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Thread: Anybody ever Flipped a House?

  1. #26
    Veteran Member Cyndi08's Avatar
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    Default Re: Anybody ever Flipped a House?

    You can take your time to flip if you live in the house you're flipping. Otherwise, you lose money to taxes. I would say the most important thing to do is to get a great location, something that needs a lot of improvement where the cap on the market is high and you can get your money back easily.

    Also, with the interior, it HAS to be neutral. People need to be able to imagine their own belongings in the home. You can have color, but it needs to be versatile. And if you can have furniture in the home when you show it, that's great. Just imagine how you feel when you walk into a model home. Keep that in mind when you're ready to sell.

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    Veteran Member Cyndi08's Avatar
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    Default Re: Anybody ever Flipped a House?

    Also, look for foreclosures, they are usually the best "sell as is for very little" places

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    God/dess Deogol's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by Cyndi08 View Post
    Also, look for foreclosures, they are usually the best "sell as is for very little" places
    Just be prepared to buy a new kitchen sink... and water heater... and toilet... and anything made of copper...

  4. #29
    Banned Katrine's Avatar
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    Default Re: Anybody ever Flipped a House?

    I was just talking about this to a very tenured advisor at the office. Two of his clients, one a successful realtor, and the other, a successful mortgage broker...lost their ASSES off trying to flip spec houses. Millions. And these guys have been doing it for a long time.

    Not for me. I have neither the knowledge or patience.

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    Featured Member NatalieFRPhilly's Avatar
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    Default Re: Anybody ever Flipped a House?

    My cousin has a business where he buys forclosure crack houses in Philly and he "flips" them and turns a nice profit. Everyone here basically said the problems he ran into, trouble with permits..some fines when he tried to do things himself that he didn't know about...not selling fast enough. But after a few tries he's got his system down pretty well. I think it would be especially helpful if your husband was a contractor or something.

    Good luck, and I'd like to see your updates!

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    Featured Member Vamp's Avatar
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    Default Re: Anybody ever Flipped a House?

    Personally I think flipping a house right now is a dangerous game.

    What worked during the housing boom no longer applies. Making cosmetic changes to a house in a market where housing values are plateauing or even declining isn't going to make a dent in the value.

    I have a friend who has been flipping houses for 20 years. He saw what was coming and now only works on one house at a time. The house he is currently working on has been on the market for 8 months. He has alot of people who want to buy it. But they do not have the credit to secure a mortgage any longer with the new criteria.

    Foreclosures can be a wonderful option. The biggest issue though is if there are any liens on the title of the home. Back taxes or any debt the homeowner has can place a lien on the title of the home. Those debts will have to be paid by whom ever purchases the foreclosed home in addition to the purchase price. In some cases searching the title can be a lengthy process.

    In this current market where things are changing rapidly i would suggest weighing out all the options. Not only with an investment property but also other investment options. I would do alot of research. Always have a good lawyer on hand if you decide to flip a house as well.

    Good Luck!
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  7. #32
    Moderator Optimist's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by Vamp View Post
    Personally I think flipping a house right now is a dangerous game.



    I have a friend who has been flipping houses for 20 years. He saw what was coming and now only works on one house at a time. The house he is currently working on has been on the market for 8 months. He has alot of people who want to buy it. But they do not have the credit to secure a mortgage any longer with the new criteria.
    Good point. My boyfriend sold his condo in three weeks at $30,000 profit BUT he was able to do it because the bank let the young guy put down 3%. I'm not so sure that's an option for most potential buyers now.
    “What a caterpillar calls the end of the world we call a butterfly.” - ECKHART TOLLE

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    Banned Melonie's Avatar
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    Default Re: Anybody ever Flipped a House?

    The house he is currently working on has been on the market for 8 months. He has alot of people who want to buy it. But they do not have the credit to secure a mortgage any longer with the new criteria.
    My boyfriend sold his condo in three weeks at $30,000 profit BUT he was able to do it because the bank let the young guy put down 3%. I'm not so sure that's an option for most potential buyers now.

