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(Bloomberg)   Time to party like it's 2006: house flippers are back   ( bloomberg.com) divider line
    More: Facepalm, Real estate, real estate bubble, gross returns, U.S. housing market, Attom Data Solutions, senior vice president, percent, home flippers  
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1267 clicks; posted to Business » on 08 Mar 2018 at 12:35 PM (32 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



47 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest
 
2018-03-08 11:48:43 AM  
While the Democrats may well pick up seats in the upcoming midterm election, I have serious doubts that they will take the House majority.
 
2018-03-08 12:06:32 PM  
They've been back for almost 8 years around here.
 
2018-03-08 12:15:33 PM  
Interest rates are finally climbing above effectively zero, which takes a lot of punch out of the real estate punch bowl.
 
2018-03-08 12:21:11 PM  
Closing on the sale of my late parents' home next week. Took the first reasonable offer (full listed price but I do some seller help and made some simple repairs) even though I probably could have listed at another $10k-20k and eventually found a buyer -- but, the market there is certainly weak and getting weaker. With the way things are going I think having it sold and the cash in my pocket is probably the better position to be in.

Right now my biggest challenge is trying to focus on "this is just a building. It is not the memories you made in the building."
 
2018-03-08 12:23:22 PM  
Relax... It's not time to panic until TLC starts bringing Armondo Montelongo and those other douchebags back to TV.

That's when I knew we were all f*cking doomed.
 
2018-03-08 12:37:03 PM  
Uhhh subby, it's been going on for two years now
 
2018-03-08 12:38:41 PM  
I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?
 
2018-03-08 12:39:19 PM  
Now is the time to buy.  They're not making any more land.  You don't want to miss out.  Everybody's doing it.
 
2018-03-08 12:40:43 PM  
Don't worry, this time home prices will continue to rise forever, making house flipping, interest only mortgages, and ninja loans all great ideas that will never end with financial collapse and ruin.
 
2018-03-08 12:44:10 PM  
I am on the market for a house and it is a joy to go through the mls listings and play find the flipper.  Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....

If I wasnt moving half way across the country I would be tempted to pick up a failed flip.
 
2018-03-08 12:45:05 PM  

nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?


The theory is that cosmetic repairs can be made that improve the market value far above what those repairs cost.

Those houses are few and far between.
 
2018-03-08 12:46:09 PM  

nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?


Many flippers are also realtors.  So they are doubly slimy.
 
2018-03-08 12:48:29 PM  

Rapmaster2000: Now is the time to buy.  They're not making any more land.  You don't want to miss out.  Everybody's doing it.


Wrong, with US stepping out on Paris you will have all of Alaska to use soon. Better get your wagon and a silver dollar so milk won't spoil and make that one last run. Bring back that awesome American spirit of yesteryore. Manifest destiny, the final frontier and resource rush all rolled into one.
 
2018-03-08 12:50:50 PM  

nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?


There were always two types of house flipping.

Classic: The classic way of flipping was to buy a crappy house in a decent hood, then put in some time and money to fix some of the issues and earn a profit.

Nouveau: The new (bandwagon) way that took place during the real-estate boom was to buy a house, make some cosmetic changes/updates (no real repairs, just painting, replacing fixtures, maybe throwing in some Ikea cabinets and a granite countertop in the kitchen), and then sell it for a big markup a few months later.

The former was around before the real estate boom, and continued past it. The latter is only profitable in an up market.

// when I was house shopping a few years back, it was easy to spot a 'nouveau' flip. The sale history of the house would show that it was bought just a month or two back and pictures from previous listing would be totally different ... but nothing would have changed outside the house (outside work is expensive and doesn't bring in profit like a refreshed interior, so cracked walkways, bad landscaping, etc, would all be there still).
 
2018-03-08 12:54:06 PM  

Saiga410: I am on the market for a house and it is a joy to go through the mls listings and play find the flipper.  Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....

If I wasnt moving half way across the country I would be tempted to pick up a failed flip.


*Fistbump*

I've been doing the exact same thing, although with me it's more "Dreaming about moving out of this frozen wasteland."  There's an obvious failed flip out in the middle of the Arizona desert I am tempted by** simply because I never want to shovel snow again.

**Not tempted enough to buy without physically inspecting, though...
 
2018-03-08 12:56:14 PM  

Saiga410: I am on the market for a house and it is a joy to go through the mls listings and play find the flipper. Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....


