Avoiding construction costs and more: why Fix and Flip is the market that matters
“We’ve been reviewing it with potential customers,” said Keith Lind, executive chairman and president of Acra Lending, reflecting on the in-house proprietary technology Acra is using, “and they think its outstanding. We asked ourselves: how can we make the process for Fix and Flip customers very transparent and very efficient? That’s our goal here.
“We spent a lot of time thinking about this and looking at our competitors. Two things we do differently came to mind. Firstly. we’ve been spending money on the technology and the processes to make this much more efficient and a better customer experience for our borrowers.
“Secondly, a lot of our competitors are not coming from the standpoint of being well capitalized. We are very well capitalized, and that’s not going to be an issue. So that sense of security should be something that our customers should be looking forward to.”
It’s a prudent time to be focusing on Fix and Flip. While the pandemic devastated certain parts of the mortgage sector – “it wasn’t pretty,” Lind said – the Fix and Flip route has remained popular, especially when compared to investing in new builds outright. The reason? Quite a simple one.
“It’s cheaper. Think about inflation, or shortages, or prices going up, or any of the ancillary products you need to build a home. Not only are material prices up, but builders are working for higher margins because they can. Traditionally they’d have five people knocking on the door, but now they have 40 people knocking on their door to build a house. So, you’re really getting hit on both sides, not just materials, but margins as well.
“The advantage to fix up is you’re not rebuilding a home. You don’t need all this lumber. You don’t need all of the metal in the plumbing. You might need some of it, but you don’t need all of it.
“It’s more efficient to already have a home than it is to do ground-up construction. And the average home in the US is 40 years old - so I think this aspect of the business is here to stay.”
It’s a market that has given Acra the chance to showcase its customer-focused approach – and also to highlight the importance of a measured and analytical outlook on lending.
“I think we might have a different approach about who we want to lend money to based on their experience and their liquidity,” Lind explained. “That’s something you have to think about. Home prices have had a really good run here – but you have to be wary of any pullback in housing. That could lead to some developers, or some homeowners, being put in a precarious situation. So, we’re going to be thoughtful about their experience and their liquidity and their history.
“But ultimately, we are here to help as many people as we can.”
Acra Lending will be launching its Fix and Flip offering in the coming months – for more information, visit acrafixandflip.com