Aint No Right

I am looking into it. Thoughts?

http://realestate.msn.com/article.aspx? ... d=13107725
These appear to be some good cautionary guidelines....

Yeah, this is an interesting topic. A couple of worries: doing too much to a property and pricing yourself out of the neighborhood; not being able to cover costs after a certain amount of time without a buyer; market fluctuations... And that link brings up the obvious issue of heavy competition.

One reason I've been thinking about it is that my career path likely means having to move around a bit over the next decade, and that means that the house I'm currently helping to pay the mortgage on will likely need to be sold in the next few years. It's a new house so it's not quite the same as property-flipping (though actually that goes on in these developments, since it's been the case that the early prices are considerably lower than re-sale). But I've thought maybe it'd be possible to just rent it out and make money that way. Similar issues, though with longer-term costs and investment in time and energy.

Like any investment, it's a fluctuating market that may or may not pan out for you, so you'll have to assume some risk.

Home values are rebounding right now, so it's not a bad time to get in. But that's the macro picture. It can vary right down to the neighborhood.

I work in the industry, and I saw too many people in too much trouble playing that game over the past few years to ever consider it personally.

It seems to me that if you are sufficiently capitalized and hav a core group of professionals the real x factor is fair market value of the property after renovations. This would simply affect how much profit you would make in the market right now, and for the foreseeable future. A business plan that provides sound projections on mortgage, insurance, and taxes are all accountable and fall more into a 'fixed' cost issue rather than non fixed. Too, one must factor the difference in capital gains at the year point v the cg pre annum.

The good news is that the market is beginning to flourish again.

And finally, if one person part of the team could handle the real estate issues, the 5 - 15% of the sale price could be found money for the team.

i've been really successful probably just because i do 95% of the work myself. i also live in the house for two years so i don't have to pay any taxes on the profit. not many opportunities to make free money.

creep wrote:i've been really successful probably just because i do 95% of the work myself. i also live in the house for two years so i don't have to pay any taxes on the profit. not many opportunities to make free money.

Except the one's you mention?

SR wrote:

creep wrote:i've been really successful probably just because i do 95% of the work myself. i also live in the house for two years so i don't have to pay any taxes on the profit. not many opportunities to make free money.

Except the one's you mention?

i don't know?? what else is tax free? roth ira's but i'm not quite at that age.

but i don't really flip. i did on my last house because i only held it for four months but i was able to take advantage of me getting laid off to avoid capital gains.

i plan to do some more houses. i take the real estate salesperson test in a few weeks to save some money on the next house.

creep wrote:

SR wrote:

creep wrote:i've been really successful probably just because i do 95% of the work myself. i also live in the house for two years so i don't have to pay any taxes on the profit. not many opportunities to make free money.

Except the one's you mention?

i don't know?? what else is tax free? roth ira's but i'm not quite at that age.

Dunno, drug sales I suppose.....the article I linked stated a gap between 0-1 year and a year beyond. If the house is lived in for 2 years it may be tax free on profit, but property taxes, insurance, materials and mortgage would likely equal or surpass the steepest taxation......and of course, the more expensive the house the more potential for higher yields and profit.....I would think.

creep wrote:but i don't really flip. i did on my last house because i only held it for four months but i was able to take advantage of me getting laid off to avoid capital gains.

i plan to do some more houses. i take the real estate salesperson test in a few weeks to save some money on the next house.

Has it been a difficult process?

SR wrote:

creep wrote:but i don't really flip. i did on my last house because i only held it for four months but i was able to take advantage of me getting laid off to avoid capital gains.

i plan to do some more houses. i take the real estate salesperson test in a few weeks to save some money on the next house.

Has it been a difficult process?

it's easy. you take three online classes for about $250 and then sign up for the test. the test is about $100 and your license it another $200 or so more.

SR wrote: If the house is lived in for 2 years it may be tax free on profit, but property taxes, insurance, materials and mortgage would likely equal or surpass the steepest taxation...

sure but in my case i lived in the house so i would have to make a rent payment anyway plus by living in it i can write off the interest and property taxes.

SR unless youre educated and experienced in most aspects of building construction it might not be for you.

clickie wrote:SR unless youre educated and experienced in most aspects of building construction it might not be for you.

Do you say this as a building construction professional or as an experienced contrarian?

clickie wrote:SR unless youre educated and experienced in most aspects of building construction it might not be for you.

I think this is a good point.

I bought a new house last year and we looked at 2 houses that were flipped by the same guy who took up flipping late in life after some un-related career.

There was a lot of sloppiness in the work that he did (caulking was messy everywhere, baseboards were too short so there was just no baseboard in some corners, doors were crooked). I'm not sure if it was a lack of skill or lack of caring about quality.

Little things like this made me question if there were more serious things he screwed up.

It's too bad because many things about one of those properties was perfect for us, but all those things I noticed turned me off from making an offer. (I noted after many months of not selling he dropped the price on that house over $100,000).

I have no designs to do any work myself should I proceed with this. I am in talks with a general contractor and a plumbing contractor, the latter I've known for 15 years. Quality of work isn't my concern. It's profit margins.

But all good thoughts.

to get the best deals you have to buy forclosures at auction and usually you can't inspect them and some auctions require cash deals. of course you are taking a risk doing it that way but the potential profit is better.

my last house was a short sale and it was a pain in the ass and took six months but it was worth it. your financing is important too because a lot of the short sales will get multiple offers and if it's not a cash deal you have to have at least a conventional loan with 20% down or they will pick an offer with better financing since the homeowner doesn't profit off a short sale they want an offer that a bank will approve.

as long as you have a good contractor or home inspector there is nothing to worry about if the numbers look right. we for the most part don't have basements here so there are not as many costly foundation issues to deal with. as long as the house has good bones you can make money. you have to be careful of any house older than 40 years old because you might run in to asbestos and lead issues. obviously look at the roof, foundation and termite issues. anything else won't break the bank. if you can learn to lay hardwood floors, tile and paint (which are all really easy) you can save a lot of money.

creep wrote:to get the best deals you have to buy forclosures at auction and usually you can't inspect them and some auctions require cash deals. of course you are taking a risk doing it that way but the potential profit is better.

my last house was a short sale and it was a pain in the ass and took six months but it was worth it. your financing is important too because a lot of the short sales will get multiple offers and if it's not a cash deal you have to have at least a conventional loan with 20% down or they will pick an offer with better financing since the homeowner doesn't profit off a short sale they want an offer that a bank will approve.

as long as you have a good contractor or home inspector there is nothing to worry about if the numbers look right. we for the most part don't have basements here so there are not as many costly foundation issues to deal with. as long as the house has good bones you can make money. you have to be careful of any house older than 40 years old because you might run in to asbestos and lead issues. obviously look at the roof, foundation and termite issues. anything else won't break the bank. if you can learn to lay hardwood floors, tile and paint (which are all really easy) you can save a lot of money.

Great advice. The article mentions auctions and though I haven't re-read it since I began the thread, I think it even mentions going door to door in search of a deal. We'll see....there a couple of things rumbling right now.

Sounds like a cool project SR. Lets start an Aint No Right house flipping team that covers coast to coast.