[fishordie]

Hi Tony,

I realized I really did not answer your question. Let me try again.

With the above said I will answer your question with the following thought. I have always understood the profit in short term real estate gains is not from the price you get when you sell but the price you acquire the property for. In these times there is no question I am getting at least a 20% better price paying all cash than those who must obtain loans for Shorts and REO's. That is a huge savings when you are doing flippers. For those who understand the process and are knowledgeable about the real pricing for any given area along with the ability to do good work and improvements cheaply the ability to sell the property quickly at a reasonable or even slightly below market price enables the hardworking individual to continue to purchase and resell more properties thus making money quickly and on an ongoing basis. As I noted, those trying for a home run or in essence trying to make their profit with an inflated sales price on their flipper will be holding on too long and not turning properties over fast enough. They also run the risk of being behind a falling market. My strategy applies in all markets, raising or falling, as the key is to turn a flipper from buy to sell in under two months and preferably in less than one month as many of my properties sold while I was doing the repairs. By purchasing at the right price well below market and selling the improved home slightly below the market for non REO or short properties, the smart investor has a steady income and a steady surplus of working properties.

What is really interesting about this strategy is regardless of market conditions going up or down the savvy investor is taking advantage of both situations in his/her quick flip strategy. Real estate markets, unlike the stock markets do not see daily drops rather they see slow and steady changes up or down. Thus should you buy and re sell in a downward moving market not only does your purchase price of at least 20% below market buffer the small drop occurring in the two month period along with saving monies on doing the improvements yourself but your next purchase will be at a lower price as well. In an up market you are continuing to enjoy the upward trend with each new house you purchase and resell. Because you are not holding on trying for that grand slam you are income averaging during any and all market movements including a stable market.

The days of seeing markets go up 20 to 100% per year are over which is why I state the savvy investor is looking for the singles, doubles and triples rather than hoping for the home run. Paying cash is just too juicy and the rewards are too great to even consider leveraged purchases if the investor has the cash to pay up front and turn the property in just a couple of months. I hope that answers your question.

FOD

[fishordie]

As a note,

Large investor groups are doing what I have noted on massive scales. I have consulted with folks doing over 2000 of these at a time just in the last year. The principals in these funds have raised capitol buy selling shares in funds with a percentage of the profit going to the participants. Contrary to some beliefs these properties were purchased directly from the lenders under a bulk REO purchase using full cash offers at discounts of 40%. Knowing where these properties were located was of great benefit to those in the know as they would be fixed up and resold very, very quickly driving up property values in small pockets all over the country. Purchasing nearby or adjacent properties made some folks a ton of monies even in this market. However, some of those bulk purchasers who were not as diligent in their discoveries went under in these times. Most who lost monies were folks who were just participants in the purchasing fund rather than the principals themselves. For me I never invest monies in funds I do not have control over. Be very careful about the lure of these funds as they have large inherent risk for participants. Fascinating stuff but important to be aware of.

FOD

[007 license to sell]

This is important news for a seller and a buyer, as thought the foreclosures haven't been handled properly in fact lenders loan servicers have been found to have been forging and putting in false information and possibly illegally foreclosing on properties so JP Morgan the first bank to halt foreclosures after finding this out could be just the tip of the iceberg and other lenders may have to follow.

This could have a serious impact on the housing inventory and pricing giving way to false pricing and more artificially controlled inventory.

This is important as a potential buyer, it raises questions as to: is the price the buyer paying really the value and for the seller what is the real value of their home and will this put more buyers off with this kind of uncertainty. Some buyers won't care they want a home and plan on staying in it for the investor that buys to flip sometime down the road could affect their bottom line. On the other hand it could mean more people renting because of this helping the investor with rentals that aren't planning on flipping.

And will this make buyers who bought in the last two years are they now underwater in their mortgages and how much? Will the average buyer want to take that risk because if there is a unexpected job loss or unfortunate event happens forcing them to move and they find themselves upside down what then?
[SIZE=2]J.P. Morgan will halt foreclosures[/SIZE] (By Ariana Eunjung Cha)

[Coop01]

Originally Posted by fishordie

Thank you Tony.

......................
As I said, I am getting too old and too tired to do the work myself. Though I still am my own contractor and still have my connections I find I would much rather go fishing than deal with too many more real estate transactions which is why I do not mind sharing what I have learned..............

Finally got your screen name. FISH OR DIE

Very good stuff. A lot of people would create a seminar and sell the knowledge. But fishing is a lot more fun. If you need someone to bait your hook..... I'm available.