Could be worse

... quick google search ...

https://www.cnbc.com/2017/03/09/buyer​-​beware-those-picture-perfect-flipped-h​omes-can-be-masked-money-pits.html

"It's literally putting lipstick on a pig," said Stephen Carpenter-Israel, president of Buyer's Edge, a brokerage that only represents buyers. "They're just doing cosmetic stuff and actually covering up problems, and that's scary because it's very difficult to figure it out."
 
2018-03-08 12:58:37 PM  

The Googles Do Nothing: nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?

Many flippers are also realtors.  So they are doubly slimy.


Real estate agents. They will sell you the house they own but act like it is someone else, take a commission you have to pay and pay the seller commission back to themselves,  send you to a title company they get kick backs on, and try to steer you to a mortgage they get a commission on.

Anything they suggest to you is just another way for them to screw you. Just make sure you buy that Owners Title Insurance.
 
2018-03-08 01:02:46 PM  

Intrepid00: The Googles Do Nothing: nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?

Many flippers are also realtors.  So they are doubly slimy.

Real estate agents. They will sell you the house they own but act like it is someone else, take a commission you have to pay and pay the seller commission back to themselves,  send you to a title company they get kick backs on, and try to steer you to a mortgage they get a commission on.

Anything they suggest to you is just another way for them to screw you. Just make sure you buy that Owners Title Insurance.


Oh and a home inspection from someone they don't suggest.
 
2018-03-08 01:11:53 PM  

Skyd1v: Saiga410: I am on the market for a house and it is a joy to go through the mls listings and play find the flipper.  Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....

If I wasnt moving half way across the country I would be tempted to pick up a failed flip.

*Fistbump*

I've been doing the exact same thing, although with me it's more "Dreaming about moving out of this frozen wasteland."  There's an obvious failed flip out in the middle of the Arizona desert I am tempted by** simply because I never want to shovel snow again.

**Not tempted enough to buy without physically inspecting, though...



That is actually the region I am landing.  I probably have seen it.
 
2018-03-08 01:15:36 PM  

Saiga410: I am on the market for a house and it is a joy to go through the mls listings and play find the flipper. Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....


Also, I recall an episode of a 'flip that house' type show where the flipper actually jacked up the entire house and fixed the foundation.

But it was a professional flipper that owned their own company so that foundation fix likely didn't cost them $10k worth of labor and materials.

(So there's profit to be made in between the actual cost of repairs vs. the cost that a contractor will charge).
 
2018-03-08 01:22:39 PM  

lordargent: Saiga410: I am on the market for a house and it is a joy to go through the mls listings and play find the flipper. Granite everythings, SS everythings, updated lighting, fresh neutral paint everywhere, $10k allowance to fix foundation....

Also, I recall an episode of a 'flip that house' type show where the flipper actually jacked up the entire house and fixed the foundation.

But it was a professional flipper that owned their own company so that foundation fix likely didn't cost them $10k worth of labor and materials.

(So there's profit to be made in between the actual cost of repairs vs. the cost that a contractor will charge).


The person next door to me did that... and did it poorly. The foundation has cracked where they kept an original corner and tried to connect it to the new wall. There is also a persistent leak on the other side of the house from a badly repaired footing. Also, in general around here, if you are going to jack up a house, it'll cost you $10k per foot raised.
 
2018-03-08 01:40:24 PM  
They never went away. The truly canny started back up fairly quickly after the crash, as home prices were rock bottom.
 
2018-03-08 01:47:28 PM  

Mr. Coffee Nerves: Closing on the sale of my late parents' home next week. Took the first reasonable offer (full listed price but I do some seller help and made some simple repairs) even though I probably could have listed at another $10k-20k and eventually found a buyer -- but, the market there is certainly weak and getting weaker. With the way things are going I think having it sold and the cash in my pocket is probably the better position to be in.

Right now my biggest challenge is trying to focus on "this is just a building. It is not the memories you made in the building."


I can understand that. We (my aunt and I) had to do the same with my grandparents' home last year. Finding Christmas ornaments in the attic that I remember putting on the fake tree... all of the hide and seek she and I played there (we are the same age)... It was hard. What helped me was writing those stories down. I could reflect on each, grok it in fullness, and then tell myself "That was a nice memory, and I was so incredibly lucky to experience it."
 
2018-03-08 01:51:33 PM  

bobug: Mr. Coffee Nerves: Closing on the sale of my late parents' home next week. Took the first reasonable offer (full listed price but I do some seller help and made some simple repairs) even though I probably could have listed at another $10k-20k and eventually found a buyer -- but, the market there is certainly weak and getting weaker. With the way things are going I think having it sold and the cash in my pocket is probably the better position to be in.

