In March 2023, Roc360 expanded its leading residential real estate investment platform by acquiring Finance of America Commercial’s (FACo) fix and flip loan business. The move highlights Roc360’s expansion into the popular house flip lending niche.
High yields and low default rates have made short-term, or residential transitional, loans a more popular investment option than Treasurys among Wall Street firms. One-year Treasurys yield about 4.6% on average, while fix and flip loans nearly double those yields–with an 8% average payout.
Profitable fix and flip ventures became more difficult to find in 2022, with homebuyers flocking to the market with historically low mortgage rates. Even with the increased competition, Roc360 and FACo lended nearly $4.7 billion combined to fix and flip investors in 2022–with Roc360 accounting for almost two-thirds of the total.
Still, Roc360 Founder and CEO, Arvind Raghunathan, suspects lower deal volume throughout the remainder of the year. However, with rising interest rates deterring regular homebuyers, he believes better deals are on the horizon for investors in 2024–making the house-flipping finance business a favorable endeavor.
“The space is ripe for consolidation–We are definitely on the prowl for more deals,” says Mr. Raghunathan.
Finance of America, founded by Blackstone Group, went public in April 2021. After struggling as a public company for nearly two years, the decision was made to sell its flip-loan business. The sale–to be paid over the next three years and not to exceed $30 million–gives Finance of America further freedom to pivot into the reverse mortgage industry.
As for Roc360, the leading investor-focused property platform, it will further its reach and resources into the profitable fix and flip marketplace.
Read the WSJ article here: https://www.wsj.com/livecoverage/stock-market-news-today-03-14-2023-cpi-report-inflation-svb/card/fix-and-flip-lenders-are-consolidating-zUeNWDqfUKv8bTfUcKdp