[fishordie]

Originally Posted by Coop01

Finally got your screen name. FISH OR DIE

Very good stuff. A lot of people would create a seminar and sell the knowledge. But fishing is a lot more fun. If you need someone to bait your hook..... I'm available.

Thank you Coop. Glad you got the fishing reference as this has always been my life's ambition. Fly fishing around the world and Long Range deep sea fishing keep me busy about half the year. I was fortunate in that I was able to retire at 54 and though I may be too tired to work on houses I am never too tired to fish...LOL.... I won't even touch the part about me being a master at baiting my hook...LOL

FOD

[fishordie]

One additional note for those with cash. On both the buy and sell side a Cash investor saves some monies under the escrow procedures since there is no documentation required by the escrow house regarding the obtaining or payoff of the loan. This can amount to several hundred or more on each end of the transaction which again goes against the bottom line for the investor. As an ongoing investor saving 1/2% to 1.5% of the sale price in not having to pay miscellaneous adds up over time. This applies to discounting brokers/agents commissions both at the buy and sell portions. Never believe for one second there are not a ton of agents out there will to work for less than the
standard fee or fee split arrangements of the past. There is just no need to pay 6% total commissions as a seller especially if you are listing your property at a more than reasonable price as the house, based on your lower than market price and the quality and proper improvements you have made yourself, make the sale of that house very, very easy on the agent. 4 - 4.5% as total commission on the sale side is not at all out of line for me as my agents love to sell my homes. When my selling agent double ends a deal I have seen them lower it to 3% in order to get that quick sale giving the new buyers a lower price by the 1 -2 percent difference. These are the kinds of selling agents you want to work with. A savvy agent or property manager who knows you will be selling or renting multiple properties on an ongoing basis at very reasonable prices will also income average with a strong seller or rental owner rather than looking for only full commissions. Every dime saved is another dime in the pocket of a smart investor. Just never be penny wise and dollar foolish.

FOD

[olecapt]

FOD provides a mixture of good information on such things as the realities of the timing and folklore on lots of it.

It is potentially a very lucrative way to acquire a home or an investment. It does however require time and may well fail at the end.

For instance there are actually few shorts outside the MLS. It is very close to impossiible with most lenders to short a home without some months of listing in the MLS. So advice to intercept before the MLS listing is quite impractical.

Of the 664 condos and townhouses sold below 100K last month 45 were outside the MLS. Of those 12 were listed short. Finding an agent who has access to any number of these 12 would not be a great investment of time.

There are further tactics to minimize cost while waiting out a short that FOD obviously does not know. Or, if he does, he is keeping his mouth closed.

It is always possible to find an agent who will cut commissions. They are the ones starving and the part time and those leaving the business. YOu may also find some PMs who really don't do buyer/seller RE who will take a low commission. You can also find listing only agents who will MLS your property for a flat fee. Or you can save it all and do it yourself. A knowledgable investor can do that or even get licensed...a small cost if you are really working at it.

Note however if you don't know pretty precisely what you are doing this sort of tactic can cost you a good bit of money. We regularly see a lot of sloppy pricing some bordering on the inexplicable. REOs underlisted by more than 100K for instance.

We have also seen a number of instances where unusually low short sale prices are countered by the bank to something close to market. Even one where they went way over market.

I see little if any savings for cash. The banks pay very little attention unless the property is troubled when they simply ban all funding but cash.

In general cash buyers completely outbid the people financing in the low end of the market. They simply make bids that are well above the FHA/VA appraisal and quite dominate the market. There are effectively no FHA/VA sales below 40 per sf. What non-investor sales occur down there are HUD or similar.

Higher in the market there are no indications of an sizable advantage to cash. As you get to 150K or so the FHA/VA buyers begin to dominate.

There do appear to be some very interesting situations where people are picking up trustee sales for extremely low prices...I think though this is insider stuff with bank connivance. You don't see that pattern on shorts however. Very few shorts are selling cheap enough to be good flips.

[dano]

I haven't seen any indication of how Sept. sales/prices are coming in. Ole can you update us?

[jfkIII]

It's probably along the same lines as the democrats looking at poll predictions for November's elections...not good.

[lisa99]

Just want to report that in my neighborhood (Seven Hills) a house sold in four days for the full asking price of $350k ($125/sq ft).

This isn't an anomaly. Houses in my sub-division of Seven Hills sell very quickly if they are in decent condition and are on a good lot.

So while the overall numbers for September may be expected to be down, there are pockets that are doing just fine.