    This was my earlier point, that the tightening lending standards which have recently been put into effect due to the rapidly rising delinquency rates on subprime loans, and now Alt-A loans, cannot be ignored. Willing buyers who could formally obtain mortgage financing with 0%-3%-5% down are now looking at a 20% down payment requirement. Willing buyers who could formally 'state' to the lender that they earned $60k-$80k-$100k a year are now limited by the $40k in earnings that the lender can actually verify. These would-be borrowers are now also limited by a creditworthiness test being applied to future mortgage payments as well as present mortgage payments - i.e. lenders can no longer peddle negative am mortgages or steep ARM's based only on what the would-be buyer can afford RIGHT NOW, they must look at what the would-be buyer can afford 2-3-5 years down the road when negative am stops and/or ARM interest rates readjust. Thus many would-be buyers of 'lower end' properties are now being locked out re 'affordable' mortgage financing. And a would-be buyer with no financing is NOT a buyer.

    Also from my earlier point, the tightening lending standards are affecting would-be 'blue collar' buyers and to some degree would-be lower middle class 'white collar' buyers much more severely than would-be upper middle class 'white collar' buyers or the rich. This is obviously because the upper middle class and the rich have sufficient assets to cover a 20% down payment requirement, and have high enough verifiable incomes to get mortgage approvals. However, a large number of 'flipper' properties are located in neighborhoods where upper middle class buyers and/or rich buyers do NOT want to live - for reasons stemming from local crime rate to local school system to basic 'character' of the neighborhood. Thus owners of 'flipper' properties in such neighborhoods are going to have an increasingly difficult time finding would-be buyers who are willing to purchase a property in such a neighborhood and who are also able to obtain financing given tighter lending standards. To make matters worse, with qualified willing buyers of such 'flipper' properties being in short supply, and with owners of such 'flipper' properties being under the gun in regard to paying taxes / utilities / mortgage payments every passing month that the property remains unsold, pressure to reduce the sale price of such property is growing rapidly.

  9. #34
    Featured Member scorpio's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by Cyndi08 View Post
    Also, look for foreclosures, they are usually the best "sell as is for very little" places
    You're WRONG. Foreclosures are NOT a deal because you pay back the bank all the legal fees, auctioning costs, everything.

    Pre-foreclosures are always a better way to go.

  10. #35
    Featured Member scorpio's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by Vamp View Post
    Foreclosures can be a wonderful option. The biggest issue though is if there are any liens on the title of the home. Back taxes or any debt the homeowner has can place a lien on the title of the home. Those debts will have to be paid by whom ever purchases the foreclosed home in addition to the purchase price. In some cases searching the title can be a lengthy process.
    Where do you get your information from? During a foreclosure any and all secondary liens are LOST. In a foreclosure the main bank will get whatever money is lost and the secondary lien holders get nothing...and they cannot go after the new owner for their money. No matter what kind of lien, outside of a government lien, can withstand the crushing blow of a foreclosure. Which is why a lot of places will do whatever they can to avoid foreclosure.

    Again, though, foreclosures are NOT a deal.

    In this current market where things are changing rapidly i would suggest weighing out all the options. Not only with an investment property but also other investment options. I would do alot of research. Always have a good lawyer on hand if you decide to flip a house as well.
    Even when the flipping market was good, it was important to weigh out the options. It is highly advisable to know your area trends. We're still flipping houses fairly easily in my area. But, we know our area...we know our price range, and we know what we're getting into. What we don't sell, we option out or rent. We've not run into any problems. But, this comes from research.

    And you never do anything without a good lawyer.

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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by scorpio View Post
    Where do you get your information from? During a foreclosure any and all secondary liens are LOST. In a foreclosure the main bank will get whatever money is lost and the secondary lien holders get nothing...and they cannot go after the new owner for their money. No matter what kind of lien, outside of a government lien, can withstand the crushing blow of a foreclosure. Which is why a lot of places will do whatever they can to avoid foreclosure.
    This is true. Anything else is considered a junior lein and is therefore wiped out by the sale.

