02 Jan The New ‘It’ Investors: Flipsters
Loan originators, get ready: There is a new breed of real estate investors in the industry. Meet the “flipster”—a millennial who flips houses, often selling them to other millennial homebuyers.
If you think this is a passing fad, think again: A survey conducted by Better Homes and Gardens reports that 96 percent of millennial investors are looking at real estate for their next profit.
“Millennials are beginning their journey into real estate, moving from their parents’ homes into rentals, and with those at the top of the generation beginning to buy, it makes sense that a growing number of them are looking to flip homes,” says Steven Davis, CIO and CFO of 5 Arch, a private mortgage company for residential real estate investors. “This is a generation of individuals who aspire to be their own bosses. Real estate investing is an exceptional way to do just that, and those who specialize in tailoring loans to this market can thrive.”
So, where are millennials getting the money to fund these flips? There are those who aren’t too proud to ask Mom and Dad for a loan. Sheena Schwartz is one such millennial for whom Thanksgiving dinner won’t be an awkward occasion: One of her latest flips turned a $250,000 profit.
Then there are those flipsters who choose to rent, taking money they would use for a down payment on a home and using it to buy investment properties instead.
“Millennials are in it to win it,” says Davis. “They see the draw of short-term cash flow, but are also committed to long-term revenue growth. Loan originators can feel good about funding millennial clients.”
Eva Boccio, a 27-year-old acquisition specialist with Realty Warehouse in New York, is one such millennial catering to other millennials. Her company takes on abandoned properties then vacates the properties in preparation for flipping or renting.
“Once inside [the property], I love to imagine what the potential of the house could be and come up with more pragmatic ways to rearrange the layout for the modern day family’s lifestyle,” says Boccio. She cites open concept as a big draw for millennial homebuyers, along with spacious closets, an office, and a children’s play area.
While urban centers remain popular with single millennial buyers and renters, those who are starting families look to the suburbs for more room. And there’s a lot more room to be had, in fact: A recent article in the Washington Post indicates that construction of McMansions (homes between 3,000 and 5,000 square feet) is on the rise a sure sign that the recession is in the rear view mirror.
Millennials often get a bad rap for being the entitled “snowflake generation.” Flipsters like Boccio, however, are showcasing that many millennials are just as hard-working as their Gen X and Baby Boomer predecessors. In fact, she believes that being a millennial in the real estate industry offers her an edge. “It has given me an advantage because of my drive and my hunger to make my life the best that it can possibly be.”
“My clients feel comfortable with me because they know I am a hard worker and that I am reliable, honest, and trustworthy,” says Boccio.
Though she boasts experience in the field, her relative youth is still a bonus. “I’ve been told it’s like I’m ‘everyone’s daughter,’ and am very easy to work with—patient, relentless, and resourceful,” she says.
Boccio also credits her success to being a digital native. “It helps that I am used to navigating technology since I was a child, and it comes easy to me to utilize any and all resources available when analyzing properties,” she says.
Flipping properties interests Boccio for a number of reasons. “Every day is a different journey, challenge, and opportunity,” she says. “I learn more about myself and other people every day, and I feel good when I know that I am helping people out of a difficult situation [re- garding their properties].”
Flipsters are much more than their trendy name. These millennial investors are game-changers in the real estate market, and loan originators should be prepared to play.