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Speaking of flipping (which is not what I'm planning to do) to me it doesn't make sense to buy a house and improve it to flip while home values are still dropping and a flood of inventory is expected to hit the market from rising foreclosures. 2010 might be worse than 2009.
I suppose if someone is very handy and can do all of his/her own work, it might be a risk worth taking, but often the cost of your improvement doesn't increase the property value very much. Also, while your money is sitting in a house that isn't selling, it could be making money in other investments. To me, if makes more sense to buy a home, fix it up quickly, and rent it to get an immediate return on your investment. Of course, in this market, finding renters isn't that easy any more. It's not 2004 any more.
BTW, if I get out of bed and make it to the bathroom without pulling a muscle, it's a major accomplishment. So, no, I can't fix up a house without hiring people.
Well, since we're on the subject....does anyone know the cost of adding a screened lanai to a house in SWFL? I've seen estimates of $25 to $90 a square foot. I saw a very nice home, but it didn't have a lanai. Also, if the back of the house faces a neighbor, any suggestions for privacy? Trees? Shrubs? Someone told me you have to plant privacy shrubs at least 10 feet from the property line.
Nancy, I pretty much asked the same question to my friends in Cape Coral (that I referred to in earlier post). They aren't worried about property values going down because they look for good deals and do very minimal up-grades to the houses they buy. Basically they seem to by older homes and freshen them up a little. They're both are handy and seem to do all of the work themselves. Like I said earlier, this is their full-time occupation. They don't have "jobs" to go to. And their approach seems to be a success
I know someone else in the Cape that bought an un-finished shell with a partner. I guess he bought too soon and didn't have enough capital to bring in subcontractors to get things done quickly. The home's value continued to drop and instead of selling at a profit like he expected to do, he ending up reluctantly moving into it himself. This didn't go as planned and wasn't a success as far as he's concerned.
Re: privacy,
Our biggest complaint about our old pool home in the Cape was the neighbor directly behind us in his pool home. I too, planted a privacy screen that filled in quickly, but this did nothing to keep out sound. The neighbor had outdoor speakers and liked to entertain a lot. (Quite often on weeknights when I had to get up early the next morning.)
I'm not talking about loud parties, but just a few people over for drinks can get a little too loud when the houses are close together.
Last edited by tommy-105; 01-20-2010 at 05:07 AM..
I know a couple in Cape Coral making a living from flipping.
They just picked up a short sale for $80,000 and they're turning around and listing it for $130,000. They had to get the lawn sprinklers working again and they plan on painting one of the bedrooms a more neutral color than it presently is. That's the extent of the work they plan on doing.
They didn't care about all the issues involved with short sales. Time wasn't a concern. They made the offer while they were working on their current flip.
How do you feel about that?
Do you see good, or bad in that?
Every other business operates exactly the same way, and on the same principles. Many people lost a fortunes investing and building, developing, building, renovating, improving and selling real estate in the past several years. The FEDs set up the policies, and created rules that allowed people time and again to buy without having the money, and availability to pay the homes off, not the people that were in the building sector who tried to do what everyone else does, or most home owners that funded thier properties properly, and took out equity investing in their homes because the statistics were skewed and indicated they could do so safely, when infact the whole market was underwater, because of the bad policies. When provided the information that were backed by government supported policies, rules and regulations, lending policies of major banks and quazi government agencies - how can the average investor figure that out?!?!? Again, it hurt a lot of people, elderly on retirement income, and people trying to buy a home for the first time - but faced with ever increasing home prices (and real concern they may never be able to afford one), and others who were developing or flipping. Most don't get to have the benefit of ones understanding of what really happened here - they get thrown into one pot, and get chastised for trying to work things out and make a profit - because some people have personally taken hits - and are angry.
