said NPLA founding member and Advisory Council member, Chip Cummings, CEO at Northwind Financial and the author of nine best-selling books. “I learn every day from this organization. The mindpower here can solve any problem in this industry.” Cory Nemoto, a principal at KÉCŌ Capital, LLC and NPLA founding member attending the event, added that his company gives much of the credit for its pandemic survival to NPLA education, networking, and communications. KÉCŌ Capital was founded shortly before the advent of the global COVID-19 pandemic. “We would not have made it through without the NPLA,” Nemoto said. “We faced many trials as an industry, and one thing that is consistent is our friends and colleagues in NPLA have been there through it all.” New Educational Elements and Networking Opportunities Jeff Tennyson, an NPLA founding member and president and CEO of Lima One, said, “Private lenders have an important, noble purpose of ultimately helping build communities, and we look forward to continuing to work with the National Private Lenders Conference to grow and build our industry, provide new ideas, and bring in the NPLA’s insights, best practices, and legislative ‘heft’ to help put a spotlight on laws that affect private lenders, real estate investors, and the end users of housing.” The conference featured presentations from John Burns Real Estate Consulting chief demographer Chris Porter and a keynote from Harry Markopolos, the forensic accounting and financial fraud investigator who uncovered evidence of the Bernie Madoff Ponzi Scheme as nearly a decade before Madoff was revealed as a fraud. The agenda also featured panel discussions on advancing your lending platform, key indicators to watch in a changing real estate market, and how inflation, interest rates, and global volatility impact the private lending industry. The event also featured multiple exhibit halls and breakout networking opportunities. The National Private Lenders Conference this March featured a number of new elements, including more than four hours of designated networking time spread across two days. “That way, no one has to feel pressure to skip the education in order to get in the networking,” Hornik explained. “We are so proud to be here, in this space, providing this education and these opportunities for private lenders around the country,” he concluded. “We are meeting in strong markets where we will attract local talent as well as national attendance, and we are excited to bring this mission to the conference and the industry.” Learn more about the National Private Lenders Conference at NPLAConference.com. If you are interested in joining NPLA, visit NPLAOnline.com.

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What Silicon Valley Bank’s Collapse Could Mean for Private Money