Right now my biggest challenge is trying to focus on "this is just a building. It is not the memories you made in the building."

I can understand that. We (my aunt and I) had to do the same with my grandparents' home last year. Finding Christmas ornaments in the attic that I remember putting on the fake tree... all of the hide and seek she and I played there (we are the same age)... It was hard. What helped me was writing those stories down. I could reflect on each, grok it in fullness, and then tell myself "That was a nice memory, and I was so incredibly lucky to experience it."


I've had to do it a couple times. I've found the best way was to take a weekend to get all of the sentimental stuff out of the way and then call in some pros to clean out the house.

Once, our old farmhouse was not worth saving so we brought in the local fire department for some training. It was beautiful to see the old place go up in flames.. cathartic.
 
2018-03-08 02:10:45 PM  

Tr0mBoNe: Once, our old farmhouse was not worth saving so we brought in the local fire department for some training. It was beautiful to see the old place go up in flames.. cathartic.


That's cool. Great way to close the chapter.
 
2018-03-08 02:18:32 PM  
This isn't all that surprising.  Millennials are finally buying houses, but they want houses that have all of the bells and whistles they're used to.  They don't want a "fixer-upper".  They would much rather spend $500,000 on a "finished" house than spend $350,000 on a similar house that needs $75,000 of work done.

This is completely stupid of course, but that's why the flippers are making money.
 
2018-03-08 02:25:53 PM  

hissatsu: Don't worry, this time home prices will continue to rise forever, making house flipping, interest only mortgages, and ninja loans all great ideas that will never end with financial collapse and ruin.


The issue is that nobody is building new housing, unlike circa 2006.  This lack of supply is driving the market right now more than anything else.
 
2018-03-08 02:28:04 PM  

bobug: Tr0mBoNe: Once, our old farmhouse was not worth saving so we brought in the local fire department for some training. It was beautiful to see the old place go up in flames.. cathartic.

That's cool. Great way to close the chapter.


It was. Too bad they didn't let 14 year-old me start the fire.
 
2018-03-08 02:28:13 PM  

Geotpf: hissatsu: Don't worry, this time home prices will continue to rise forever, making house flipping, interest only mortgages, and ninja loans all great ideas that will never end with financial collapse and ruin.

The issue is that nobody is building new housing, unlike circa 2006.  This lack of supply is driving the market right now more than anything else.


Apartments is what they have been building instead. That's starting to have too many empty apartments which will keep home prices down.
 
2018-03-08 02:39:17 PM  

Red Shirt Blues: Uhhh subby, it's been going on for two years now


Been longer here in Denver.  I think the 2008 crash was just a temporary inconvenience to them around here.  I've seen a house flipped once about 5 years ago getting renovated again this year.  Not sure if it's going to be flipped since it's being done so slowly.  On the other hand, they have not put up any window coverings and its been months.
 
2018-03-08 03:11:40 PM  
I suspected the jig was up when my neighbors sold a house virtually identical to the one I own for $100 more than I paid 2 years prior. I smelled something fishy when my wife's best friend who can't keep a dollar in the checking account landed a house that cost about twice what ours cost.

My mother (who is nearly retired and has a foreclosure on her record) just bought a house. It's time to stock up on canned goods and ammo folks. This is 2008 all over again.
 
2018-03-08 03:12:27 PM  
$100k. The house next door sold for $100k more.
 
2018-03-08 03:24:18 PM  
We're shopping right now in the Twin Cities and it's a mess.  The main floors all look great but the upstairs or basements are all neglected, water damaged, or DIY'ed to shiat.  But houses are getting 30 showings a day and selling in 48-72 hours.  It's farking nuts.
 
2018-03-08 04:39:18 PM  
I get realtor/developer calls weekly on my shack. I'm not in a hurry to sell, so I'm asking top dollar for my lot. Either they pay or don't. House is virtually paid for, so I can live my low overhead lifestyle for a long time to come.
 
2018-03-08 04:49:14 PM  

lordargent: nmrsnr: I can't imagine house flipping being that lucrative. The realtor fees alone cut into your ROI. How many markets have home prices which are appreciating at 10+% APR?

There were always two types of house flipping.

Classic: The classic way of flipping was to buy a crappy house in a decent hood, then put in some time and money to fix some of the issues and earn a profit.

