Nearly 35% of all homes flipped in 2017 were purchased by the flipper with financing, a nine-year high, according to Daren Blomquist at ATTOM Data Solutions. According to the data, financed home flips take longer to complete and often offer lower cash returns compared with flips purchased with cash.
The big disparity in property purchase discounts realized by flippers using financing compared to those using cash may be explained in that cash buyers often hold a big advantage over non-cash buyers in that they can typically complete the transaction much more quickly — in days rather than weeks or months — providing the seller with extra convenience that he or she may be willing to reward with a deeper discount on the price.
Financed flippers are still achieving lofty average returns close to $80,000 per flip and close to 100 percent gross return on investment, helped by the fact that these flippers are putting down less of their own cash on the acquisition of the home. Many fix-and-flip lenders also finance the rehab portion of the investment, allowing financed flippers to leverage that portion of the investment as well.
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