patrick.net

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.

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.

Some of the flipper houses are pretty "rough" and in need of serious work. This is especially true of foreclosures, where the previous owner knows they will be losing the house and so takes no care at all and/or actually rips the house to shreds out of spite.

One problem could be financing. Already-completed upgrades to the house can be used as collateral; future repairs require payment and completion before they can be used to back a loan. Cash-strapped buyers might qualify for a loan on a house priced $200k higher if it assess for that higher amount and is habitable. But if they buy a house in need of fixing, they won't necessarily qualify for a $100k home improvement loan (on top of the lower-priced house), especially if they won't be able to live in the house until the fixes are made. They could be stuck paying rent (in their old place) plus paying a mortgage (on the new place) plus paying for repairs on the new place.

Another is risk tolerance. The flipper is taking a risk that the repairs will go as planned. Flippers hire shady contractors and other workers. No permits, no legal work contract, "undocumented" workers, etc. Many prospective buyers don't have the knowledge and/or connections and/or risk tolerance for such shenanigans. There might be all sorts of problems with how the plumbing, electrical, foundation, or roof was fixed, but the flippers will be long gone by then. Buyer is buying a (probably false) sense of security.

People purchasing might be on a tight timeline to move in. For example: move before new job starts or school starts so there's no disruption part way through. Or maybe the buyer's current house is about to be sold and they need to move out soon or lose the offer on the sale. If they buy a house that needs extensive work, that will delay moving in or be a real hassle if they have already moved in.

Thanks for all the interesting info! Flippers do take a lot of risks! They have more guts than I do. They say the more the risk, the greater the reward. So go for it :)

I love the comment that Real Estate is largely unregulated. Hard to believe but a great point! It is BUYer Be Careful (the basement may flood and the roof leak).

Ha! I haven't seen any threads about this story in the Mercury News that I totally find hard to believe. So why is this lot empty?!

https://www.mercurynews.com/2019/05/22/its-a-vacant-palo-alto-lot-but-who-can-afford-it/

The darn Merc has a Pay Wall!!! Anyhow, it is a story about a $9 million EMPTY lot near where Steve Jobs used to live in Palo Alto :)

Here's the same story without a PAYWALL https://sanfrancisco.cbslocal.com/2019/05/15/empty-palo-alto-lot-hits-market-for-9-million/

Wonder who first broke the story? Wonder who the buyer will be and will she or he be in a "bidding war?" Stay tuned :)

They add no value. They are the types who basically end up screwing buyers and families by forcing higher pricing. This is pure greed on them.

I think I hate these guys. Fucking assholes. Flippers and realtors should be shot at point blank. Especially any with Realtor(tm) association.

When we decide to sell our CA property here is what listing description will be:

“For sales by owner, to families only, no bidding wars, slightly underpriced to sell fast, first qualified offer will be accepted. investors, bankers, and realtors will be shot on sight.”

FortWayneIndiana says

When we decide to sell our CA property here is what listing description will be:

“For sales by owner, to families only, no bidding wars, slightly underpriced to sell fast, first qualified offer will be accepted. investors, bankers, and realtors will be shot on sight.”

I like that.

FortWayneIndiana says

When we decide to sell our CA property here is what listing description will be:

“For sales by owner, to families only, no bidding wars, slightly underpriced to sell fast, first qualified offer will be accepted. investors, bankers, and realtors will be shot on sight.”

I'd add one more thing: "If you want a buying agent, you pay them out of your own pocket. Figure that into your costs, not mine."