Over the last month, we have seen an increase in the execution of the BRRRR strategy. Now admittedly, some of this execution is due to necessity and not hitting the desired sales price, but nonetheless, it is still an effective exit… even in this market. As properties bought late last year and earlier this year are coming to completion, investors are finding that their underwritten values have stayed stagnant or even dropped some percentage. Instead of accepting the loss, they are holding and cash flowing on a property that they plan to sell in 5 to 10 years. This is an excellent play given that within that period, it’s highly likely that rates will drop from the historic highs of today and they will be able to refinance to increase their cashflow even more in the coming years. Not only that, but the cyclical nature of real estate means that the investor is likely to catch the next market upswing once they are ready to sell the property. Don’t be afraid to wait out of the market by turning a flip into a rental. The beautiful thing about real estate is that so often patience can minimize any mistake made on a property and turn it into a fruitful investment.
The most common challenge I saw last week was investors looking to save time and money by not pulling the correct permits. This only ever costs you more of both resources in the end. When trusting a GC to pull permits for you, double-check within the state’s database to ensure all major permit work has been applied for and approved. Unfortunately, there have been too many times when an investor goes to sell a property and they are unable to, or things are delayed because an incorrect permit was pulled or not even applied for. Stick to the straight and narrow and knock things out correctly the first time, this will allow for a fast, smoother selling process.
One thought from a conversation last week – local matters. Being able to manage your projects by being local and present is key to protecting your investments. In addition, by being local, you begin to understand the personality of your local market – What works or doesn’t work for a particular submarket, what projects are hitting the market, and what properties would be a good target for your own marketing. Here’s why that matters to you: When someone presents you with a deal, knowing what it can potentially sell for without having to call an agent can save you thousands of dollars on not allowing that deal to be seen by others.
Single-family detached home in Montgomery County
PURCHASE: $443,100
RENO: $70,000
ARV: $670,000
DEAL DETAILS: This client is a jack of all trades! They are their own agent and the GC for their deals, saving themselves time and money on all required work. The client is picking this property up at auction and had to consider the hefty auction fee in their purchase to ensure the numbers still made sense. Luckily, they were able to talk with the auction house to secure the property before the bidding went even higher by ensuring a 2-week closing time. The plan for the property is to fully update the home to today’s standard while keeping the 4 bed, 3 bath layout. Recent sales in the immediate area have been unrenovated homes so that will give our subject property a bit of a boost when it does hit the market given it will be in better shape than the neighboring homes. The client plans to spend no more than 4 months from purchase to sale on this project. Given their track record, we have full confidence that this will occur. Closing thoughts
There is so much talk about what is happening within real estate nationally, but I am more concerned with regionally. There are markets and submarkets in our area that on a surface level appear to be performing but when you dig into the data deeper you can find that homes with a price point of X or higher are getting less than asking and homes with a price point of Y are getting more than asking. This is why it is so important to know your market and area extremely well. Many of the investors in the region only invest locally and personally, I feel that is what is best for the area. Because local investors know the styles, the neighborhoods, and what the communities like to see. The national investors who look to find hot spots will not be able to compete with the locals when and if times get tougher for the rest of the year. As a lender, it gives me immense joy to see my clients giving life back to the communities that they live and spend so much time in.I put these newsletters together to share the useful insights that I and my team uncover from all the deals we underwrite and the data we pour through daily. I figured, why not share it?
I would also love to have more conversations about the unique perspectives and insights that you may have. So check my schedule below, and let’s chat about our industry, our market, or whatever else comes to mind.Conor Reilly
Sales Manager, WCP
Semi-Detached Home in NE DC
PURCHASE: $385,000
RENO: $70,000
ARV: $575,000
DEAL DETAILS:
This was a fun property to underwrite for the client. We talked for 3 days prior to going under contract because the ARV comps had a 50K range and would heavily impact the profitability of the deal. We were finally able to come to an agreement on how we wanted to proceed given the plans for the property. The client will add a full bedroom and a half bath to make this property a 4 bed and 2.5 bath. This will allow them to differentiate themselves from the lower-end comparables in the area. The client does excellent work and is always very quick to get things done. We agreed that in order to be successful with this project, they would need to exit within 6 months. We are both confident in this occurring given our track record together and the team they have in place.
