Is FLIPPING DEAD??

Question

I knew it would happen eventually. Some big news channels are picking up and starting to tell people to look at flipping. I am not involved in flipping but know once the news stations start saying it the market will become about nonsense instead of numbers.

It's kind of like a stock everyone is saying to buy is when the smart people sell to them and get out.

I am sure we will see in the next 6 to 12 months articles like "The real estate money making machine is back ! etc "

http://www.bankrate.com/finance/real-estate/flipping-houses-after-bubble-1.aspx

Andy Collins · Answer

Don't you love this business, a few years ago agents begged you to make an offer on a foreclosure,,I wish I had done 1/10th of the deals I didn't do because they weren't good enough (to me at that time).

Now everyone is buying, I'm seeing a house I could have picked up for $70k a few years ago, rehabbed and listed (I didn't say sold) for $140k today,,,guess what, it was probable worth more than $70k a few years ago and isn't worth $140k now, but that's the market

We are in a hot market, you just have to play the market however it is at the time.

Account Closed · Answer

Rick H.  said "Foreclosure sales? Short sales? REO's? If you are a full time speculator and are accustom to having food on your plate, you'd better understand the cycles, when and what to buy. And never forget that all real estate, like politics, is local. Can't tell how many cycles I've seen big differences between one region's thriving while another languishes."

Right on!

Rick H. then said "And if you flip properties for a living and still think that's investing, just stay in bed for the next few months and see how much your "investing" is paying you.

Right on!  Oh wait is this an insinuation that a bubble is going to hit everywhere or just local markets?

Thanks, Jeff

Jay C. · Answer

Rick,

Great post,could not agree more with your points on speculation.

One thing a person has to do is keep a sharp eye on the stock market. This recent run up is in large fueled by the market with the hedge funds stepping in and buying.  Lots of profits drifiting from the stock market to real estate market. I keep a keen eye on the market as a trader first and real estate owner second.  If this market which many say is in a buble rolls over be careful. The real estate is not far behind.

Rick H. · Answer

Jeff Newenhouse - Sorry, my crystal ball operates on the same frequency as the missing Malaysian airliner's ELT (121.5 MHz). So, not enough pings to help me or you predict much.

Jay C. · Answer

Well not only tv but you have sites like BP. Greenhorns are coming out of the woodwork with dancing dollars in their eyes of riches. With the huge drop a few years back its the goldrush all over again but unfortunatly many of them missed it. Far more are going to lose money trying to flip then profit by it. Many will be ruined financialy from it. Its sad its themed in such a profitable light. Much like the stock market timing is everything. I look at many of the posts on BP and ponder how much some of these folks are going to lose.

Rick H. · Answer

Buying (or controlling) real estate for a quick, short term profit is not investing, it is speculating. Speculation is when you gamble that your short term exit plan will produce a profit. While it can be quite profitable, it requires me to go to work, keep buying, add value in some manner and sell. Whether you buy one at a time or properties in bulk, it ends in "butchering the cow."

I've watched friends make and lose fortunes speculating. They all refused to see why I keep certain properties, liquidate others and stay heavily invested in paper (for cash flow).

I also try to be very clear about what value I add to an investment (or don't). The buy-sell model typically requires me to solve a problem (provide quick liquidity to a seller, renovate, add more living space, etc.). I'm happy to speculate however these days I prefer fixing problems on paper for a big chunk of the equity.

When markets begin rising after a recession, those who are positioned well make money when they sell retail. Many other are afraid to take action, lag behind, and don't really get going until the market has moved yet again.

Then they cry: "I can't find any good deals!"

Just like a builder who must build, a speculator must continually find multiple sources of properties for they can add value and re-sell. The deal flow needs to be year-round, in buyer or seller markets.

Foreclosure sales? Short sales? REO's? If you are a full time speculator and are accustom to having food on your plate, you'd better understand the cycles, when and what to buy.  And never forget that all real estate, like politics, is local. Can't tell how many cycles I've seen big differences between one region's thriving while another languishes.

And if you flip properties for a living and still think that's investing, just stay in bed for the next few months and see how much your "investing" is paying you.

Account Closed · Answer

@Andy Collins

.Right On. There are speculators and there are Investors in every market.

Jeff

Account Closed · Answer

@Joel Owens

I like your analogy. That is why I flip and have holds. I sell properties that are least profitable to the untrained and the uneducated for "their" price then re-invest where I get better returns. Funny the world is an ever changing place and in my honest opinion so are areas in real estate that offer the greatest returns

Is FLIPPING DEAD??

Most Popular Reply