People who continue to work hard, at risk, to buy and improve a house, office, development, car, seafood, table lamp, television, cell phone, flooring products, or anything you buy everyday at Walmart, Target, Best Buy, Publix, the auto dealer, gas station, fishing tackle store, bar, or the material you recieve at church, should be able to make a profit. How much profit is based on the simple rules of supply and demand - provided they are not taking advantage during a hurricane and gouging for gas. That is capitalism. The profits provide revenues in the form of taxes that support our firemen, police, schools, roads, supplement and support medical care, and many other public improvements and services, and without them none of us could function the way we do now.
How do you feel about that?
Do you see good, or bad in that?
I say good for them, BH. Some people want to buy something that's turn-key.
My only point in this example, is that I think locals have a considerable edge over buyers from out of state. This couple has a close relationship with their real estate agent and they know their town well. They say they didn't have to do anything, the agent found the deal and did all the legwork. All they had to do was act fast on it.
When I think of the out of state buyers, I can't help but think of someone showing up at a weekend garage sale on a Sunday afternoon. The deals are already gone.
Interestingly enough this couple is also very involved in going to garage sales. They always head out early.
I don't think anyone is opposed to people buying homes, fixing them up, and selling them for a profit. I think most complaints are when people who learned their properties lost value began to cry foul. Some people think all the bad mortgages belong to homeowners who lived beyond their means. However, there were a lot of speculators who decided to get a touch of that spirit you mentioned, and they were left with properties they can't sell or rent.
Excellent point! But, there are people that whine continually about people that are continuing to buy, renovate, and flip, or rent - with the objective of making a profit. The speculators lost in the deal just like everyone else, however many were smart enough to mitigate their risk by setting up shelter corporations. I understand people being angry at those that they feel have "contributed" to the current mortgage crisis, however, if the policies that allowed the end buyers to purchase homes they could not afford, and ultimately were doomed to failure - and temporarily provided them faults hope(s) wasn't created, and pushed by the FEDS, they could not have purchased the homes, demand for the homes would not have been inflated to such unsustainable / stupid / foolish levels, and the entire economy would still be strong. The market would not have peaked so high, but we would not be seeing the devastation and huge deflation of home values that we are seeing now, that has been (and maybe still will be for some time) dragging the economy down, and as a result causing such huge unemployment.
Those policies have been corrected - banks are not lending (to anyone) unless you really demonstrate to them that they will be paid back (so they can profit from the loans). The FEDS still have not fully corrected the policies and systems that will set this straight, but they are doing so in a way to soften the blow. They and the banks are holding back, but releasing foreclosures at a rate that the homes that are to come to market do so at a pace that attempt to sustain current home pricing levels - with some fluctuation of course. One example is the tax credit for first time home buyers.
Buyers and flippers are still at risk, because if the market is flooded with foreclosures - then the prices will plummet and they will be stuck. But most are doing so with cash rather than through loans and additional debt service.
I know you've been looking for a while. I hope that you are able to find something soon. Prices are bouncing along the bottom of the market right now. I don't expect there will be any huge drops like there has been over the past couple of years. I know that you have looked, and have gotten a lot of good advice on the places you've checked out. It is good to check with numerous sources - as you do. Anyway, I hope you find a nice place.
I know you've been looking for a while. I hope that you are able to find something soon. Prices are bouncing along the bottom of the market right now. I don't expect there will be any huge drops like there has been over the past couple of years. I know that you have looked, and have gotten a lot of good advice on the places you've checked out. It is good to check with numerous sources - as you do. Anyway, I hope you find a nice place.
I've seen a lot of reports suggesting otherwise. I'm not going to post links right now. I'm sure Nancy knows this, but I think the key thing is to make sure that your going to like the area that you buy in. If prices do keep falling, you're going to be stuck with it unless you're willing to take a loss. Kind of like the "you break it , you bought it" policy in a china shop. There's no turning back.
I say good for them, BH. Some people want to buy something that's turn-key.