Fall is my favorite time of year, and as a real estate investor, it may very well become yours too. Fall kicks off one of the most active buying times of the year, as many investors plan to purchase now, complete renovations over the winter months, and resell in the hot spring market. Families tend to move in the spring and summer months to avoid disruptions to kids’ academics.
It’s very likely the Fed is at or near the end of its rate increases for this cycle, and there is a strong belief that by the middle of next year, the Fed will begin to cut rates. So, capturing your larger projects now will allow you to build through the storm in time to deliver during the next cyclical upswing.
Think of this as the time to load up your pipeline for projects to be delivered in the spring or summer of next year. That’s why Fall should be an exciting time for everyone in our industry.
I put these newsletters together to share the useful insights that I and my team uncover from all the deals we underwrite and the data we pour through daily. I figured, why not share it?
I would also love to have more conversations about the unique perspectives and insights that you may have. So check my schedule below, and let’s chat about our industry, our market, or whatever else comes to mind.
Conor Reilly
Sales Manager, WCP
Single family detached home in Prince George County
PURCHASE: $290,000
RENO: $100,000
ARV: $480,000
DEAL DETAILS: This client makes it their daily KPI to send out 5 offers a day to raise their chances of getting into the right deal at their desired purchase price. They have secured this property by being quick on the offer trigger for an on-market property and using an agent who knows how to push the envelope to get a decision. They will fully renovate this bungalow to have both above and below-livable grade sqft. This experienced client often has material already in storage which allows them to speed through projects with their crews. The 5 bed, 2 bath property will become a 5 bed, 3.5 bath within the next 6 months. With a focus on volume, this client’s strategy aims to hit multiple ‘singles’ to keep crews in place, rather than meticulously looking for ‘home runs’ on every deal.
Everyone wants to be flashy and make hundreds of thousands of dollars per deal. How many of those deals are truly in our market? What is the ROI on the cash required for those deals? The risk involved in those types of transactions is generally very high, not to mention the time commitment required to get those types of deals to the finish line – often requiring 2+ years to see the project through. If success means to you, “I need to make $100K whenever I flip a house”, I might challenge you to consider what the ROI profit looks like instead. If someone came to you and said you’d make 50-60% ROI on your cash within 6 months, would you take it? Most people would jump at that opportunity, especially in this market. This is what we’re seeing some of the most successful investors doing. They’re finding projects that can make 50% ROI on the cash that’s been put into the deal with opportunities that will take them under 6 months. Doing this multiple times a year gets them to their desired total dollar profit, lowers their risk per deal (as they are generally simpler rehab projects), and keeps their crews busy and working with them and not another investor. If you were to be looking at the ROI of your cash instead of what the dollar amount profit is on a per-deal basis, would you be getting into more deals? Is your version of a buy box limiting your ability to purchase more deals?
I put these newsletters together to share the useful insights that I and my team uncover from all the deals we underwrite and the data we pour through daily. I figured, why not share it?
I would also love to have more conversations about the unique perspectives and insights that you may have. So check my schedule below, and let’s chat about our industry, our market, or whatever else comes to mind.
Sales Manager, WCP
Single-family detached home in Prince George County
AS-IS: $250,000
PURCHASE: $172,000 (including assignment fee)
RENO: $70,000
ARV: $350,000
DEAL DETAILS: This client worked with a local wholesaler who was able to secure a property well under the as-is value, adding in instant equity upon purchase. In order to secure the deal and market it to other potential investors, our client needed to close within 5 days. After underwriting the potential value of the property and coming to an agreeable ARV, WCP agreed to make the closing date. The client is also a general contractor which allowed them to save costs on construction. The final project will open up the floor plan on the upper levels allowing for a larger feel within the home, but without increasing the square footage. The basement will also be fully finished and add 2 bedrooms bringing the final bed count to 5 bedrooms. This experienced client will be able to complete this project in 4 to 5 months and plans to sell with their long-time agent within 6 months.