In a Global Economy, Every Financial “Ripple” Matters By Carole VanSickle Ellis In early March 2023, Silicon Valley Bank (SVB), a major bank in Silicon Valley that had made its name catering to venture-backed tech startups, was taken over by federal regulators. The SVB collapse was the start of the second-biggest bank failure in history and was instigated by a run on deposits after the institution announced it had sold roughly $21 billion in securities and subsequently sustained losses totaling nearly $2 billion in the first quarter of 2023. While $2 billion might seem insignificant compared to the bank’s $209 billion total assets as of December 31, 2022, the sale and losses sparked trepidation among investors and depositors at SVB, resulting in customer withdrawals of $42 billion, about a quarter of the bank’s entire deposits, in a single day. At close of business the next day, Thursday, March 9, 2023, SVB’s stock had fallen 60%, shareholders had lost more than $80 billion, and clients were reporting delays in requested transfers to other institutions. Although some analysts said in retrospect there were signs of potential trouble at the institution, public appearances essentially indicated that the bank was in sound financial condition Wednesday, March 8, 2023, and insolvent the following day. The Fallout Not surprisingly, SVB’s struggles affected the entire banking and finance sector, with Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase all losing substantially before stabilizing and then gaining ground as customers and clients at smaller banks pulled assets from those companies to deposit them at larger institutions. This shift was fueled in part by the perception that larger banks would be at less risk of failure than “smaller” ones like SVB, which was the 16th-largest bank in the country when measured by deposits, and in the interest of diversifying assets so that larger volumes of capital would be insured by FDIC coverage, which is typically limited to $250,000. Many of SVB’s clients had large amounts of capital that were uninsured at SVB; in fact, at the end of 2022, SVB held $150 billion in uninsured assets. Regional bank stocks crashed nearly across-the-board as customers reacted to fears that smaller banks might “run out of money” in the event of a run. Interestingly, “neo-banks,” also sometimes referred to as “challenger banks,” benefited from an influx of funds in the wake of the SVB meltdown. As start-ups raced to diversify their holdings and rescue what they could from the uncertain fallout, neo-bank Mercury snagged 20% of new-account openings over the weekend following SVB’s turmoil. Neo-banks are fintech platforms that offer a variety of options to streamline mobile and online banking, including apps, software, and other web-based technologies. They tend to specialize in one financial product, such as checking accounts or savings accounts, and are often viewed as digital disruptors because although they may partner with a “megabank” to insure deposits and products, their entry into the financial space has been compared to Airbnb’s effects on the hospitality industry or Uber’s impact on transportation. Will the Ripples Reach the Private Money Sector? So far, most private lenders and private loan brokers are cautiously waiting to see what fallout, if any, will reach the private money sector in the wake of SVB’s meltdown, the subsequent collapse of Signature Bank, the federal bailout of SVB customers, and a concerted effort from mega-banks to shore up confidence in spiraling First Republic Bank by making $5 billion in deposits to demonstrate faith in the San Francisco-based operation. “It is interesting how history repeats itself,” observed Mike Tedesco, CEO of Appraisal Nation, a national appraisal-management company based in Raleigh, North Carolina. Tedesco noted that after the housing crash of the mid-2000s, federal legislators passed tighter regulations on lending to prevent a repeat event. However, he said if it appears the fallout from SVB is subsiding, regulators might elect to back off, particularly given current Federal Reserve policies that necessitate ongoing interest hikes. “If [policy makers] feel they have nipped this in the bud, then they may wait [on stricter legislation], but if a few more banks fail, it is absolutely coming,” he said. Ben Fertig, president at business-purpose lender Constructive Capital, said that from his perspective, the bigger issue with the entire SVB saga is that it has the potential to change how lenders, borrowers, banks, and customers, think about credit, lending, and finance. “Even though the depositors were [ultimately] protected, the equity structure for banks could dramatically change. As new stakeholders make decisions, the credit philosophy of those [bailed-out] banks could be much different than it was before. If this extends outward, to regional banks, for example, you could see certain types of financing that could become harder to come by.” Fertig noted that this could have a temporary, positive effect on private lenders able to meet financing needs previously handled mainly by conventional bank loans, but said in the long run the change would be “net negative” for the financing sector. “I think the credit availability is the most important,” he said. Lily Fang, dean of research and professor of finance at INSEAD’s Fontainebleau campus, warned that the impact of the SVB collapse on the tech ecosystem has yet to fully manifest. In a breakdown of events published on March 23, 2023, Fang wrote, “SVB was an important player in the tech ecosystem and the main banker for tech start-ups — taking deposits and making loans. We have already been in a tech winter for a year, and the unravelling of SVB will simply deepen that winter.” SVB has placed the interconnectivity of the global economy on display in a new light, with the shock waves of what should have been a relatively minor misstep affecting just one institution rippling outward to maim and cripple other international players, like Swiss lender Credit Suisse. While Credit Suisse was already floundering thanks to years of scandals, management changes, and financial losses, the final sale of the bank to competitor UBS was spurred by fears spreading

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Warren Ifergane, CEO, ICG10 Capital, LLC

