Home Flipping 08

From what I have been reading from you guys it seems like this is a bad market to flip properties in. I personally was looking for something that I could live in while I renovate and then sell within a year. What are your thoughts about this? I know you can still flip if its a steal but sometimes to steal them you need to have lots of cash on hand.

I have been stealing all I can handle right now. You can still flip in this market if you steal them.

As long as you buy right and are realistic about your sales price, you can still flip. That being said, stay in areas where it is primarily homeowners not renters.

You’ve got the right idea. Just live in it. A year may be all you need to wait. If it takes longer, and you are done with renovations, you can always rent it out until you can flip for the price that will make you happy.

Another suggestion is to "econo"rehab - just enough to make it rentable and go back and upgrade later when you know the market is better for the flip.

I agree it is all about price…

I know price is a HUGE factor in this market. Budget would be strict. My thoughts are to find something that I can afford to live in after renovations in case it doesnt sell. Renting would be another great idea, I am going to run the #'s on that as well.

You need to decide your exit strategy up front. The exit strategy will determine what kind of rehab you’re going to do. I absolutely would not do the same rehab on a rental that I would do on a property that is being sold to a homeowner. Tenants are very hard on property and can easily do enough damage that you’ll need to do another rehab before you can sell to a homeowner.

I also think it is EXTREMELY foolish to think that this market will recover in a year. The market is still on the way down. If the democrats (socialists) get in office next year and they are able to implement even a small percentage of their socialist agenda, the economy is going to collapse (yes, I mean COLLAPSE). It could easily be MANY years before the housing market recovers. Even without increasing big government under the socialists, we already are in deep trouble. The Bush mortgage bailouts (boooo!) are not preventing a crisis, they are merely postponing it.

In the relatively near future, our entire federal budget won’t even cover the interest on the national debt. That doesn’t mean that the government will default. However, what they will do is start printing money (that is based on nothing) faster and faster and that money will cause inflation to explode. Instead of $50K buying a rental in Ohio, we’ll be lucky if it will buy a loaf of bread. This has happened over and over throughtout history. Look it up.

At any rate, I would not buy a property counting on the market improving any time soom. I would only buy at a HUGE discount and with a CLEAR exit in mind. Cash is king. If you’re going to buy equity, it better be BIG EQUITY!

Good Luck,


If you live in it for a year, there are tax advantages because it becomes long term capital gains instead or ordinary income. If you live in it for 2 years, the fist $250,000-$500,000 of capital gains is tax free.

Something to thnk about it if you plan on living there for a full year, anyway.

Mike here are some fun facts about money… Take a look at the first bills printed…

What denominations of bills were first printed? The first paper notes were printed in denominations of 1 cent, 5 cents, 25 cents, and 50 cents.

How long does money last? That depends on the denomination of the note. A $1 bill lasts 18 months; $5 bill, two years; $10 bill, three years; $20 bill, four years; and $50 and $100 bills, nine years. Bills that get worn out from everyday use are taken out of circulation and replaced.

How much money is printed each day? The Bureau of Engraving and Printing produces 38 million notes a day with a face value of approximately $541 million. That doesn’t mean there is $541 million more money circulating today than there was yesterday, though, because 95% of the notes printed each year are used to replace notes already in circulation.

Michael Quarles

Like someone before me said, you should really put a lot of thought on your exit strategy.

I think it may be a good idea to buy something and rehab while you live in it, and flip it within a year. If you get a good enough deal with equity and/or you have cash available, you can use that to your advantage when doing your marketing to sell in the end.

A lot depends on what market you’re in.

BTW I am a flipper… I wouldnt live in any of the property I buy UNLESS I planned on living there more than 2 years out of 5 and planned on making less than 500k profit… Can you say TAX free

the most important factor is location…i wouldnt try in flip in san diego right now but if you move to say, san antonio, you are safe. remember, all real estate is local and several texas cities are bucking the nationwide trend as we speak and safe for flipping. try and stay in appreciating markets if you are new to this, it will help to ensure your success.

If you buy correctly then any market can be a flippers dream… Everytime I ask people if they would buy a house at 50 cents on the dollar I get a bunch of raised hands… So the key is to buy at less than what a buyer would pay…

I guess my question is “who are you flipping to?”. With lenders capping how much a house can be sold for in the short term, and title seasoning getting tighter along with no subprime how can you be flipping?

What can a lender say? If the appraisal is legitimate and air tight and shows that the house is worth $150k and the buyer has decent credit, what do they care if you bought it for $100k 60-90 days ago…

Plus it helps if you leave a little equity for the next guy, which you can if you buy it right. It appraises for $150k but purchase price is only $140k looks better to the bank.

What the lender can sat is, “Sorry we don’t finance homes without title seasoning of at least 1 year”. This can happen even if there is a legitimate appraisal. The only reason they care is because either that is their internal policy, or the policy of their secondary market.

The only thing you can do is look for a more flexible lender.


In the RARE occasion that I have a lender who needs a seasoning letter I use one of three that I have… Works every time…


Can you send me a copy of those?? I’m just starting to here this from a few appraisers.


RE: Property
Bakersfield CA 93308


To whom it may concern

It has come to my attention that a letter of explanation explaining the purchase and resale as well as the difference between the sellers purchase price and the resale price of the aforementioned property has been requested. The home was purchased from a distressed couple who did not maintain the main home and the second unit was so bad as its only use was as a storage facility…
The sellers were in jeopardy of loosing their equity interest under a lease with option to purchase agreement, which included the right to sell. As well as their rent credits and considerable option deposit as they did not have the resources sufficient to exercise their rights to purchase… The following is an outline of repairs required to sell the home.

Main Residence

  1. Completely Paint Interior
  2. Replace All electrical fixtures and outlets
  3. Replace Carpet
  4. Replace linoleum
  5. Replace door and millwork
  6. Re-sheetrock interior walls
  7. Replace plumbing fixtures
  8. Foundation

Second Residence

  1. Completely Paint Interior
  2. Replace All electrical fixtures and outlets
  3. Replace Carpet
  4. Replace linoleum
  5. Replace all windows
  6. Replace tile in bathroom
  7. Replace door and millwork
  8. Re-sheetrock interior walls
  9. Repair exterior trim
  10. Replace plumbing fixtures

Investor’s Investment for the reconstruction is approaching 30,000.00

Besides the repairs needed, the seller, Investor., also paid all cost to purchase the property from the sellers. The following is an outline of costs required to purchase and resale the home.

  1. Commissions to purchase
  2. All escrow and title fees
  3. All transfer tax fees
  4. Insurance
  5. Holding costs
  6. Resale commissions
  7. Resale Title and escrow
  8. Transfer tax

As you can see a considerable amount of time and expense has been contributed to this project in order to bring the home up to the standards of the marketplace. Thank you for your time and I look forward to a speedy resolution in this matter…


Transaction Coordinator

I just closed a flip in early Jan 08 that was sold to a first time home buyer. I was on title only about 5months. As far as I know it was never an issue.

However, I will qualifiy that and say we are talking about a $100k hourse and my buyer was putting 20% down.