Posted on 10/20/2005 8:17:28 AM PDT by ex-Texan
Get in, get out, get the next deal. That's the code of the ''flipper."
Flipping -- buying and quickly reselling houses -- has helped some investors make a killing in booming markets like Boston's western suburbs.
But with concerns rising about a slowing housing market, has the world flipped on flippers? Some analysts and brokers think so. * * *
Real estate investing by buyers who don't plan on living in their properties is arguably at historically unprecedented levels, Federal Reserve chairman Alan Greenspan said last month in a speech to the American Bankers Association.
This suggests that speculative activity may have had a greater role in generating recent real estate price increases than it customarily has had in the past, he said.
(Excerpt) Read more at boston.com ...
Did you ever hear of people "buying" a single stock and borrowing (renting) $ 350,000 + to make the deal? Who wants to rent $ 100,000 more than a property is really worth in order to make a killing? In place like California, expand the risk at least 5 to 8 times over what it is in the heart land.
Nothing to see here. No bubble here. Time to move on.
Doesn't MA have a declining population and two goofy senators? That can't be good for the real estate market.
In California you cannot do this. If you sell within the first two years you get hit with a BIG tax.
Bump!
Saving my money to be the only home buyer in America when the fecal matter meets the turbine.
These are taxed at capital gains rates. If you owned the house less than one year, then you owe taxes on the gain at ordinary income rates. Over one year, and it's capital gains rates. But the first $250K/$500K is exempt if you lived there.
Flipping is a risky proposition, and the people engaged in this practice might have thought it was easy money. For a while, it was. Now it might not be so.
It's just like 1999 in the stock market: people quitting their real jobs thinking that they can work from home and make a fortune without really doing anything. It will come to an end.
You can't live in, sleep in, take a shower in, or raise a family in a stock.
I think the "Over one year" statement is incorrect, I believe. I think it is "Over two years", isn't it?
Well, sure. It's called "buying on margin".
Ever heard of buying a single stock on ... Margin?
Good point. An astute Freeper pointed out a couple of months ago that he recognized the impending end of the real estate "bubble" when he started seeing/hearing all these ads on television and radio trying to convince people that they can become instant millionaires by investing in real estate "with no money down."
My 17 year old son and I are part of our Neighborhood Crime Watch, so we spend 2 hours each week driving the entire neighborhood.
The housing market has been crazy. A house will go on sale one week, and be sold the next. We've heard reports that sellers were getting 20-30 thousand above asking price for houses. And when we'd do our drive, we'd hardly see any houses for sale that didn't have a contract pending notice on them.
This past week we counted 20 houses for sale. Granted that's in the entire neighborhood, but that's more than double the amount of houses we've seen before...and no contract pending notices.
I think it might be the sign of a slow down in our market (which would be a good thing, the market needs to cool off, our County Commission had a meeting because they were concerned our housing was becoming unaffordable for local workers. Salary/cost of housing is disproportionate.)
Or, it might be that a lot of people figured they'd try to pull top dollar out of their houses like their neighbors have been doing.
Don't know yet, time will tell.
If you buy a co-op apartment, you esentially are buying stock.
What happens to the "buyer" who discovers his $ 750,000 shoe box condo in San Diego is not worth $ 450,000? A year later, the shoe box is worth even less. But the sucker owes the full $ 750 k forever. Bankruptcy will not cure his problem.
There will be thousands of foreclosures. Get ready to go bargain shopping about this time next year. But wait at least another year before renting money to make a deal.
Yeah - and pay the mortgage and taxes and upkeep...which for many flippers will bankrupt them in 6 months.
Well, if he walks away from his house, he walks away from the loss. That is, is he is the kind of guy who can make a living without credit or without anybody caring about his credit record.
I'd be very careful. If too much of a neighborhood goes for sale, or gets foreclosed, the government is going to be giving it to low-income renters, or the whole neighborhood gets blighted, or it goes to owners who turn every room into a dorm for lots of people.
Those stupid McMansions? I've typed this many times....on their cul-de-sacs, they are perfect candidates to become small apartment buildings or rooming houses.
I was in the brokerage business for three years. During that entire time, I never saw a brokerage permit anyone to buy a single stock and risk $ 250 k. But I did help a few wealthy clients make deals of $ 100 or more in several stocks with the intention of making some fast bucks. But these investors were very astute. They had millions to play with and a $ 100,000 loss would be just a flea bite.
Have you ever experienced a margin call? The rough equivalent will be happening all over the U.S. next year: When lenders start demanding the difference between the loan amount and the value of the property.
My wife and I walk our recently developed neighborhood nightly. We noticed that houses were under contract with in a week or two until July. Now most have been on the market for over two months. The crazy appreciation is over as well. Our style of home has not appreciated in the past four months. However, there has been no depreciation.
The rapid appreciation, increased interest rates and reluctance to have an interest only mortgage, have limited the number of potential buyers. This all was very predictable.
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