    There are a few instances that the new owner is responsible for some debt: property taxes and special assessments have first claim on the property and whoever buys the real estate has to pay them.

    (this is straight from my RE textbook, BTW)

    ~
    Last edited by Melonie; 07-21-2007 at 07:42 AM. Reason: fix parsing for quotation

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    Featured Member saphire123456's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by scorpio View Post
    You're WRONG. Foreclosures are NOT a deal because you pay back the bank all the legal fees, auctioning costs, everything.

    Pre-foreclosures are always a better way to go.
    well yes, and no, pre foreclosures can be a better deal if you get to them before the bank does (buying directly from the people) because at that point they are desparate and would rather make some money, than end up w/ nothing AND ruined credit. Those properties are harder to find though.

    However, when you buy it from the bank often times its a bargain as well, not as much of a bargain as above case, but the bank will often list it at between 10 and 20% below market price. at that point you don't pay back any legal fees auctioning costs, etc. because they have been rolled into the listing price. there are normal closing costs, but not much beyond that. the thing to watch thou, is the bank's contract, its very unfavorable to the buyer. one wrong move and there's fees. (i bought 2 properties that way, and 1 pre foreclosure)

    Def watch out for the market conditions, I know in my area flipping pretty much shrivelled up and died, and people are just stuck w/ their houses for months...i haven't flipped anything since the fall, i have just been renting

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    Banned Melonie's Avatar
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    Default Re: Anybody ever Flipped a House?

    ^^^ agreed that it IS possible to make money from rental properties, provided ...

    - the carrying costs of whatever financing you used to purchase the property have a sustained relatively low interest rate, i.e. that your monthly mortgage payments aren't going to jump skyward in the next couple of years

    - the local property tax rates and insurance rates are likely to be relatively stable ... which is NOT the case in areas where local gov'ts are running big budget deficits, nor in higher risk locations where formerly subsidized homeowner's insurance rates are rapidly rising to accurately reflect actual risks of hurricanes / earthquakes / criminal property damage

    - the local pool of tenants are likely to be able to keep their decent paying jobs for awhile, and are unlikely to strip your rental property of its copper wire and plumbing prior to going bankrupt.

  14. #39
    Featured Member Vamp's Avatar
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    Default Re: Anybody ever Flipped a House?

    I get my information from working in banking.

    Each state is differant. Here is the basics ...

    http://64.233.167.104/search?q=cache...nk&cd=15&gl=us

    Lien Holders Must Get In Line for Payment
    by M. Anthony Carr


    A title search is one of the most important activities of the real estate transaction. Without the ability to convey title, a property owner cannot sell his or her home and a buyer would not want to take possession without this most basic exercise.

    "Title" is the right to own land. Thus a title or settlement company conducts searches at the courthouse to determine if one owner has a "clear" title so that they can pass the property over to another owner. If a title has liens or judgments against it, then it creates a "cloudy title" and that's not a good thing, unless the liens are the most common sort, such as a mortgage.

    Liens are "a charge or claim against a person's property, made to enforce the payment of money," according to my old principles of real estate text book, "Modern Real Estate Practice," published by Dearborn Real Estate Education. These liens are broken down into two major groups: voluntary (you actually created the lien intentionally, like a mortgage) and involuntary (it was forced on you, like taxes or a creditor's lien seeking payment).

    Beginning investors need to be careful that when they go to the courthouse steps to bid on a property, that when they "win" they haven't just purchased a bunch of liens, which are attached to the property and convey with the property. Keeping in mind that if someone has allowed their house to go to foreclosure, then they've had financial problems and that means they could have had liens placed on the property from vendors seeking payment.

    As mentioned above, mortgage companies place liens on the property for the mortgage amount. Other liens could be placed on the property for taxes, fees outstanding to contractors (mechanics lien), and even homeowners association dues. You may even find liens for utility companies and local creditors.

    When a house goes to foreclosure, the lien holders must get in line for payment. The first one with a hand out is the government for taxes. This lien is the first in priority, even though the general rule is "first-come, first-served." All other lien holders better hope they placed a lien on the property early on.