Part of my role involves speaking with investors throughout the DMV to hear what they are seeing within the market. One of the things that I hear the most is that there are no deals out there that ‘make sense’ from wholesalers anymore. The above deal shows that with patience and the right networking, there is plenty of profit to still be made purchasing off-market deals from wholesalers. Investors need to be willing to put the work in to network themselves to get deal flow into their pipeline. As I mentioned in the quick insights above, people are beginning to be accepting of where we are in the cycle. With this acceptance, we have seen clients have greater deal flow than earlier in the year and sellers are more willing to listen to offers now. My prediction is that this momentum will continue through the rest of the year.
Are you ready to capitalize when the right deal comes across your plate?
I put these newsletters together to share the useful insights that I and my team uncover from all the deals we underwrite and the data we pour through daily. I figured, why not share it?
I would also love to have more conversations about the unique perspectives and insights that you may have. So check my schedule below, and let’s chat about our industry, our market, or whatever else comes to mind.
Sales Manager, WCP
This modern architectural beauty started off as a quaint all-brick ranch house in the Wellington Estates neighborhood of Alexandria, VA. This property was in good condition but was significantly undersized for the neighborhood. Our borrower secured a Fix and Flip Loan to finance both the acquisition and significant renovation costs for this “pop-top” project. Let’s dive deeper into this project to see how our borrower executed it effectively.
Project type: Pop-Top Renovation
As-Is:
As-Repaired:
Purchased: $610,000
Construction: $300,000
ARV: $1,450,000
Zip Code Median Sales Price: $1,120,000
Zip Code Median Days on Market: 32
Walk Score: 54/100 (Somewhat Walkable)
School District:
This property is located in the Wellington Estates neighborhood of Alexandria, Virginia. This quiet, established neighborhood has a mix of well-maintained older homes and heavily renovated homes with lots ranging from 10th-acre to 3rd-acre. Wellington Estates is a residential neighborhood that has a few shopping and dining opportunities within walking distance. Just an 8-minute drive away is Hybla Valley’s large commercial center, giving residents nearby amenities, but with the necessity of a car. This combination of walkable and drivable amenities gives Wellington Estates a Walkability Score of 54 (“Somewhat Walkable”). This neighborhood’s location just 30 minutes south of the heart of DC and a 15-minute drive across the river to National Harbor makes it highly desirable. This neighborhood enjoys the benefit of being quiet and tucked away from the bustle of the city while remaining at arms-length to all of the District’s major draws.
Because the existing home offered a functional footprint, our borrower had the idea to utilize a “pop-top” renovation to achieve their desired square footage versus a completed teardown and rebuild. While this renovation does preserve the existing foundation and footprint of the existing structure, all the additional work is similar to new construction. While this type of renovation does save money, our borrower still utilized a $300,000 renovation budget in order to achieve their vision of a modern 2-story home that meets the standards of higher-end buyers for the area.
Because the existing home offered a functional footprint, our borrower had the idea to utilize a “pop-top” renovation to achieve their desired square footage versus a completed teardown and rebuild. While this renovation does preserve the existing foundation and footprint of the existing structure, all the additional work is similar to new construction. While this type of renovation does save money, our borrower still utilized a $300,000 renovation budget in order to achieve their vision of a modern 2-story home that meets the standards of higher-end buyers for the area.
Our borrower’s renovation decision resulted in a home that offers twice the original square footage and an entirely reimagined design. The final product isn’t just updated – it’s a prime example of modern architectural and interior design prowess. The finishes are strategic and beautiful, targeting the top of the local market that has a keen eye for homes with defining character. This home sold for $1,450,000, earning our borrower an additional $250,000 in profits above the expected ARV.
Need funding for your next fix and flip project?
Need funding for your next fix and flip project?
This new construction condo building started off as an empty lot between two multifamily buildings in the Dupont Circle neighborhood of NW Washington, DC. At first glance this property appeared to be a simple alleyway, but it had a prime location and dimensions for an investor to build on. Our borrower secured a Refinancing Loan to take the place of the loan they used to acquire the property and to cover construction costs throughout the project. Let’s dive deeper into this project to see how our borrower executed it effectively.