A Conversation About the Economy, Lending and the Real Estate Industry Warren Ifergane is the CEO of ICG10 Capital LLC, a private lending company focusing on financing for fix-and-flips, new construction, and long-term rental properties. Currently lending in 44 states, they are very active in secondary cities such as Jacksonville, FL, Kansas City, MO, and Atlanta, GA. With headquarters in Miami, FL, ICG10 funded $250MM in loans in 2022. REI INK sat down with Ifergane to get his thoughts on the current state of the economy and the real estate investment industry, in general. Warren, to start with, how about a little background. You were born in Paris, France and moved to the United States when you were seven years old and settled in Miami. Can you give a quick overview of your professional journey? Eleven years ago, I started as a part-time teller at Bank of America making around $800 per month. I was renting this studio apartment for $600/month after being kicked out from my “father’s” house for no other reason than his wife didn’t like me. I had no money and not even enough income to change the bedsheets that came with the place. The room had no windows and no light and was basically a direct reflection of my life at that point in time. And it was not a safe environment. After several jobs, I eventually landed a position as a private equity analyst. During that time, I also earned my MBA at Indiana University. Within five years, I was the Executive Director at that hedge fund company managing over $1B in distressed loans and making portfolio management decisions. After that, I started my own lending company, ICG10, and worked 12-16 hours every day to build the business to where it is today. A question on everybody’s mind is the state of the economy. We have inflation, rising interest rates, a proxy war in Europe, a tremendous national debt and most recently a few bank collapses. What is your take on the economy and how it may impact the real estate investment industry? Regarding real estate, it is a challenging time for anyone who is involved in real estate on a volume basis, specifically lenders, title companies, realtors, home inspectors, appraisers, etc. But with any challenge, there is the opportunity to get some substantial discounts on properties that have been sitting on the market. Very importantly, there is a slow-down in transactions as a consequence of supply and demand. Obviously, the Fed raising rates makes it particularly difficult for borrowers to purchase at affordable levels, especially since home prices have not adjusted that much relative to interest rates. But what many people don’t talk about are the ramifications of having near-zero interest rates the last few years. Approximately 85% of home owners have mortgages below 6% which evidently cripples refinances, but it also does not provide any incentives for current homeowners to list their homes. This basically shut down the “move up” buyers because they would face higher interest rates and higher purchase prices at the same time, which usually isn’t worth it when they are comparing a new home to what they currently own. In terms of finance and lending, lower transactions are affecting everyone in the space. With that said, banks have been curtailing back even further than the private lending space. So far, the private lending space has been resilient and is really functioning pretty well at fulfilling its major function, which is providing liquidity to “unbankable” or “bankable” but “hurried” customers looking for high leverage. And the recent bank collapses? It’s clear our financial system is not designed to withstand the pace of rate hikes we have seen thus far from the Fed. If you’re looking for the immediate reason of the SVB failure, it’s simply because cost of capital and risk-profiles have changed due to these rate increases, crushing valuations on young startups and even treasuries. A deal that seemed to make sense given a certain amount of risk a year ago does not make sense now. The Fed’s blunt tool is just that, extremely blunt. And SVB made the cardinal sin of mismatching durations (taking short term deposits from customers and investing them at less than 2% on 10-year treasuries. Right now, we’re not sure of the extent, but I suspect the Fed broke something and a pivot will be in play shortly. This may present buying opportunities if things don’t get too much worse. But the Fed still needs to cut rates to avoid a contagion. I personally wouldn’t keep my money in any regional bank as the risk is too high to earn cheap saving returns. If you’re going to keep cash, diversify it in some of the major banks that still pay yields. But all in all, I think this situation may end up being a good thing for real estate down the road. Your company had an excellent 2022 with $250MM in loans. What are your current thoughts on various strategies, fix-and flip vs buy-and-hold vs short-term rentals? Everyone has different strategies and personalities. Each one of them can make you massive amounts of money if scaled correctly. So that’s where we try to come in. I had one borrower who had never done a loan in his life. He met me and I convinced him the best course of action was for him to leverage and scale. Within a couple years, he acquired over 40 rental properties and increased his net worth by 2-3 million dollars, each of them cash flowing very well. That’s what I aim to do: provide access to capital so others can be successful. At the same time, I have clients that do Airbnb and are crushing it. Most investors buy properties that need renovation, and they fix them up specifically to target the Airbnb clientele. And I’ve also seen “pure” flippers that make even more money. We have one client who did over 50 flips with us in

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Flooring is a Vital Part of a Wise Property Investment