    For example: Mr. Smythe is ordered to go to foreclosure on his home and is able to receive $275,000. He has a tax lien for $5,000 the current year, a first trust mortgage from 1998 for $125,000, a judgment lien from a creditor for $100,000 from 2003, and a mechanics lien for work done by a contractor on his deck for $20,000 from 2002.

    The order of payoff would be as such:


    Taxes: $5,000

    1st Trust: $125,000

    Mechanics lien: $20,000

    Judgment lien from creditor: $100,000

    Mr. Smythe: $25,000
    The seller receives the balance of the proceeds (and that's assuming the creditors have not sued him for the cost of the foreclosure or any fees they've incurred that they are allowed to because of the foreclosure).

    If Mr. Smythe goes to foreclosure in a down market and only receives $200,000, the roll out of the proceeds may look like this:


    Taxes: $5,000

    1st Trust: $125,000

    Mechanics Lien: $20,000

    2nd Trust: $50,000

    Mr. Smythe: $0
    In many foreclosure cases, the mortgage company will pay the taxes just so they can get first in line for their own money. The only other way a creditor can move ahead in the line may be through a "subordination agreement" between them and another lien holder to change the priority (you might say these are also considered a "fat chance" agreement or "snow ball's chance" agreements). Not too many companies are willing to subordinate to other creditors if they don't have to.

    If you find yourself in a must-sell situation, it's best to let your agent know immediately that you might have liens on your property -- she'll find out about it eventually during the title search. For those facing foreclosure, you may have creditors judgment liens on your house and not even know it. The only way to find out about them is to visit the courthouse and look at your records. Obviously, the only way to remove the liens is to pay them off.


    It is decided by the courts and mortgage holder the terms of the purchase of a foreclosure. Each state is differant as well as each foreclosure. To say they are just lost is simplistic and not the whole picture.
    Last edited by Vamp; 07-21-2007 at 12:35 PM.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Featured Member scorpio's Avatar
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    Default Re: Anybody ever Flipped a House?

    you are confusing things. There is no foreclosure until the bank goes to court and legally has property rights assigned to them. Then the tenants get evicted and the home either goes straight to the bank or is sold at auction. Then and only then is it considered a foreclosure. At that point, ALL liens are lost (except government liens) the example you site is a pre-foreclosure, where the borrowers still control the house, though they may be delinquent and in default. There, liens may apply, although I have never had an issue getting them quashed, because the lienholders have nothing to stand on. it's either release the lien for nothing or pennies on the dollar, or the property goes to foreclosure and they get nothing. Works every time.

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    Default Re: Anybody ever Flipped a House?

    My husband and I are fully invested in real estate. We started out with doing single family houses and have moved on the larger properties since then. He has more experience in this than I did. We both feel that starting out fixing up properties, using your skills, is a solid start to a good financial foundation. While short term it is impossible to say what may, or what may not happen. Long term, real estate has been a good investment. The world is full of nay sayers and those predicting doom, however over a period of time, sound decisions will pay off, even if they go "south" for a period of time. The American economy has weathered many storms and this is just one of those storms. If you look at this from a historical context, if is just a small speed bump.

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    Featured Member Vamp's Avatar
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    Default Re: Anybody ever Flipped a House?

    Quote Originally Posted by scorpio View Post
    you are confusing things. There is no foreclosure until the bank goes to court and legally has property rights assigned to them. Then the tenants get evicted and the home either goes straight to the bank or is sold at auction. Then and only then is it considered a foreclosure. At that point, ALL liens are lost (except government liens) the example you site is a pre-foreclosure, where the borrowers still control the house, though they may be delinquent and in default. There, liens may apply, although I have never had an issue getting them quashed, because the lienholders have nothing to stand on. it's either release the lien for nothing or pennies on the dollar, or the property goes to foreclosure and they get nothing. Works every time.
    Orginally you said they were lost and now you are saying that you have quashed them?

    My only point here is to make those that are new to purchasing forclosures aware of some pit falls. As I said each state is differant, each home, and each forclosure is differant. Everyone needs to do their own research and come to their own decisions.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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