Built: 2022 (empty lot previously)
Home Type: Condo Building (2 units)
As-Is:
As-Repaired Unit 1:
As-Repaired Unit 2:
Purchased: $1,200,000
Value when Refinanced: $2,000,000
Construction: $810,000
ARV: $3,000,000
Zipcode Median Sales Price: $619,000
Zipcode Median Days on Market: 36
Walk Score: 97/100 (Walker’s Paradise)
School District:
This property is located in the Dupont Circle neighborhood of NW Washington, DC. This neighborhood is considered a go-to location for buyers looking to experience the quintessential metropolitan experience with no shortage of classic DC rowhouses and condo buildings. Dupont Circle boasts an abundance of shopping, dining, and entertainment all within a few minutes walk; giving it a Walk Score rating of “Walker’s Paradise.” Dupont Circle’s central DC location makes it a great buying opportunity for federal government employees and contractors, K Street executives, and Penn Quarter workers. You would be hard-pressed to find a more desirable neighborhood for established Washingtonians and those looking to experience all that the District has to offer at arms length.
This gorgeous 2-unit condo building began as an empty lot between two existing condo buildings. While it appeared to be an alleyway at first glance, our investor saw the massive potential for an “urban infill” project using this lot. Our borrower acquired this property and began construction using another lender, but refinanced their loan with WCP to receive superior terms.
The As-Repaired comparables in the area ranged from just shy of $1 Million to $1.9 Million depending on square footage and bed/bath count. Our borrower’s project planned for 2 condo units – Unit 1 meeting the $1 Million comps and Unit 2 meeting the $2 Million comps.
Because the property began as an empty lot, our borrower had some flexibility in the design aspect of the condo building. But with many urban infill projects, the existing buildings to the left and right present a set of requirements and building practices that a standalone new construction project does not have to adhere to. The total renovation budget was $810,000 which was included in their loan.
The condo building features 2 units, a smaller unit containing the basement and first floor, and a larger second unit containing the 2nd and 3rd floor as well as a rooftop patio. This is a common unit mix for small condo building in Washington, DC with no shortage of comps available.
Our borrower’s design choices are not only impressive and stylish, but also strategically targeted toward the higher-end of the market in order to achieve the highest ARV supported by comps. With a dramatic open concept floorplan, modern yet comfortable design, and luxury materials used throughout, these condo units are both beautiful and profitable final products.
Need funding for your next new construction project? Need funding for your next new construction project?
The pandemic-era hot market has finally cooled off in the majority of markets across the US – but there are other factors like the inventory shortage that are adding some interesting dynamics to the market. We may not be economists but we love digging into the data, so let’s take a look at what best practices make sense at the end of Q3 of 2022 given current trends and stats.
In September 2022, the Federal Reserve enacted another interest rate hike of 75 basis points in a continued effort to curb runaway inflation. According to Bankrate, the average interest rate for a 30-year home loan is 7.04% as of October 10, 2022. There’s no denying that rates a high compared to the great rates being offered at the beginning of the year, we are seeing a decrease in listing prices which simply means the rate hikes are starting to see their intended effect.
Anytime we see high interest rates, we always advise investors to consider which exit strategies make the most sense. Rentals may be a better play for you now, even if flipping was your focus over the last couple of years.
Price Reductions are Increasing, New Listings are Decreasing
According to Realtor.com, active listings nationwide in July were up by 28.7% year-over-year and newly listed homes were down 9.8% year-over-year, showing a significant drop in seller motivation in what has quickly become a buyer’s market. Realtor.com also shows that the price-reduced share of active listings is up 8.6% year-over-year, continuing to show the shift away from bidding wars and toward a bigger need to price homes to sell.
Key Takeaways for Investors
Wholesale deals are being sold at a discount. For the first time in years, we’re seeing wholesale deals sell at truly discounted prices. Wholesalers need to stay in business too, so when After Repair Values start declining, they know to respond with lower asking prices. If you’ve turned away from wholesale deals in the past due to their pricing, you may want to take another look.
Choose the Exit Strategy that is Best Supported by the Numbers. Anytime we see high interest rates, we always advise investors to consider which exit strategies make the most sense. Rentals may be a better play for you now, even if flipping was your focus over the last couple of years.
