FLIP THAT HOUSE

[retailguy]

ty understands R's viewpoint, but ty has always favored using other people's capital...THE TRUMP WAY!!!

I agree, except there is a problem. Bretsky, afaik, is not Donald Trump.

Trump has hundreds of millions of business assets that could be liquidated if he lost money in a business deal. His personal assets and his personal residence are not likely "at risk" any longer. (If you recall, even Trump went bankrupt many years ago)

So, lets just say that Bretsky has investments that total the $90k that he wants to borrow. If he wants to risk those assets, I have no problem with that, because if the deal goes bad, he won't be living in an apartment. However, if the majority of the assets he has are either tied up in a 401k plan or in equity in his home, why risk that for $20k? The risk is just too great.

Hell, you can make half of that $20k or more in a year by delivering pizzas in the evening 4 days a week.

[retailguy]

This particular one might be comparable; six weeks ago it had an accepted offer that was 20% higher than our original offer. I also know I could make payments for a good year plus if I had to; not an expensive property. 2 story home that will get sold for between 85-90G by bank. I would pay on the lower portion of that; there is a chance I might not get it but if I do it will be at my price. Needs 8-10G of fixings and I'm confident it will sell in the 120's. In our area most homes are starting in the 130's currently and I'd price this one to sell.

All of the views on this are interesting; I do think Patler did this a while back

My biggest question to you is WHY did the house have an accepted offer but didn't close?

If there really was an accepted offer someone willingly walked away from earnest money. Why did they do that? There are many reasons for that, a few of which have nothing to do with the actual value of the home, but many that do have to do with the value of the home.

How many other properties in the neighborhood are for sale? How many by banks? What is the local economy like? Any pending factory closures? Any businesses moving out of town? Any new development on the fringes of town? Which way is the town growing?

All of these things are considerations.

How long will it take to do the work? Where does the money come from for materials? Can you do all the work?

What are the average days on the market for properties for sale in your area? What is the "average" selling price in the neighborhood? How does the home compare to the "average" home in the neighborhood? Bigger? Smaller? How about amenities? One bath or two? Two bedrooms or three? Single car garage or double?

Have you had the home inspected? Does it have clear title? Why did the previous owners lose it? Is it in the "right" school district? How much are the taxes? Any unpermitted additions?

B, I love real estate. It's a great way to make money if it's done right. If you are putting yourself in a position to "risk" the equity in your home if this deal goes bad, I can't support that. It's simply too much risk for me. There are other ways to make $20k in reasonable amounts of time that do not risk your personal assets.

I'd recommend that you find an old book that's probably out of print now, but very good. It's called The Millionaire Next Door and the authors are Thomas J. Stanley and William D. Danko.

You might surprise yourself at just how many people are investing with their own money. An interesting side tidbit - You know I used to do taxes for a living, right? Well, 90% of the schedule D's that I did were for people LOSING money. By my math, that makes that "typical". And that's not just in this bad economy either....

Be careful!

[Bretsky]

[quote="retailguy"]

This particular one might be comparable; six weeks ago it had an accepted offer that was 20% higher than our original offer. I also know I could make payments for a good year plus if I had to; not an expensive property. 2 story home that will get sold for between 85-90G by bank. I would pay on the lower portion of that; there is a chance I might not get it but if I do it will be at my price. Needs 8-10G of fixings and I'm confident it will sell in the 120's. In our area most homes are starting in the 130's currently and I'd price this one to sell.

All of the views on this are interesting; I do think Patler did this a while back

My biggest question to you is WHY did the house have an accepted offer but didn't close?

Financing was denied

If there really was an accepted offer someone willingly walked away from earnest money. Why did they do that?

Again, the loan was turned down as it was an unapprovable buyer

How many other properties in the neighborhood are for sale?

Approximately 125

What is the local economy like?

Stable, but on the week side

Any pending factory closures? Any businesses moving out of town?

No Any new development on the fringes of town?

How long will it take to do the work? Where does the money come from for materials? Can you do all the work?

4-6 weeks; money comes from reserves; I can do some of the work but half will get paid out to plumbers and for drywall

What are the average days on the market for properties for sale in your area? What is the "average" selling price in the neighborhood?

4-6 months
125-140G

How does the home compare to the "average" home in the neighborhood? Bigger? Smaller? How about amenities? One bath or two? Two bedrooms or three? Single car garage or double?

3 Bed, 2 Bath, 2 Car Garage
I would have it inspected if offer is accepted
Owners lost it because they stopped making payments
Clear Title
Average for neighborhood

Have you had the home inspected? Does it have clear title? Why did the previous owners lose it? Is it in the "right" school district? How much are the taxes? Any unpermitted additions?

Clear Title
Within a mile from middle school in average area
Taxes 2700 with 127G assessment
No

B, I love real estate. It's a great way to make money if it's done right. If you are putting yourself in a position to "risk" the equity in your home if this deal goes bad, I can't support that. It's simply too much risk for me. There are other ways to make $20k in reasonable amounts of time that do not risk your personal assets.

I'd recommend that you find an old book that's probably out of print now, but very good. It's called The Millionaire Next Door and the authors are Thomas J. Stanley and William D. Danko.

I'll look it up and read that

You might surprise yourself at just how many people are investing with their own money. An interesting side tidbit - You know I used to do taxes for a living, right? Well, 90% of the schedule D's that I did were for people LOSING money. By my math, that makes that "typical". And that's not just in this bad economy either....

That does not surprise me; too many people doing this w/o much of a clue.
It actually looks like another buyer may be swooping in on me and outbidding me for the home.

Which sucks....if it happens........but life will go on if it occurs[/b]

[Bretsky]

It appears that my attempt to Flip that House has been rebuffed

Before we made our first offer my wife and I decided 87G was the top $$ we'd pay. As I had noted there was an accepted offer on the home well above that a few weeks ago. We figured we had to put in 10G at most to make this a very nice home to sell, and factored in the chance that we might either have to make payment for six to nine months if it did not sell.

We wanted to have no more than 100G into it before the payments started and figured after all the work was done 8 weeks from now we'd list the home at 128,000 with expected sale between 120-125G. At worst case if we had to rent our total payment would have been less than 700 with taxes and we could have easily rented it for 8-850 range with the location.

Home was listed at 92,900.

Our first offer was 84G
Got a counter at 89,900
We countered right down the middle at 86,500

I was pretty confident that offer was going to get accepted the following day

But then a snake in the grass entered at the last minute and kicked my ass on the bid. I don't know what the exact price was (I will in a few weeks) but from the sounds of it they are going to occupy it and their bid was well above ours.

Unless their financing falls apart, they get the home.

Kind of bummed; would not do anything different but at same time I'm not sure I learned much or would do any more due diligence than what I did.