Nouveau: The new (bandwagon) way that took place during the real-estate boom was to buy a house, make some cosmetic changes/updates (no real repairs, just painting, replacing fixtures, maybe throwing in some Ikea cabinets and a granite countertop in the kitchen), and then sell it for a big markup a few months later.

The former was around before the real estate boom, and continued past it. The latter is only profitable in an up market.

// when I was house shopping a few years back, it was easy to spot a 'nouveau' flip. The sale history of the house would show that it was bought just a month or two back and pictures from previous listing would be totally different ... but nothing would have changed outside the house (outside work is expensive and doesn't bring in profit like a refreshed interior, so cracked walkways, bad landscaping, etc, would all be there still).


We bought a realtor owned, flipped house.  New driveway, A/C, roof, water heater, and windows. All paperwork and permits.  He brought in dirt to regrade, but just dumped the dirt and spread it, didn't actually grade it.  The siding will have to be replaced before we sell it, but I happen to work for a company that sells siding so i can get it at cost, and I know several contractors and the quality of their work.
 
2018-03-08 04:58:41 PM  
I blame those dumb flipping shows on HGTV
 
2018-03-08 05:33:21 PM  
Does that ahole in Las Vegas still have a show?

Lately its been weird I have been getting a lot of flyers in the mail to buy my house unseen, yeah not gonna do that. When I moved in the bank partially fixed up my place with a new oven dishwasher, new carpet and a coat of paint. It did need work because there was a water heater leak before I got there, so new water heater and floating wood floor in the living room.
 
2018-03-08 05:49:54 PM  

groppet: Lately its been weird I have been getting a lot of flyers in the mail to buy my house unseen


I had flyers in the mail offering to help me sell my house that I had just moved into (tented for termites, moved in, checked the mail for the first time, already had junk mail with my name on it).

// they just pull the addresses for an entire neighborhood and carpet bomb it. It's the fourth lowest form of acceptable advertisement IMO*.

// I still get mail addressed to the previous home owners ... from the sellers agent they used to sell me the home (because the agency the sellers agent works for just carpet-bombs mail and puts the agent's name on it because the house is in her zone).

// The third lowest form is flyers stuck in your front door. The second lowest is newspapers tossed in the driveway. The lowest is bags of rocks tossed in the driveway by "landscapers".
 
2018-03-08 05:52:08 PM  

Mr. Coffee Nerves: Closing on the sale of my late parents' home next week. Took the first reasonable offer (full listed price but I do some seller help and made some simple repairs) even though I probably could have listed at another $10k-20k and eventually found a buyer -- but, the market there is certainly weak and getting weaker. With the way things are going I think having it sold and the cash in my pocket is probably the better position to be in.

Right now my biggest challenge is trying to focus on "this is just a building. It is not the memories you made in the building."


My MIL passed and we had to unload her place. Actually, it was a nice place but it needed Everything: roof, HVAC, basement water issues, landscaping, etc. We would not have minded living in that house but it was far away from the jobs. Mrs. Edmo spent her entire life in that house until college so it was tough.


The buyer rented it out to somebody and the place went downhill fast. It was sold and sold again but the last we saw it, some 10 years after the sale, it was being loved again and had lots of new stuff like windows and a porch, etc. Glad to see the place thriving again with kids running around.
 
2018-03-08 06:00:04 PM  

edmo: Mr. Coffee Nerves: Closing on the sale of my late parents' home next week. Took the first reasonable offer (full listed price but I do some seller help and made some simple repairs) even though I probably could have listed at another $10k-20k and eventually found a buyer -- but, the market there is certainly weak and getting weaker. With the way things are going I think having it sold and the cash in my pocket is probably the better position to be in.

Right now my biggest challenge is trying to focus on "this is just a building. It is not the memories you made in the building."

My MIL passed and we had to unload her place. Actually, it was a nice place but it needed Everything: roof, HVAC, basement water issues, landscaping, etc. We would not have minded living in that house but it was far away from the jobs. Mrs. Edmo spent her entire life in that house until college so it was tough.


The buyer rented it out to somebody and the place went downhill fast. It was sold and sold again but the last we saw it, some 10 years after the sale, it was being loved again and had lots of new stuff like windows and a porch, etc. Glad to see the place thriving again with kids running around.


