patrick.net

The guy is an aeronautical engineer.
Maybe people should have incentives to, you know, do some work.
Instead of get rich quick schemes.

I happen to know these two young guys in the article. Sean Pan who lost $400k on his 2nd flip in Sunnyvale, and Bryan Pham who estimated to lose between $50k-$100k on his $1.1M flip.

Sean has two partners so the loss is split 3 ways. They made $300k on their first flip so it’s not too bad when the net loss of $100k is split 3 ways.

Sean is going all-in and has put in his resignation. His last day at the job is May 31st. I had lunch with Sean last month and we’ll hang out next month when he has more free time.

The same with Bryan Pham, who has a partner on his flip so the loss will be split 2 ways.

Both of these guys are great kids. I don’t like their flipping formula. It’s too aggressive for my liking, and when the market turned like last fall and winter, they were left holding the bag. They’re smart kids. They’ll figure it out and will make it all back and more. I’m willing to bet on it.

I’m much more conservative and don’t want to go for a home run by flipping million dollar homes during this part of the cycle. Here are my two flips:

1) a 2/2 condo in Union City. Paid $355k, spent just over $30k on rehab and sold for $540k within 3 months. It turned out that last spring was the peak of the market. I got lucky on that one. I thought the exit price would be $475-$500k, but the market carried me. Cleared over $100k net profit.

https://www.google.com/amp/s/www.redfin.com/CA/Union-City/109-Camino-Plz-94587/unit-139/home/1175911/amp

2) a 3/1 in San Leandro. Paid $435k, spent just shy of $50k on rehab and sold for $610k this spring. Cleared $70k net profit.

https://www.google.com/amp/s/www.redfin.com/CA/San-Leandro/15306-Dewey-St-94579/home/1381961/amp

I’ll share my current flip once it’s closed if anyone is interested. Just got into contract last week. Expect to close next month. I’m just an average Joe who is trying to make some spending money on the side. My main gig is in apartment investing in downtown San Jose. That’s a much more profitable gig. We’re looking at making $400-$800k equity per deal. However, we only do one to two deals per year as good deals are hard to come by.

It’s not all gravy, but it’s not all bad. Some make money and some will lose money. It’s just the nature of the biz.

Thank you for a very well written story about "flipping!" I live in Mountain View, which when I was young, was, according to my Dad, "the most densely packed region in the United States. Packed with what, you ask? Ha! I like keeping people in suspense and sorta dragging things out. OK, if you've read this far--Apartments! By dragging it out, well, I kinda hoped to give emphasis to APARTMENTs! Hmmm, looking back ... maybe I shoulda just used ALL CAPS?!

OK! Next to the Bank of America, within a short walk of where I live, they (the stupiidheads running Mtn. View) are building a HUGE apartment complex, It covers 2 whole blocks and is 3 stories high. Ha! And across the street from Klein Park, they have almost completed 250 chicken coops for (my guess is H1-B visa ppl) Idon'tknowwho! And I guess a "developer" bought the Chevy's Restaurant (which I ate at frequently) and is turning it into more apartments.It is easier for me to walk to the WalMart than to drive, on accounta the parking lot is always full. The traffic around Mtn. View is terrible.

I sense a "Gold Rush" mentality and fear it ain't gonna end well.


www.vMKNUylmanQ

Your cautious approach sounds better than swinging for the fences.

Actually, I talked to a Mtn. View govt. person and suggest that they build a HUGE Hong Kong type skyscraper on the Google campus and be done with it.

A friend brags that his house in Mtn. View is worth over 2 million. I keep telling him that he should sell and move to Nevada and invest his profits in either NVDA or GBTC. But he won't listen to me :)

Hey, you sound like a nice guy. I do wish you luck :)

PS: Why do they build all the chicken coops within 3 ft. of the sidewalk. A setback of 10 feet would look so much nicer. OK, it's rhetorical, I know the ans: GREED!

House flipping is probably going to work much of the time if you are in a locale where people have well paying jobs.

What is interesting is person who usually enjoys the fruits of "home equity" is the guy who flips them; the guy who sits in his house bragging "My place is worth a million bucks!" might be clipping coupons before buying groceries at the Dollar store.

I actually know a several people like this in Santa Cruz County; one guy's place is worth $1.2 million or more and he won't put the heat on; he has a roommate too; another rents out a part of her driveway to a guy in an RV and ran an extension cord to it, in addition to having a roommate. Another guy drives an ancient pick up, his wife drives the SUV with the cracked windshield.

I considered doing a flip but my innate inertia to make large financial decisions prevented it. That's probably good.

But you almost can't lose if you have the dough; people desperately want to buy houses regardless of the debt they take on.

Down the street from my friend's place the house is for sale for $1.3 million; the property taxes will be $1300+ per month forever and will go up.

So, the buyer of this house is not only assuming the mortgage debt; he is assuming the pension liabilities of Santa Cruz County workers forever.

True but compared to the past years the sfba housing market is pretty weak now. Prices are flat or retreating and existing sales are slumping. Still there's enough people who want a starter crap shack by any means so the low end market remains somewhat tight for now. Flipping is only for absolute pros now the majority will lose.

bill says

Dis Guy Who Quit His Job to "Flip" Took a $400K Bloodbath...

https://www.bloomberg.com/news/articles/2019-05-09/young-real-estate-flippers-get-their-first-taste-of-losing

As Yogi Berra would say: "It's like déjà vu all over again." :)

Damn, $400k bath? I don't feel so bad about the $250 I lost in Vegas last December.

What I don't understand is spending the money and time on "renovating" the flip. If market goes up you'll make your money regardless, and if it goes down you shouln't be flipping in the first place.

Flipping should be illegal in all Cities.
If you buy you must hang on the property for at least 5 years. Unless you fill out a form and show valid proof why you are relocating.
You can lose the house though foreclosure, or you can short sale it for less than you paid. But not flipping up and destroying house prices for the rest of hard working Americans.

And single family homes where the owner, owns multiple of them for the purpose of renting them out. Should have a Federal Homeowner's tax waged on them for every house that is not their primary residence. And any house owned by a corporation gets a federal homeowners tax regardless how many they have. Houses that only need bathroom fixtures and Kitchen fixtures should still be allowed to be financed. Especially if the guy was asking $125K for a house worth $295K or more, what's $20K for a few wet fixtures and cabinets?

Put me in charge, I'll have ample housing supply, and work out the ass, and the median home price would be back to $120K around the country.

A 3 Br rental would be back to $800 - $1200 a month.

Fuck the Greedy Bastards they don't deserve their thievery.

And Banks rigging markets with Ghost inventory would be a fraud scheme that would land the Execs in Federal Prison for up to 25 years.

Hugolas_Madurez says

What I don't understand is spending the money and time on "renovating" the flip. If market goes up you'll make your money regardless, and if it goes down you shouln't be flipping in the first place.

You slap on some 'European' door handles and marble, custom faucets and shower heads worth 50k and add 200k to the price for luxury remodeling

mell says

Hugolas_Madurez says

What I don't understand is spending the money and time on "renovating" the flip. If market goes up you'll make your money regardless, and if it goes down you shouln't be flipping in the first place.

You slap on some 'European' door handles and marble, custom faucets and shower heads worth 50k and add 200k to the price for luxury remodeling

I doubt it works like that IRL.

Rigging any market is illegal but Real Estate.