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Mr. Stock’s lender, Roc360, last week received a $2 billion infusion from insurer Athene Holding Ltd. to make more loans to house flippers as well as landlords, who buy a lot of rehabbed houses. Arvind Raghunathan, Roc360’s chief executive, said his firm would have little trouble raising several billion more given the hunt for yield that has sent investors into less-familiar pockets of fixed income.
“These notes have done extraordinarily well the last eight years,” Mr. Raghunathan said. “There have been hardly any losses, and 8% for one-year paper is extraordinary.”
New York Mortgage Trust Inc. said it ramped up its investment in flip loans last fall and ended June with $622 million worth, carrying an average coupon of 9.33%. The firm bundled $167 million worth of loans into two-year securities, sold them to other investors and expects that replacing repaid loans with new notes before the securities mature will produce returns in the high teens or low 20s.
“There’s not many markets where you could achieve that type of return,” the firm’s president, Jason Serrano, told investors last month.
Probably a good time to shop for rental loans.