I drove by the house I grew up in about a year ago, I did like some of the changes they did, solar panels on the roof but I was pissed they dug up my azalea bushes, come spring they were always an explosion of color, red white, pink and my little lavender one. Our old neighbors hated the first guy that lived there, he was a Chinese national and they had some high security government jobs and he was always nosey about what they did. He was a college professor and the one time I met him I had to try not to laugh. His outfit looked like Marty McFlys in Back to the Future 3, the awful cowboy outfit and oh yeah he had the hat too.
 
2018-03-08 06:33:38 PM  

RumsfeldsReplacement: This isn't all that surprising.  Millennials are finally buying houses, but they want houses that have all of the bells and whistles they're used to.  They don't want a "fixer-upper".  They would much rather spend $500,000 on a "finished" house than spend $350,000 on a similar house that needs $75,000 of work done.

This is completely stupid of course, but that's why the flippers are making money.


Wait, you think Millenials can afford a $350,000 home? Let alone a half-million dollar home?! All right, I'll bite; Let's do some MATHS!

A $350,000 loan on a 30 year mortgage, 4% interest rate would run around $2,254/month. If we're going by the 33% rule of gross income, a Millenial should be making about $82 grand/year. Bump that loan to $500,000, and that payment ups to $3,220/month, with a required income around $116,000/year.

... The median income in the United States is currently sitting at $59,000, meaning in your scenario, Millenials are making 139%-196% the average income.
Just to be clear, your thought process right now is that Millenials, who are saddled with the highest college debt in human history are raking in so much dough we can't be bothered to buy a third million dollar home because we're what? Lazy?

Let me give you a hint from a Millenial "Insider." Literally 92% of us can't begin to afford homes in that range using the assumed "33% of gross income" rule. We can't afford the piss stained cardboard box under the bridge of I-95 right now because of house flipping and the monstrous increase in housing costs.

tl;dr - this is clearly for you:
img.fark.netView Full Size

/goddamn people have no concept of money around here...
 
2018-03-08 06:56:13 PM  

lordargent: // The third lowest form is flyers stuck in your front door. The second lowest is newspapers tossed in the driveway. The lowest is bags of rocks tossed in the driveway by "landscapers".


I've never seen these last 2.  What is the point of throwing a bag of rocks in your driveway?  Someone does that to me I'm going to be confused and pissed off, not want to talk my lawn.
 
2018-03-08 07:01:37 PM  
I don't think they ever really went away. Just most of them are bad and take rebuild-able wrecks and sometimes make them worse. More than a few times I've heard from coworkers and neighbors that some flipper immediately got in trouble with the HOA to the point that whatever they tried to gain out of the flip was lost on the redo. Whups! Guess ya shoulda read them there HOA docs!

/there's a person right across from me with a silver-finish doorknob
//only brass doorknobs allowed in this zone!
///i literally do not care enough to report something as petty as the color of my neighbor's doorknob, good grief
 
2018-03-08 07:03:37 PM  

Skyd1v: I've never seen these last 2. What is the point of throwing a bag of rocks in your driveway? Someone does that to me I'm going to be confused and pissed off, not want to talk my lawn.


It's a plastic bag with rocks and a business card/slip of paper.

http://www.richcontractor.com/hall-of​-​shame-a-flyer-and-rocks-in-a-clear-pla​stic-bag-on-my-driveway/
 
2018-03-08 07:09:47 PM  
^ as for newspapers, the local paper agency will (about once a month) toss a free paper onto the lawn (with a flyer included in the bag asking you to subscribe if you like the paper).

I throw all of this into the 'shiatty advertising' category and immediately dispose of them (I put the rocks over with the rest of the rocks in my landscaping, and any newspapers or flyers go straight into the recycling bin.)
 
2018-03-08 07:10:03 PM  

lordargent: Skyd1v: I've never seen these last 2. What is the point of throwing a bag of rocks in your driveway? Someone does that to me I'm going to be confused and pissed off, not want to talk my lawn.

It's a plastic bag with rocks and a business card/slip of paper.

http://www.richcontractor.com/hall-of-​shame-a-flyer-and-rocks-in-a-clear-pla​stic-bag-on-my-driveway/


Ah...ok, thanks for the link.

I was thinking it was a 30lb bag of pea gravel or landscaping rock...
 
2018-03-08 07:40:11 PM  

Skyd1v: I was thinking it was a 30lb bag of pea gravel or landscaping rock...


Probably more common out here due to the weather (doesn't rain often).

// It happens about once a month and it doesn't matter how well or poorly maintained your lawn is (EX, a neighbor down the street has a dirt yard, so I don't think they signed up for the mowing and edging service.).
 
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