How Wall Street, Silicon Valley institutionalized home flipping
Once a local business, home flipping is now a national FinTech operation Lending to a home flipper used to be a quaint transaction. It could be as simple as an aspiring flipper meeting with a local big-wig with money to burn at a country club, having a chat over whiskey, and leaving with a loan to finance the next house flip. Although bigger markets had more formal operations, home flipping was generally a fractured, market-specific business.
But since the housing bust 10 years ago, firms from Silicon Valley and Wall Street have nationalized and institutionalized the ?fix-and-flip? loan market by leveraging big data and technology. The transformation has attracted the type of big banks, Wall Street players, and venture capitalists that had traditionally shied away from making investments in home flipping, turning the once hyper-local business into a global FinTech industry. ?We thought it was a unique opportunity to institutionalize this asset class [home flips],? said Roc Capital cofounder Eric Abramovich. His firm lends to intermediaries that then lend to thousands of home flippers. ?Our background is in [quantitative] trading, and we are now using a similar data-driven perspective to real estate lending and thus bringing this product to large institutional investors. This is what makes it interesting for us.?
As the housing market has gone from recovering to roaring over the last five years, home flipping has also increased. Both investors and flippers have gained ...
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