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Selling several homes a week is some wild fairy tale, at least in today's market !! How many are you planning on buying?
I'm not buying ANYTHING, Big ~ just curious how much real $$ flippers are actually making. The one poster said she personally knew of flippers making profit.
IMHO buying RE in SWFL for profit nowadays is only for those with lots of money.
Do you have any idea, SoFLGal, if the $10k - 20k is before RE fees & capital gains? If not, money in pocket after sale could be 23% less. Of course, flipping & selling several a week could work out, even after paying materials, labor, fees, etc.
I believe it's before capital gains. Interesting enough many of the "flippers" are Realtors or Realtors paired up with a financial backer. Not in my group but there are several other groups.
Here are a few articles about some who are doing well in my area. Now, I can tell you that these profit figures are exaggerated. They don't take into account many expenses. Leonard and Twigg are both local Realtors and both are pulling in pretty decent sums of money. They buy all cash and have no inspection on the properties they're picking up, as my various groups do. It's not for the faint of heart.
Twigg currently has 14 properties on the market at an average list price of $195k and 45 days on market. He has sold 14 homes in the last 6 months with an average selling price of $195k and 95 days on market.
Leonard has 40 active properties with an average list price of $130k. He has 9 pending properties. And has sold 35 properties in the last 6 months with an average sales price of $127k and 95 days on the market.
So, yes. Some of the investors are "flipping" upwards of 6+ homes a month. There's a whole slew of them doing this and this is just a sample of what I'm talking about.
Jeffrey Leonard has spent nearly $10 million to acquire more than 150 houses since February 2008 | Real Estate > Real Estate Agents from AllBusiness.com (http://www.allbusiness.com/real-estate/commercial-residential-property-property/14601056-1.html - broken link)
You can make very little on each deal if you chose badly or have unexpected issues arise or you can make $100k-$150k on a deal. I would say the most typical amount is $20k or so. Some groups also chose to "bring on" other investors. Just depends on the group and the person looking.
Again some people are making a sizable amount of money "rehabbing" property. Most of it is knowing where to look, what to buy and having the means to do so.
Again some people are making a sizable amount of money "rehabbing" property. Most of it is knowing where to look, what to buy and having the means to do so.
You hit the nail on the head, as the expression goes.
By the way, I assume the selling prices you mentioned are in areas of Sarasota, yes? The reason I'm asking is because the median sales price in North Port last month was $83,000. Guess I should just read the article.
Here's a little bit of trivia. According to the Yale Book of Quotations, The Van Nuys (Calif.) News said the three most important things about real estate were location, location, location in its issue of June 10, 1956.
In Canada you have to hold a property a year for a flip to be a capital gain instead of regular business income. Is it the same in US?
I try not to get to far into the tax ramifications on the properties but I believe that is the way it works here. I always tell my groups to talk to their accountant when those discussions come up.
There are however lender restrictions, some lenders have restrictions on the amount of time you must hold the property for. The time period is often 90 days. Some have restrictions on the profit margin you can make. And some lenders don't have any restrictions. All properties must appraise out if you are using a lender (this is for the new buyer). If the offer is cash then there are no restrictions.
Quote:
Originally Posted by justNancy
You hit the nail on the head, as the expression goes.
By the way, I assume the selling prices you mentioned are in areas of Sarasota, yes? The reason I'm asking is because the median sales price in North Port last month was $83,000. Guess I should just read the article.
Here's a little bit of trivia. According to the Yale Book of Quotations, The Van Nuys (Calif.) News said the three most important things about real estate were location, location, location in its issue of June 10, 1956.
Nice article Nancy and that saying still holds true today.
I believe Leonard operates mostly in Charlotte county. Twigg is mostly in Manatee county. There are a few who operate in North Port. Their initial purchase price would have to be much lower than the $83k to make a profit, unless of course it had a pool or some acreage.
I represent some of the North Port crowd of investors, as well as other areas.
Their initial purchase price would have to be much lower than the $83k to make a profit, unless of course it had a pool or some acreage.
Okay, speaking of pools, I saw an adorable 2/2/1 home in PC off of Ackerman on a quiet street. It's around 950 s.f. and was purchased in 2010 (assume it's a flip) for only $51,000. It's back on the market a few months later for $89,900. I checked the county records and the roof was installed in 2008, the new hot water heater was also installed 2 years ago. So the seller didn't add these improvements. There are new windows and kitchen cabinets (not real wood) but the counters aren't new. It's very cute, but also small. The biggest drawback is closet space and the size of the master. However, it has a very nice pool and it's enclosed. There's also a nice fence around the entire yard. In any case, the house is listed for 76% more than it sold for months ago.
So here's my question. What does the tax assessment mean? I keep seeing listing prices that far exceed the just value shown in the county record. Also, the 2010 preliminary values are considerably less than 2009. I realize preliminary values have yet to be certified, but why is there such a gap? A nice 1584 s.f. home on a saltwater canal listed for $179,000 has a just value of $122,000 for 2009 and $88,000 for 2010. The house has been remodeled with granite counter tops and has top of the line appliances, but it's puzzling to me why the tax value is estimated to be 1/2 of the listing price.
