Ok fellow House Flippers… this week I ask the question:
Is it time to buy yet ? A house to flip that is…
Well, in trying to answer that, I visited one of my favorite fellow Bloggers:
http://bubbletracking.blogspot.com
And I a came across his post last Friday,
If Only I Waited… In Fairway Canyon
This particular article is very meaningful to me because I live 4 exits down the freeway from Beaumont(the city where the house in Fairway Canyon is)… so, I not only know where this housing tract is, I have driven by it many times and I am very familiar with the general area since it is just a few miles away…
After reading this posting, your heart is going to into your stomach as you realize that someone just lost $250,000.00 in 7 months… not exactly what we are trying to do here Flippers… we are trying to make money flipping houses, not blow our life savings and more in a few months…
so back to our important question of the week.. Is it time to buy yet ?
Well, the answer is:
“It has ALWAYS been time to buy”.
You think I am crazy right ? 
I don’t blame you… I would think I sounded crazy too…
But, I am not crazy.
It has ALWAYS been time to buy a GREAT DEAL.
LET ME REPEAT THAT: It has ALWAYS been time to buy a GREAT DEAL.
A great deal makes you MONEY, PERIOD. If you are not buying a great deal, you CAN get lucky in a skyrocketing market and LUCK INTO profit… like so many of these flippers on Flip That House, etc did… I am sure you have seen these bumbling idiots mess everything up, go way over budget, blow their timeline by 12 months, and then sell the house for 100k more than they originally planned because this flip was going on in 2004…
but if you take this road to house flipping, you are gambling, you are playing with fire… and eventually, you will lose it all in a house flip like that Beaumont house listed above…
On the other hand, if you only buy great deals… there is one thing that you can count on… you will always make money!
What is a great deal ? Well, that can be subjective to the person and their personal financial goals… while some may go for at least $10k of profit per flip(like me), others may only do deals where they are going to make $50k per flip(like Robert K, of Rich Dad)… so, the great deal is the flip that is going to make you at least your goal no matter what.
I am oversimplifying you are saying to yourself… yes, I am… but, it really is that easy…
You are flipping a house… and you have fixed it up… and you are trying to sell it now, but the market is dead right ? Wrong… there are always people buying homes… the way to sell it quickly is fairly simple, PRICE IT WAY BELOW THE MARKET… right ? Yea…
Well, then a GREAT DEAL on a house flip, is a house that you can buy, fix up, and then sell at a price that is WAY BELOW THE MARKET… if you can’t buy it for the price that allows you to do all of the above… DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY, DON’T BUY!
That’s it for this week, I appreciate your comments…
Flip on House Flippers!
7 Comments
The most important key of all is buy low. There are always buyers even in a down market, but sellers often get greedy. The inexperienced flipper has the same problem. Sometimes it costs more to be greedy than to be the lowest priced house in the market, break even, and move on. That is a valuable lesson. Experience gives you strength to buy low the next time and be more conservative on your fix up costs. Or one could buy low and rent for several years until the market catches up with itself!
It’s a different story in my country (Malaysia). I bought an apartment 5 years ago due to “good price” and “new township” during our property boom then. Today, my apartment appreciates by about 10% but no buyers due to the excess of apartment units around the vicinity. Here, you are better off buying existing properties. That way, you can see what the environment, community and and upkeep is like.
Hi Robert, interesting blog you have here. It makes a good read. The housing market here in the UK makes for an interesting time as the prices are generally still increasing, but fluctuate wildly. So one week you could buy a house and the next week it could have lost nearly a quarter of its value!
Jimbo
I would like to point out that the deals in California and the rest of the US are coming. And they are going to be coming in droves. If you check out the article in Yahoo Finance today about American home mortgage http://biz.yahoo.com/ap/070731/american_home_mortgage_liquidity.html?.v=19 you will see what I’m talking about.
What we are experiencing is the three fold effect of:
1. Decrease in investor activity.
2. Decrease in purchaser affordability
3. Increase in foreclosure (inventory)
This is a 1, 2, 3, punch for the Real Estate industry. If you are purchasing in this market expect your home value to continue (as it has nationally) an average of 3% per month through the next year or so. We are entering the coldest months for the R/E market and the hopefull sign of the spring buying season never appeared.
On the lighter side of things if you visit Standard & Poors website you can see evidence of this repeated regression in the California R/E market over and over again and through basic charting techniques can see that we should reach the bottom of the market in 2009 or 2010. Although NO-ONE can predict or pick the bottom of any market, these charts give an eye opening pattern of instability, stability and recovery. Have fun with them as I have been. Only buy the WINNERS right now, which may be easier to find as fewer people are looking to buy, and remember what was said above “the way to sell it quickly is fairly simple, PRICE IT WAY BELOW THE MARKET… right ?” and that price is going to be less month after month for a while.
Of course this all depends on your market, and market conditions. There are areas of the country where the Median Income is only 17% of the Median home value, and others where it’s as much as 90%. It’s always easier to get a better price if more people can afford it.
…your site is awesome man. Hope you don’t mind if I steal some ideas from you
From South Africa with Property in Love
I think there’s money to be made in any market as long as you are smart about the purchase price. My golden rule is “you make money when you first buy a home, not when you sell it.”
Its never more true when your flipping houses
houses are more of a long term investment for me, so I’ve boughts according to location; nice neighbourhood, easy commute to the city, etc. That theory has done me relatively well so far. The other thing I’ve done is buy properties that haven’t yet been subdivided but are zoned for subdivision.
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