LVT is the Superior Choice for Short-Term Rental Flooring By Fred Harris Short-term rentals are a great investment in 2023, but a wise investment must be backed up with wise expenditures. Smart spending goes a long way to help overcome some of the challenges you may face with short-term rental investments. Flooring is one of the most important expenditures you will need to make, and here is what you need to know to choose the right one. The Factors In order to make a wise flooring choice, there are several factors that you have to remember. Materials Cost When choosing flooring, it is easy to spend much more than you need to. Floorings can vary greatly in cost, often with little visible or functional difference. Beauty Regarding style, you may be tempted to think that flooring does not matter, but remember that flooring spans an entire space. Tenants will see a stylish space and feel they are getting good value for their money. This means higher rent and better returns. Longevity The lifespan of flooring ranges from three years to a lifetime. The five main factors of floor longevity are scratch resistance, water resistance, durability, cleanability, and whether the environment is commercial or residential. Ease of Installation and Repair If you’re doing all the labor yourself, you’ll need to pick flooring that is easy to install and repair. Some floorings will require skilled labor to install or fix. When contracting, choosing flooring that is quick, easy, and affordable to work with will keep your costs down and properties occupied. On the topic of repairs, the repair needed for damage done by pets in a rental unit is often overestimated. You will make your listing more attractive with a pet-friendly policy. Sound Reduction Noise complaints can be a serious issue. Floorings with built-in sound reduction and sound-reducing underlayments can solve the problem without expensive assembly reconstruction. Make sure to look for a flooring’s HIIC score to see how much sound reduction it will provide between floors. For those unfamiliar, HIIC is the new standard replacing the IIC method of sound-reduction measurement. If the manufacturer can only provide IIC scores and cannot provide an HIIC score, they are behind the times. The Options Make your flooring of choice a wise expenditure. Here are your options. Luxury Vinyl Tile/Plank Luxury vinyl flooring (also known as LVT or LVP) is the best option for durable and completely waterproof flooring with affordability in mind. LVT is so easy it can be installed by almost anyone, not just professionals. There are several kinds of LVT flooring to fit any need. LVT can feature polyurethane wear layers of up to 28 mil as well as microscopic ceramic-bead integration for further damage deflection. Choosing the right wear-layer thickness is key to a long-lasting floor in both residential and commercial environments. If you desire the cushion, sound reduction, and heat insulation that carpet provides, a good, thick underlayment can provide all of those benefits as well as moisture protection. If you are using floating floors, make sure the manufacturer specifies that the underlayment will not compromise the flooring’s clips. Looselay LVT is a great option for residential rental spaces because it is extremely easy to replace single planks. LVT can take a beating, but if a looselay plank becomes damaged, replacement is quick, cheap, and does not need to be done by a professional. Carpet Carpet is on the opposite side of durable, rental-friendly, and DIY flooring. It is undoubtedly the most easily damaged and stained. Carpets may loosen over time, requiring the expense of stretching. Carpet can be a challenge to clean thoroughly, and even when it appears clean, it may be trapping allergy-inducing dust, dander, pests, and more. Carpets have also been known to off-gas harmful VOCs. Finally, carpet tends to have a lifespan of about five to seven years. Tile Tile made from stone, porcelain, or ceramic is a beautiful, durable, and waterproof option for short-term rental flooring. It definitely adds value to a property, but the high cost may be a problem for large projects. Tile can be uncomfortably cold and hard for people and pets alike. Tile is also a poor choice for sound reduction. Tile requires technical skills and experience to install and may be easily damaged. While damaged tiles can be replaced, it is a costly, dirty, destructive, and time-consuming process. Cork The main selling points of cork flooring are natural cushion, sound reduction, and sustainability. However, it is susceptible to scratches, dents, and moisture damage. Laminate Laminate is meant to closely resemble hardwood flooring and is a close competitor to LVT, but it fails to match up with regard to water resistance. This may be a big problem in vacation spots where tenants often return from a swimming pool or a snowy slope. Hardwood Although beautiful, solid hardwood is one of the most expensive flooring options for rentals. It can absorb liquid, resulting in permanent warping and stains. Depending on the kind of wood and finish, solid hardwood may also be very easy to damage. Support animals and pets can be a real danger to solid hardwood flooring. Solid hardwood is also one of the worst options for sound reduction. Engineered hardwood is an alternative that still suffers from similar problems to solid hardwood, just less so. Bamboo Bamboo flooring is similar to solid hardwood flooring, but when made properly, it is generally more durable and water resistant. As sustainable flooring options go, bamboo is a decent one, but its vulnerability to moisture and scratches, poor sound reduction, and high cost make it less than ideal for short-term rentals. The Best Option LVT is the superior choice for short-term rental flooring. No other flooring comes close to providing the overall form and function that LVT does while still remaining affordable to install and replace. Your short-term rental investment will succeed if you make all your expenditures with this kind of care and consideration.

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How Modern Housing is Failing American Renters