I probably mentioned this before on City-Data, but I guess I can't seem to find an answer that makes sense to me. Maybe you can offer an explanation that will satisfy my "enquiring mind."
Last edited by justNancy; 10-03-2010 at 06:13 PM..
I just want to add that the Herald-Tribune had an investigative report about the estimated $10 billion in "Florida flipping fraud" (talk about alliteration. lol)
Although much of this happened during the housing boom, it's mind boggling to me that Florida had no law against fraudulent mortgages until 2007, according to this 8 page article.
"The deals - many of them inflated sales among friends, family and business associates - drove up property values and tax bills during the boom, federal bank bailouts and failures after the boom, and fueled the foreclosure wave that has gutted property values."
[URL="http://www.heraldtribune.com/article/20090726/ARTICLE/907261020"]How to prevent flipping fraud | HeraldTribune.com[/URL]
"In 2007, Florida lawmakers specifically made mortgage fraud a crime for the first time in the state."
Last edited by justNancy; 10-03-2010 at 06:26 PM..
Reason: fix typo
It seems rather obvious that flipping property nowadays should only be left to big set ups, who can absorb possible losses and can afford to pay 15% capital gains on a $10K profit. Last I checked with my attorney, capital gains is paid until you have lived in that home for 2 years, as your primary residence. So, buying a house and holding for a month or two is out of the question to avoid paying those capital gains.
Someone who is out of work, down on their luck or looking to supplement income should look elsewhere.
I just want to add that the Herald-Tribune had an investigative report about the estimated $10 billion in "Florida flipping fraud" (talk about alliteration. lol)
Although much of this happened during the housing boom, it's mind boggling to me that Florida had no law against fraudulent mortgages until 2007, according to this 8 page article.
"The deals - many of them inflated sales among friends, family and business associates - drove up property values and tax bills during the boom, federal bank bailouts and failures after the boom, and fueled the foreclosure wave that has gutted property values."
"In 2007, Florida lawmakers specifically made mortgage fraud a crime for the first time in the state."
Yeah that was some of the cause of the housing situation we're in now. The banks are pretty stringent on their rules now.
I don't have an issue with what my groups are doing. They buy the properties cash, employ local tradesmen to fix the homes up and resell them for a profit. The objective of most businesses is to make a profit. This is nothing different. To me they're doing a service to the community making more jobs, getting the foreclosures off the market and turned around much quicker and providing a quality product for the new home buyer. If someone wants a home that's move in ready then they can buy from my group. If they want to do the work themselves then they have the option to do the work themselves.
Ya know I've called both counties and questioned that as well and can't seem to get a straight answer. I noticed that as well in Charlotte county. The assessed value seems to be running way under what the market value is coming out. This is for the 2010 year. I really don't know what their thinking is on that. First off the county assessment won't know that it has granite counters because they don't go inside.
This is basically how it works when we are assessing home (so you know the general criteria). We start with a distance of one mile from the house (we go out more in distance if there are no comparable properties). We would pull up all homes that are five year older and five year newer then the subject property. Then we take the square footage and we subtract 20% from the square footage and add 20% to the square footage. So, for you example of 950 sq ft it would look like this, 760 sq ft-1140 sq ft. Then we look at circumstances. If the home is bank owned then we try to pull up other bank owned homes. If it's owner occupied sale then we look for those.Then I look at the three most similar active and sold properties. If you want to know the true value of the home have the Realtor you're working with pull these stats for you. I don't pay much attention to the rest of the noise.
Quote:
Originally Posted by justNancy
Okay, speaking of pools, I saw an adorable 2/2/1 home in PC off of Ackerman on a quiet street. It's around 950 s.f. and was purchased in 2010 (assume it's a flip) for only $51,000. It's back on the market a few months later for $89,900. I checked the county records and the roof was installed in 2008, the new hot water heater was also installed 2 years ago. So the seller didn't add these improvements. There are new windows and kitchen cabinets (not real wood) but the counters aren't new. It's very cute, but also small. The biggest drawback is closet space and the size of the master. However, it has a very nice pool and it's enclosed. There's also a nice fence around the entire yard. In any case, the house is listed for 76% more than it sold for months ago.
So here's my question. What does the tax assessment mean? I keep seeing listing prices that far exceed the just value shown in the county record. Also, the 2010 preliminary values are considerably less than 2009. I realize preliminary values have yet to be certified, but why is there such a gap? A nice 1584 s.f. home on a saltwater canal listed for $179,000 has a just value of $122,000 for 2009 and $88,000 for 2010. The house has been remodeled with granite counter tops and has top of the line appliances, but it's puzzling to me why the tax value is estimated to be 1/2 of the listing price.
I probably mentioned this before on City-Data, but I guess I can't seem to find an answer that makes sense to me. Maybe you can offer an explanation that will satisfy my "enquiring mind."
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