Flipping making a comeback ?

**SteelerFan45** · #1 10-28-2011, 11:30 PM

Have seen a few Flipping shows recently on tv and there was a piece on the local news last week of a Houstonian using his retirement to buy foreclosures. Said he couldnt buy these houses fast enough !

I tried and failed at a flip in Bayou Vista right after Katrina came through but was poised to prove to myself and co-workers that I could do it but lost that job.

Anyone out there got the itch ?!

**Red3Fish** · #2 10-29-2011, 07:46 AM

I have not had a "real" job in 30 years....I bought and flipped houses and had rent houses. The "rules" are a little different today!

Sub prime loans in the past, made it easy to fix one up and flip it. Nowdays with tight credit, and tons of folks out there with bad credit, it might be hard to "cash out" on one, unless you are going to owner finance it. And most lawyers no longer will write "wrap notes"...where you have it financed, and then sell to a buyer (hopefully, for a lot more!) with an owner finance (wrap note).

AND if Obama gets his way, you might be competing with the government to sell houses cheap to marginally qualified folks.

My rule of thumb, in "bad times" was to buy it for no more than $0.60 on the dollar of what I could sell it for......after rehabbed!! (ie. buy and fix up for 60,000 on a house that would sell for $100,000.

I am scared of this market....it might not be like the ones in the mid 80's and late 90's.

I haven't kept up with all the "new tricks".....maybe there is something I don't know.

Proceed with caution, and GOOD LUCK!

Later
R3F

**RAYSOR** · #3 10-29-2011, 08:10 AM

Good info!

**kdeaux2002** · #4 10-29-2011, 12:31 PM

There are tons of deals out there. Houston is full of them. PM me if you have any questions and I'll try my best to answer them for you.

**Red3Fish** · #5 10-29-2011, 01:37 PM

I agree there are tons of deals out there. The problem is, what do you do with it after you have one?

One option I did during the bad times, was rent them out, until the market came back....and it will come back....some day. I am too old to wait this one out! LOL AND you kinda have to have special knowledge, skills and temperament to rent one out successfully.....and staying power. (AC goes out...$2K, roof....$5K, etc.)

I sold 4 houses 6 yrs ago....wished I had sold 5!! Still have one worth about half of what it was.....rented out. I took about a $35K "hickey" on the value on paper of that one. Bought it in '86 for $20K cash at auction....rented out.....refinanced it three times for $50K for 10 yrs each (tax free money). This third time I still owe about $25K for another 4 yrs, and worth about $45K instead of $75K.

OH, yeah.....tenants didn't want to run their water bill up and didn't water the foundation like I told them to, and I would pay all water bills over the minimum......guess what? Take another $10K or so off that value, as now I have to get foundation leveled! LOL

I am just saying for a first time flipper it is kind of a scary time for RE investor.

Good Luck
R3F

**SteelerFan45** · #6 10-30-2011, 12:04 AM

Yes the rules have changed significantly the past 2 or 3 yrs. with the banks. Like I said if one has access to cash to buy a distressed home in a good area and in Houston there is no shortage of good areas, the model that I have seen still works in this market. Buy a house 50 cents on the dollar and put in 20-30k of upgrades like granite, s.s. appliances and nice flooring and still have a healthy margin when you sell to a credit worthy customer.

Houston is the 4th largest city in the U.S. and homes are being sold every day !!! The market isnt the sub-prime as these people are now stuck renting the rest of their lives as they have **** poor credit and no money for a down payment.

I wont be able to get back into the game for awhile due to employment status with the banks but this is a good time for those that can.

**Red3Fish** · #7 10-30-2011, 07:19 AM

Flipping (my definition LOL) is getting in, and getting out of a house in 6 mos or less. One house, I owned for 5 hours! Closed on buying at 1:00 PM.....met with buyers at same title company at 6:00 PM and sold it......profit....$22K! I never picked up a paint brush or mowed the lawn LOL. My realtor had it sold a month before I "bought" it! LOL

RE Investor....one who buys a house and rents out for profit or waiting for market to rise.

I was a combination of both.....would do 3 deals a year,....one to rent fleet, and two to flip....usually in the winter months and fished through the summer LOL. At one time I had 14 rentals.

It might be a good time for an investor, but I think a "flipper" will have a rough time in this market!

I live in a nice part of Katy, and a neighbor has a house for sale with tons of upgrades, and been on the market for 3 months without an offer. They have it listed at the HCAD appraised value...I didn't have the heart to tell them they are going to have to get off that price in today's market! LOL

PS....HCAD appraised value is an arbitrary number, and can vary by as much as 15,000 on two identical houses next door to each other in the same condition. It usually, in no way represents a true "market" value except in "good times".

Later
R3F

**txflats** · #8 11-02-2011, 08:03 PM

Any suggestions on buying bayside property. Been looking at the Sea Isle subdivision prices are getting right. Looking at buying and renting out as much as possible just to help offset some of the cost to be affordable and then retiring to after kids are grown. Good or bad idea?

**Red3Fish** · #9 11-03-2011, 07:07 AM

I never did vacation rentals....so not knowledgeable there. But this phrase worries me..."offset some of the cost TO BE AFFORDABLE".

If it never rented out, or only a few weeks out of the year, could you still afford it, or would it get you in a financial bind?

Your call...

Later
R3F

**txflats** · #10 11-03-2011, 02:04 PM

No problem affording it just looking at ways to make a little income off it when not using it.