…And How Property Investors Can Pivot to Win By Jon Friesch Nearly 30% of households are adults living alone, but the market still focuses on nuclear families. The housing supply we need already exists; we just need to know how touse it better. Across the country, low-income workers are running into a housing wall. With a shortage of more than 7.5 million homes and limited affordable options available, our vital workforce is forced to commute long distances, couch surf with friends and family, or worse, live in their cars to reach their paying jobs. With the current trajectory, there’s no bright spot on the horizon. As urban centers become denser and costs continue to rise and outpace wage increases, the housing wall is only growing and furthering the housing equity divide. A housing crisis rising from an outmoded model The traditional rental model wasn’t designed to meet the low-income earner’s financial capacity. The housing market is limited to serving people who make $50k or more a year and who have a credit score of 550. In contrast, 64% of rental households make less than $40k a year and the average workforce credit score is 461. This mismatch has serious consequences, both for the individual’s and our nation’s economic livelihood. Affordable housing is essential to personal economic well-being and a thriving workforce is instrumental in supporting a robust U.S. economic recovery. A struggling workforce that can’t secure affordable housing, or takes huge financial hits to do so, is not sustainable. “The entire affordable housing real estate ecosystem — developers and builders, architects, property managers, and those in law and finance, — stands to benefit from creating and preserving this stable asset class,” shares Richard Burns, Forbes Councils Member and President and CEO of The NHP Foundation. For example, affordable modern housing produces a reliable source of income for property owners. Unlike luxury properties that are more susceptible to fluctuations in occupancy rates, affordable properties stay rented and are often backed by a waitlist of hopeful tenants. Within the community, the diversity and range of incomes that affordable housing brings allow urban business owners to staff and grow their businesses more easily while increasing the purchasing power of those who have reduced housing costs. Burns also clarifies an important point for property owners: a potential investor with a good understanding of the economic benefits of affordable housing will be in a prime position to invest and build profitably. And the market opportunity for affordable housing is massive and growing. Our housing needs are shifting — can the market? We have a glut of unused space in cities across the country. If we look at the average square feet of new single-family homes from the years 1980 to 2020, we see an increase of almost 1,000 square feet. Simultaneously, the average household size over the same period has reduced from almost 3 people per home to 2.5.  Only 20% of today’s U.S. households are nuclear families, yet the housing market is still geared toward producing inventory focused on their needs. To give further insight into this market misalignment, nearly 30% of households are adults living alone. While the real estate investor competition remains focused on the 9.5 million small renter households that earn more than $50k, the market for one- to two-person households earning less than $35k a year (and can’t qualify for anything) sits untapped at 14 million. This represents one-third of the U.S. rental population looking for a viable solution. Coliving: An old solution with a new application and profitability As urbanization leads to unaffordable housing, the use of coliving spaces is becoming a solution borne of necessity. Low-wage workers are seeking ways to share cost burdens, and with projections that 70% of people will live in cities by 2050, coliving is a sustainable housing option to make city living more affordable and bearable. Historically, housing has often been shaped according to shared needs and resource concentration. Now squeezed by population growth and increasing real estate prices in the modern world, new models and new ways of configuring space are needed. PadSplit founder and CEO, Atticus LeBlanc took the concept of shared space and saw how to convert this unfulfilled market need into opportunity. He and his team developed a platform and playbook to make it easy and scalable for real estate investors anywhere to connect with the marketplace. From 2008 to 2016, LeBlanc owned and operated 550 affordable rental homes and gained a deep understanding of the problems low-income renters were facing. As a business person, he also understood the motivations and incentives of the private market.  With PadSplit’s approach, investors take the unused spaces (like a formal dining room or an extra bedroom) in existing single-family homes that never generate income and convert them into extra bedrooms that are private and rentable. By doing this, property owners create additional revenue streams that bring $500 and more a month extra in net revenue. LeBlanc knew he could further improve the offering and profitability by incorporating some traditionally time-consuming property management tasks into the platform. To further set investors up for success, PadSplit takes on the work of marketing the property, screening members and handling payments and collections. PadSplit worked with policy consultants to ensure its standards were based on HUD standards and that the technology allows maintenance to be tracked in real-time. Since rolling out the platform, PadSplit has seen other benefits as well. Property owners are realizing an increase in NOI on single-family rentals by 2-3 times. Vacancy rates, another important metric for property owners, also decrease. Because the demand for affordable housing is unending, PadSplit can fill rooms quickly with an average of 2.2 days in Atlanta, for example. And while the ability to easily collect weekly, personalized rent payments is an obvious asset to both renter and owner, the added boon has been collection rates of 96%. By building these operations into the technology and leaning into efficiencies of scale, PadSplit is making good on LeBlanc’s

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Home Flipping Remains Up In 2022