An inventory shortage could mean a hedge against the buyer’s market. Despite the Fed’s efforts to lower housing prices with higher interest rates, supply issues could present a more complex market. The byproduct of lower sales prices is a shrinking seller’s appetite, so we may see an inventory that would prevent prices from falling further. Stay tuned for future market updates to see how this one plays out!
Now more than ever, you need to master your micro-market. Despite the national trend of a cooling market, some cities have retained their high sales prices. Other cities have seen prices fall so drastically that properties that were prime candidates for flipping a year ago no longer make sense. If there was ever a time to double down on a smaller area that you know best, you’re probably looking at it.
It’s still a competitive investing landscape. Some investors may be playing it safe and sidelining themselves, but the smartest and best-prepared investors will be moving full-steam ahead. These are the folks who may have made a killing during the Great Recession while others were panicking or the ones who have been reading the tea leaves of this current recession and adjusting their buying strategies. The point is, well-prepared investors with plenty of capital are continuing to buy, so speed is still a necessity. We recommend continuously adjusting your deal analysis calculators, reading every article about shifts in your target market, and being prepared to move quickly when you find a deal that checks all of your boxes. Part of that equation is having your financing lined up, so if you need fast funding in today’s market, speak to one of our Loan Officers today.
It’s no secret that the real estate market is shifting – both for investors and traditional buyers. We’re not economists, nor do we have a crystal ball, but let’s take a look at what best practices make sense at the midpoint of 2022 given current trends and historical data.
In July 2022, the Federal Reserve enacted its second consecutive interest rate hike of 75 basis points in an effort to curb runaway inflation. The first hike took place in March, marking the first increase since 2018 according to The Balance. While the rate hike is a concern for many buyers, we have seen a decline in the average 30-year mortgage rate from June to July of this year.
For real estate investors, this is an important factor to keep in mind when making buying decisions and determining your exit strategies.
According to Realtor.com, active listings nationwide in July were up by 30.7% year-over-year and newly listed homes were down 2.8% year-over-year, showing the large supply of unsold homes has curbed some seller motivation. With prices still hovering at historic highs and mortgage rates nearly double what buyers had available in 2021, all of this inventory appears to be lacking the fast turnarounds and high offers of years past. Realtor.com also shows that the price-reduced share of active listings is up 9.7% year-over-year, indicating that buyer appetite is cooling due to financing costs.
Fewer Buyers Usually Means More Renters. The days of almost guaranteed bidding wars and single-digit days on market seem to be subsiding. With mortgage rates roughly twice what they were a year ago, buyers need to be much more conservative on their home purchases and many potential buyers may have lost their motivation since their mortgage rate might double if they make a new purchase. But even if the buyer pool is shrinking, this presents an opportunity in the rental market. The need for housing isn’t going anywhere, so rental properties may be a good way for investors to hedge against the volatility in the fix and flip/new construction market.
Right-Size Your Fix & Flips. With higher mortgage costs, investors need to be careful with higher-end fix & flip properties. It’s important to consider how many buyers given current market conditions can afford a $1+ Million home. If you are flipping houses, now is a good time to check the FHA loan limits (this differs county by county). Staying within the average buyer’s affordability range is your best bet right now – in most cases.
Competiton Won’t Disappear. Despite some percentage of investors sidelining themselves during market shifts, the smart and prepared investors will be making lots of moves right now. While investors should be conservative on their deal analysis and really dig into their numbers before jumping on a deal – speed will still be key. Investors should expect similar levels of competition for quality properties, so make sure that you have everything in place to move quickly on a deal that meets all of your criteria. Part of that equation is having your financing lined up, so if you need fast funding in today’s market, speak to one of our Loan Officers today.
2815 Hartland Rd #200,
Falls Church, VA 22043
(703) 348-0549
FOR IMMEDIATE RELEASE
Forbes Business Council Is an Invitation-Only Community for Successful Business Owners and Leaders
Falls Church, Virginia (April 19th, 2022) — Giselle Bonzi, President of Washington Capital Partners, a private lending company operating in the Washington DC, Virginia, and Maryland area, has been accepted into the Forbes Business Council, the foremost growth and networking organization for successful business owners and leaders worldwide.
