Mistaking a Hot Market for Having Skills

[Owen Dashner]

Today has been a good day. I just finished up the rehab on a cosmetic flip in Omaha, and my agent put it on the MLS late yesterday afternoon. When I bought the house a month ago, my target exit was $145K based on comps. I decided to push the asking price to $149K because inventory is so low and demand is really high in the area in that price range. So far, in less than 24 hours, there have been over 15 showings, and I have received 4 full price offers, one of which has an escalation clause to $152K. In Omaha of all places! I am in "highest and best" status right now until 5 pm with more offers likely to come in.

I used to watch the house flipping shows like "Flip This House" and "Flip or Flop" and think, "Man, it must be nice to get multiple offers and bidding wars on listings every single time!".  But I honestly always thought it was either A) Completely staged and they were fake buyers (which could actually still be the case), or B) Just a completely different world than the midwest.  

Well, I have now had multiple offers in one day on my last 5 flips, all of them selling for above asking price, with 2 of them selling for significantly over asking price.  While this is surreal and obviously very exciting, it really makes me stop and think of how delusional a newer investor/flipper could be if he/she missed out on the Great Recession.  It would be really easy to convince yourself that you have this game all figured out simply because the market is so crazy hot right now.  "A rising tide lifts all boats" is certainly applicable to the current state of the market.  

I hope I am wrong, but I keep getting this feeling that we are in the 9th inning of this cycle, and this will be the last summer of a fantastic sellers market.  Just be careful out there and remember Warren Buffet's quote that, "Only when the tide goes out do you discover who has been swimming naked."  

[Owen Dashner]

@Collin Schwartz - Thanks!  You are smart to be cautious with flips, in this market especially.  My cleaning lady this morning told me that she is thinking of buying a rental property or a flip.  I feel like I had the same conversation with her in 2006. ;)

The good thing about Omaha is we kind of have the "canary in the coal mine" with California, Vegas, New York, and the other crazy hot appreciation markets.  Hopefully we will get some warning signs early enough to pivot when the market starts going sideways in those areas.  I'm just trying to make hay while the sun is shining with flips and hoard as much capital as possible so that I can snap up more rentals when the market turns...