Area Is Hot Again For Real Estate Flipping, Study Finds (Sarasota: bank owned, comparable sales)

[wondermint2]

Good or bad?

Area is hot again for real estate flipping, study finds | HeraldTribune.com

"Southwest Florida is one of the best real estate markets in the country for property flippers to make quick money with homes in demand and prices rising, according to a new study."

[calico777]

Might as well quote some word of caution too and look up the previous purchase time and price, not every flipper will do a good thorough job in repairing defects....and I assume no disclosure will be at hand either?

"Some economists believe flipping can be dangerous for a housing market because it often leads to — or causes — rapid price increases that can artificially inflate values beyond what is considered sustainable.

An overwhelming number of flips beginning in 2005 — many with fraudulent intent — helped fan the price run-ups that ultimately contributed to a historic decline in prices and record foreclosures.

Moore and others fear, too, that the rising popularity of flipping again could push Southwest Florida into another housing bubble."

[blueherons]

I find hard to believe.

I'm currently looking in the $150-$300 market and what is on the lower end it would take you a fortune to rehab. It seems to me that the in the price point betweeen 150-200 there isn't a tremendous amound of inventory.

If someone is buying a home for 116 then selling it for 150, they aren't making 34 on the house because they have to put some kind of money in the home to flip it.

Maybe one of our knowledgeable realtors will chime in.

[zmgriffith]

I'm with blueherons on this one.

I'm on zillow several times per day, and the asking prices on current inventory are much, much higher than the comparable sales on the same streets were over the last couple of years.

Many are priced at what historically would be "fair bordering on optimistic pricing" for the same house following extensive renovation.

I believe that flippers would also have to pay capital gains taxes on earnings not offset by rehab costs, further reducing profit spread.

I'm not seeing market inventory that is being sold following "flippage" or is priced in such a way to make any money with a flip.

That article is, in my humble opinion.... (wait for it) A FLIP FLOP!

[Obrero]

Plus to have another bubble you really need easy money - and I'm not seeing that again (yet).

[Rushmore]

Please don't mention Zillow here. That's just awful.

[bbronston]

I see flips occasionally but they are not particularly prevalent and they are almost always purchased as bank owned properties, fixed up pretty well (at least on the surface) and priced at the higher end of the market range for comparable properties. They are not the same flips we had in the mid 2000s. Those were essentially bought and sold (or built and sold) using only the rapidly escalating market values of the time to justify the investment. I think that is why so many people got into the flip thing--there was almost nothing to do but buy and sell.

[Sunshine Rules]

I know a number of the local investors that buy, rehab and resale homes in our area. In general, they buy up foreclosure or short sale properties that are considered fixer uppers. A lot of them need new roofs, AC units (the originals were stolen or taken by previous owners), appliances. Many of them have either had maintenance neglected or deliberate damage by owners or tenants. These homes are purchased mainly with cash as the homes could not qualify for financing. Most of the investors I know try to stick within the lower price ranges, not over $200k. They like neighborhoods such as South Gate, Gulf Gate, Lake Sarasota, Sarasota Springs, ie popular locations with good school districts.

Many of them do a nice job with the renovations, they have crews that they work with on a regular basis or do a lot of the work themselves. They make a living by fixing and flipping a number of homes per year. They take a beat up property, add value, then pass it along to a buyer who would not have been able to accomplish a large renovation for the same amount of money the investor could. This is not the same as what happened in the early 2000's when many flippers were closing on homes and literally putting them back on the market at substantially higher prices within days, without any renovations at all.

There are a few investors in our area that I cannot say fit in the nicely done renovations category I mentioned above. They make the kitchen look pretty, do some inexpensive cosmetic stuff, but ignore more important issues that would require licensed repairmen or worse, have their handymen do the work that should be done with permits and by appropriately licensed repairmen. They also buy under a variety of LLC names, I am not sure why it's necessary to have 10, 20 or more corporate names. Buying one of their flips is a gamble, you may come out ok or it may be the money pit from hell.

For the most part, I would have more concerns about the loosening of lending requirements and qualifications and the impact of that on the real estate market rather than the investors that buy, fix and resale. 100% financing is NOT the way to create a healthy real estate market!

[zmgriffith]

Originally Posted by Rushmore

Please don't mention Zillow here. That's just awful.

What's wrong with Zillow?

[Rushmore]

Originally Posted by zmgriffith

What's wrong with Zillow?

I know a fair number of people in all facets of real estate sales (from agents to appraisers), and every single one says that Zillow is not only hugely inaccurate, but also a little dangerous because people seem to trust the absurd numbers they post.

Just my two cents, given what I have been told by people who ought to know.