My only point in this example, is that I think locals have a considerable edge over buyers from out of state. This couple has a close relationship with their real estate agent and they know their town well. They say they didn't have to do anything, the agent found the deal and did all the legwork. All they had to do was act fast on it.
When I think of the out of state buyers, I can't help but think of someone showing up at a weekend garage sale on a Sunday afternoon. The deals are already gone.
Interestingly enough this couple is also very involved in going to garage sales. They always head out early.
Kinda funny but very true. Loved the garage sale reference. The early bird gets the worm
As Tommy pointed out, flipping wasn't their sole source of income, although they profit quite well from it. Maybe it's a hobby too. Sounds as if they have some money to live on, even if they don't quickly sell the homes they renovate. That's very different from many speculators/investors who buy land/homes and hope to profit from them and have loans to pay back.
Since it's his private business, I'll keep this post very general. In Dec I rented a room from someone who buys/sells cars. One of the cars in his garage was a fancy hot rod he had listed for $35K. I think he put about $30K into it. I don't know how long he was trying to sell it, but he eventually bought a smaller engine so he could lower the price and saved the higher HP engine for a car he'll purchase in the future. I'm not judging this person, since he could have been selling several cars a month before the economy tanked, but I only know that all his bills were past due and FPL sent a final shut off notice. I'm mentioning this, because it's no different from buying a home and thinking you'll make a big profit when you fix it up & resell it, except that you still need to pay tax and maintain the property when it's a house.
Anyway, that situation was uncomfortable for many personal reasons, so I rented another nice room. The owner is single and bought a 3/3 pool home with a den in 2005. Instead of selling her other home, she rented it and bought a 3rd rental property. I know I paid too much for rent, but it's a very pretty home. I'm sure she rented this room to me because she's broke and might lose the house, since she'd mentioned it several times. This isn't the political board, so I won't get into my rant about bailing out people who made foolish choices while renters get nothing back for their frugality.
However, I've had my share of people who got greedy and decided "I work hard, I deserve more" and then learned that borrowing beyond your means shows lack of good judgment. Then these same people come home from a hard day's work to face more messages from creditors and take it out on me with their sarcastic remarks. Without whining, I'll just say I'm in a lot of pain and walking is often difficult. Yet a day doesn't go buy where some kind of sarcastic remark is made like "you don't understand, because you're not even working." or how about "some of us have to get up to go to work to buy food." Well, if I felt like arguing I'd just say "Maybe it's because when I qualified for an option ARM or an interest-only loan, I didn't go out and buy the biggest house I could find, put nothing down and spend thousands on new furniture. BTW, I also sold furniture for years and many people applied for financing. I lived with a mattress on the floor and a TV for a year while I saved. When I needed a new TV, I bought a 32" tube style, not one of those fancy LCD TVs for $2,000. My credit score is well over 700, I have no debt and I can buy a very nice house for cash because, to quote an old Smith Barney commercial, "I earned it."
I am getting so sick of people crying how deep in debt they are after they CHOSE to stretch themselves so thin that they're living in the dark because turning on a lamp is too expensive. I've made some very stupid decisions in my life and I blame most of them on my own ignorance.
BTW, the above post was not referring to people who suddenly lost their jobs or got sick and were burdened with high medical bills. I've said that many times on other threads, but I want to make myself clear. There are also a lot of people who learned they had CDW when trying to sell, which must be a terrible ordeal. Yes, I also know some people found jobs or were transferred to other states and can't sell at today's prices. So there are many reasons people get into trouble. I'm only talking about the risk takers, since the subject was mentioned.
This isn't anything new. When I had a life, I'd often have a drink with friends who never seemed to have any money. One in particular had so many clothes, half of the items in her closet still had tags on them and she had enough shoes to put Imelda Marcos to shame. But when the tab came it was always "I'm so broke. Can you lend me $10 bucks?"
Geesh! How did we get from "do homeowners get vindictive" to this?
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