Giselle was vetted and selected by a review committee based on the depth and diversity of her experience. Criteria for acceptance include a track record of successfully impacting business growth metrics, as well as personal and professional achievements and honors.
“We are honored to welcome Giselle Bonzi into the community,” said Scott Gerber, founder of Forbes Councils, the collective that includes Forbes Business Council. “Our mission with Forbes Councils is to bring together proven leaders from every industry, creating a curated, social capital-driven network that helps every member grow professionally and make an even greater impact on the business world.”
As an accepted member of the Council, Giselle has access to a variety of exclusive opportunities designed to help her reach peak professional influence. She will connect and collaborate with other respected local leaders in a private forum and at members-only events. Giselle will also be invited to work with a professional editorial team to share her expert insights in original business articles on Forbes.com, and to contribute to published Q&A panels alongside other experts.
Finally, Giselle will benefit from exclusive access to vetted business service partners, membership-branded marketing collateral, and the high-touch support of the Forbes Councils member concierge team.
“I am honored to be part of the Forbes Business Council as I join a powerful network of thought leaders with whom we are hoping to collaborate to create impact on the people who work with us as well as our respective industries and communities.”
ABOUT FORBES COUNCILS
Forbes Councils is a collective of invitation-only communities created in partnership with Forbes and the expert community builders who founded Young Entrepreneur Council (YEC). In Forbes Councils, exceptional business owners and leaders come together with the people and resources that can help them thrive. To learn more about Forbes Councils, visit forbescouncils.com.
ABOUT WASHINGTON CAPITAL PARTNERS (WCP):
WCP (www.washingtoncapitalpartners.com) is a hard money lending firm operating in the Washington DC, Maryland, and Virginia area. WCP provides financing options to real estate investors for a variety of projects. The company specializes in loans for fix-and-flips, acquisitions, rentals, refinancing, and more.
# # #
Press Contact: Investor Contact:
Khadija Jordan Christina Araujo
kjordan@wcp.team Christina@wcp.team
2815 Hartland Rd #200,
Falls Church, VA 22043
(703) 348-0549
FOR IMMEDIATE RELEASEWCP Loans celebrates 10 years of transforming the hard money lending experience for real estate investors.
Falls Church, VA, April 12, 2022 – WCP Loans is celebrating its 10-year anniversary this month. WCP provides a variety of loan products to real estate investors in the DMV and seven other states along the East Coast but is most proud of its efforts in removing the stigma of hard money lending.
Daniel Huertas, Founder & CEO, started WCP Loans on April 12, 2012, after having nothing but bad experiences with hard money lenders during his own real estate investing career. The mission for WCP became to elevate hard money lending by focusing on flexibility, transparency, and local expertise.
Since then, WCP Loans has provided over $1 billion dollars in funding for real estate projects, transformed the careers of hundreds of real estate investors, participated in a number of charitable efforts including the creation of The WCP Foundation, and successfully navigated the COVID-19 pandemic despite uncertainty and challenges.
Today, Daniel runs the company alongside his wife Giselle Bonzi, President, who also brings a wealth of financial knowledge to the WCP legacy. Together, they have built a team of experts and a work culture that fosters care, transparency, and innovation. For this reason, WCP has been featured on several “Fastest Growing Companies” lists (2018-2022) and “Great Places to Work” (2019-2022). We look forward to the next several decades of facilitating the success of investors through their lending experience.
“As we celebrate this important milestone, I am very proud of the impact that we created in our community over the past 10 years, and I can’t wait to see all that WCP Loans accomplishes in the next decade. I am very grateful for the team that we have built, the relationships with our borrowers, investors, and business partners as well as the economic growth and betterment of our communities.” – Daniel Huertas
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About WCP:
WCP (www.washingtoncapitalpartners.com) is a hard money lending firm operating in the Washington DC, Maryland, and Virginia area. WCP provides financing options to real estate investors for a variety of projects. The company specializes in loans for fix-and-flips, acquisitions, rentals, refinancing, and more.
# # #
Press Contact: Investor Contact:
Khadija Jordan Christina Araujo
kjordan@wcp.team Christina@wcp.team
