Legendary Wall Street buyout firm KKR is doubling down on house flipping. The private equity firm run by billionaires Henry Kravis and George Roberts is putting another $250 million into Toorak Capital Partners, which buys short-term loans made to real estate investors who buy and flip houses, according to The Wall Street Journal. 

That’s on top of the $250 million KKR already has invested in Toorak, which currently holds about $1.5 billion of so-called flip loans on its books, the WSJ said. Flip loans typically have a maturity of a year and can pay yields of 8% to 11%.

“We remain very positive and constructive on U.S. housing-related risk and therefore see real opportunity for growth for Toorak,” Dan Pietrzak, a portfolio manager for KKR’s private credit funds, told the WSJ.

There are plenty of risks associated with flipping, the WSJ pointed out: “The housing market could sour mid-flip. Remodeling estimates might be way off. Flippers might misjudge house hunters’ tastes.”

There’s also a question of KKR’s timing. ATTOM Data Solutions put out a report last week that showed signs the flipping market may be softening. While activity spiked to a nine-year high in 2019’s first quarter, with 7.2% of all home sales being a flip, the average return on investment, or ROI, fell to a near eight-year low. ROI, calculating the cost of acquisition versus the cost of sale, was 38.7% in the first quarter. That’s down nearly 10 percentage points from a year earlier.

Of course, the results varied by geography. In 11 markets, investors doubled their ROI, including Pittsburgh, Pennsylvania; Flint, Michigan; Shreveport, Louisiana; Scranton, Pennsylvania; and Knoxville, Tennessee.

“While the home flipping rate is increasing, gross profits and ROI are starting to weaken and the number of investors that are flipping is down 11% from last year,” Todd Teta, ATTOM’s chief product officer, said in last week’s report.

Nationally, the average flip sold for a median price of $215,000 and the average gross flipping profit in Q1 was $60,000, according to the ATTOM report. The average timeframe to complete a flip was 180 days. 

Home prices are at a record in many areas, and builders have struggled to produce homes affordable for first-time buyers, the WSJ story said. 

“That has left a big market for rehab specialists who can get their hands on physically distressed or out-of-date properties for peanuts,” the WSJ said.