Don't know what's going on with Los Angeles homes. Fixers are up 5-10% from '05-'06 era up to this date. Yet the ARV homes are NOT SELLING and sitting flat like pancakes from I-Hop. Some comparables are even sliding on the repaired homes. So SCARY since the MLS is now flooded with houses for sale. Thanks to the Sub-prime meltdown. I've been looking at REO's thinking there are deals out there. After making charts of the the sold REO's they only go 5-10% less from their outrageous prices to begin with. Some sell for full price. These homes never go over 90 days (hoping I can hit below the belt after 3 months). The 70%-80% rule of thumb, NO CAN DO!
After reading some of the posts, I'm so jealous. You guys from the smaller cities are making a killing on your Flips. I know I was only looking at the MLS (got a license at least!). I was thinking of looking somewhere else. Any good suggestions where to?
Thanks for your tips and Help!!!
“Move closer to the food, sir” Mike O’Meara (of “The Don and Mike Show”) – Radio God
Keith
What do you mean by ‘move closer’. Can you be specific? Mailings, drive-around, knocking on doors… Which one really works. Thanks
Move out of California to a state where things are saner…
You’ve got bozos that will pay too much for too little because they’ve watched 3 episodes of “Property Ladder”…
Keith
You're right about that. I wish I could pack my bags and leave. Kids, schools, contacts, business etc., etc., etc. Correct me if I'm wrong, I think we could not blame it entirely to the 'bozos'. Some of these houses are sold to the leftover buyers of the first half of the decade who kept on speculating that the prices will turn 180. Now they buy and rehab it themselves because they have no more choice.
I thought if LA fixers are high then Sparkling homes should also be high. But they are not. .....still, I really wish I could leave. I could be living in Mansion for $450k in the other areas before I can even start making money with Flips!
What a BUMMER!!!
San Diego is much the same. The deals are few and far between, but there are some.
People are still paying too much for too little here. Looked at a probate yesterday listed at $297,000. ARV was about $465,000 (@ 70% $329,000). Court said that they had an offer for $285,00, so would not consider anything under that. Property is zoned for multi-family. The house is AWFUL. No, front door, just the security door. Smelled like mold even though it had no front door and had plenty of air. Chunk of the plaster had fallen off the lathing of the ceiling. So, it had obvious roof problems. The bathroom (which I could see from the 2 feet that I stepped into the building) looked like sh*t had been smeared over every surface. This house was either a bulldoze or take it down to the studs and replace what is rotted scenario. I couldn’t believe that someone would be willing to pay $285,000 for what that house needed. At $225,000 I might have thought about it.
That said, I’ve noticed that the REOs have started coming down.
As for moving from California…there’s no place like it. I love living here.
Good thinking BobbiOh. California all the way… I guess the law of gravity holds true.
‘What goes up must come down’ Our economy is strong enough to sustain this Sub-prime onslaught. After coming down for so much, where will it go? I GUESS UP!
Remember 9/11? People were emotional about it and flags were flying all over the streets and houses. 2 years later, gone. I guess housing market is not the only cyclical but also people’s brains. Just because “Property Ladder” and “Flip this House” showed hundreds of thousands of profit from 2005-2006 shows (they don’t include back to back closing costs, carry costs, sales commissions, hehehehe!), everybody wants to be the next Donald Trump. Wait until some of these people lose their shirts.
My thought;
2005 the market was still up.
2006 market starts cooling down
2007 Sub-prime meltdown (20% of the buyers gone)
2008 ??? New boss will be in the White House
2009 ??? Bottom ???
2010 California come back!!!
Any ideas from gurus! The been there done that minds. What are we gonna do for now?
California baby!
If you get a chance, check out Bruce Norris. He does a great lecture on real estate cycles. He shows the pattern of the last two crashes and has some great insight.
He does only California, so the topics are relevant. He’ll be doing a talk at the San Diego club in April. www.thenorrisgroup.com
If I never make a dime investing in real estate, it still won’t influence me to move from Southern California. I don’t equate money with happiness. I grew up in Connecticut and Masschusetts. I went to college in Miami. I lived in Indianapolis for 8 excrutiating months. I love being where I’m at.
I’m married to a man I love, live a mile from the beach, enjoy my job, the people I work with and the people I work for. We have two goober-ish dogs, have nice cars, live an hour and half away from skiing. I’ve survived cancer, get to drive with the top down on my car and get to sit on the beach for my lunch hour.
The money from REI would give me some more freedoms, but it doesn’t have the power to dictate whether I’m happy with my life or not. I guess my point is, if the only reason to contemplate moving from someplace that makes you happy is doing REI, it may not be the right reason.
Moving is not even part of my vocabulary. When I was a beginner in the mid 90's I bought houses and rental properties because I thought ownership makes me look big. I did not realize that was the bottom of the last cycle. I kept all of it until now because it is my livelihood.
Flipping is just to generate instant cash. The last one I had was in summer '06. I checked the MLS again after close of escrow suddenly the market was different. The low ends were rising crazy and high ends were falling. There goes the profit!
I'm also familiar with the Norris Group theory. It's the RE cycle once again. Honestly I liked it this way to keep RE inflation in check.
Although I don't like to kick back and wait, do you know if marketing methods like mailers, signs, ads work? For the last 12 years I was just doing it with the MLS. I was doing good though in my behalf until now.
Thanks for your encouraging insights.
The two that are generating leads for me right now are:
Driving my target neighborhoods and writing letters to the owners of fixer houses and calling on fixer houses that have a “For Rent” sign in the front yard. I’m getting a lot of people that thought that they couldn’t sell their house because of the condition.
I also have a wholesaler that let’s me know whenever he has something good.
I can do drive around and mailings that's not a big deal. Where do you find a wholesaler? I e-mailed one last night from craigslist. I don't know if he is for real. Any sites I can go to look for one?
You can find wholesalers at your local REI club. Most “wholesalers” on sites like Craigslist and others are actually just the middleman. Trying to get a rookie to bite on the property. I live in San Jose, and feel your pain. I looked at a fixer where the ARV was about $650,000, the guy wouldn’t budge below $600,000. And guess what, he got the $600,000 in about 7 days. I think most of the people buying the listed fixers now are just owner ocuupants looking for sweat equity.
I agree money can’t buy happiness like others have posted… But either can working a job you can’t stand. Not that you fall into that category. I think the relocation thing is just up to you and what you want to gain out of it. I am not originally from Cali (Iowa is where I reign from), so could not imagine settling down here. Although, if my entire family were here and my roots were here, I would consider it. Where I’m from, $300,000 will buy the nicest house in the nicest area.
Fixers there are truly fixers, can be bought for $30,000. I plan on moving back and filling my portfolio full of those babies… Then when I retire from the U.S. Coast Guard, I will have some decent cashflow to supplement my government retirement check… I’ll be 41, fully retired, full medical benies for the fam, and a decent investment portfolio… I’m goin fishin…
I found my wholesale guy through the local real estate club.
OK where do I find my local REI Club? I hope this is not a dumb question.
Thanks guys for your help!!!
Excuse the above question. I found my Local REI Club. Where? …Google.
Thanks again