Number of Home Flips Hits Highest Level in More Than 15 Years By ATTOM Staff ATTOM, a leading curator of land, property, and real estate data, released its year-end 2022 U.S. Home Flipping Report, which shows that 407,417 single-family homes and condos in the United States were flipped in 2022. That was up 14% from 357,666 in 2021, and up 58% from 2020, to the highest point since at least 2005. The report reveals that the number of homes flipped by investors last year represented 8.4% of all home sales, also the largest figure since at least 2005. The latest portion was up from 5.9% in 2021 and 5.8% in 2020. But even as quick buy-renovate-and-resell turnarounds by investors shot up, gross profit margins on home flips in 2022 sank to their lowest level since 2008 following the second major drop in two years. Homes flipped in 2022 typically generated a gross profit of $67,900 nationwide (the difference between the median sales price and the median amount originally paid by investors). That was down 3% from $70,000 in 2021 and translated into just a 26.9% return on investment compared to the original acquisition price. The latest nationwide ROI (before accounting for mortgage interest, property taxes, renovation expenses and other holding costs) was down from 32.6% in 2021 and from 41.9% in 2020. Investors saw their profit margins drop for the fifth time in the past six years as the median value of the homes they flipped rose more slowly than the median price they paid to purchase properties — 12% versus 17%. The decline in home-flipping profits in 2022 continued to cast a negative light on a niche of the U.S. housing market that is growing but also struggling to figure out how to profit from changing price trends. The latest drop-off came during a year when the nation’s decade-long home-price runup began to stall, leading to the weakest annual gains in three years and even a decline in the second half of 2022. That happened as rising home-mortgage rates, consumer price inflation and other forces cut into what home seekers could afford, reducing demand and cutting into prices investors were able to get on resale. But profits for home flippers had begun diminishing in 2017 even as the broader housing market was booming. “Last Year, home flippers throughout the U.S. experienced another tough period as returns took yet another hit. For the second straight year, more investors were flipping but found no simple path to quick profits,” said Rob Barber, chief executive officer at ATTOM. “Indeed, returns are now at the point where they could easily be wiped out by the carrying costs during the renovation and repair process, which usually accounts for 20 to 33% of the resale price. This year will reveal more about whether investors decide to find different ways to profit from home-flipping or take a step back and wait for conditions to get better.” Home flipping rates up in almost all housing markets, with biggest increases in South and West Home flips as a portion of all home sales increased from 2021 to 2022 in 216 of the 218 metropolitan statistical areas analyzed in the report (99%). Among the 25 largest increases in annual flipping rates, 20 were in the South and West. They were led by:  »         Burlington, VT (rate up 283.7%)  »         Prescott, AZ (up 183.1%)  »         Bremerton, WA (up 182.7%)  »         Jackson, MS (up 176%)  »         Honolulu, HI (up 172.6%) Metro areas qualified for the report if they had a population of at least 200,000 and at least 100 home flips in 2022. Aside from Honolulu, the biggest increases in flipping rates in 2022 in metro areas with a population of 1 million or more were in:  »         Sacramento, CA (rate up 116.4%)  »         Atlanta, GA (up 94.3%)  »         Minneapolis, MN (up 72.8%)  »         Orlando, FL (up 72.2%) The only metro areas where home flipping rates decreased from 2021 to 2022 were:  »         New Orleans, LA (rate down 8.2%)  »         Green Bay WI (down 2.9%) Typical gross profits on home flips decline in half the nation Homes flipped in 2022 were sold for a median price nationwide of $320,000, generating a gross flipping profit of $67,900 above the median original purchase price paid by investors of $252,100. That national gross-profit figure was down from $70,000 in 2021 (the high point since at least 2005) but still up from $67,000 in 2020. Among the 56 metro areas in the U.S. with a population of 1 million or more, those with the largest gross flipping profits in 2022 were:  »         San Jose, CA ($242,625)  »         San Francisco, CA ($163,000)  »         Washington, DC ($146,728)  »         New York, NY ($141,332)  »         Seattle, WA ($137,664) The lowest gross flipping profits among metro areas with a population of at least 1 million in 2022 were in:  »         Kansas City, MO ($26,963)  »         San Antonio, TX ($29,000)  »         Houston, TX ($29,901)  »         Indianapolis, IN ($34,532)  »         Dallas, TX ($36,970) Home flipping returns drop in three-quarters of U.S., hitting lowest nationwide level in More Than 15 years The gross profit margin on the typical home flip in the U.S. last year fell to 26.9% — the smallest investment return since at least 2005. The ROI on median-priced home flips nationwide has dropped 15 percentage points since 2020 and is off by 24 points since 2016. Margins fell last year as the median nationwide resale price on flipped homes increased just 12.3%, from $285,000 in 2021 to $320,000 in 2022. That was less than the 17.3% increase in the price investors were paying when they bought homes (from $215,000 to $252,100). The typical home-flipping investment return decreased from 2021 to 2022 in 168, or 77%, of the 218 metro areas analyzed. Among metro areas with a population of 1 million or more, the biggest percentage-point decreases in profit margins during 2022 were in:  »         Rochester, NY (ROI down from 100.4% in 2021 to 55.6% in 2022)  »         Oklahoma City,

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