So many of these flip gone bad stories to come.. and they'll only get worse, as the smart flippers got out early, or got out with just a small loss. The really dumb and greedy ones are getting killed by not bailing at any price today.
Yes, folks, the housing Price to Earnings ratio does matter. The PE always matters. The flippers will find out, but so will your neighbors.
Thanks to various HP readers for the link...
Todd Linsley, a 37-year-old investor, bought a three-bedroom house in Stuart, Fla., for about $318,000 in late 2005. His original plan was to quickly flip the property -- which is in a new housing development about 40 miles north of West Palm Beach -- by selling it for as high as $425,000. But when he saw that the market was turning, he decided to list the home for $379,900. It's been on the market since early January with no takers.
Mr. Linsley says home builders keep discounting unsold houses in the neighborhood -- sometimes axing as much as $100,000 off the original asking price. He says he can't afford to go that low. "If I got in a jam I would have to drop the price, but I am not at that point," he says.
So now he's renting his investment house out for $1,000 a month, while paying a $2,045 monthly mortgage and a $108 monthly homeowner's association fee. "My Plan B was always to rent it out. I am not going to lose my shirt," says Mr. Linsley, a salesman for a medical-products company.
8 comments:
As a professional investor myself..I find it embrassing to call Todd Linsley an "investor". The moron has no concept of Free Cash Flow (which is cash flow after all operating expeneses and cap ex has been paid).
Freakin' moron..people like Todd really piss me off. I can't wait for him to "lose his shirt" so I can buy his property pennies on the dollar and have positive FREE CASH FLOW!!!
Not to worry.....he's gonna find someone to sell to. They say there's a sucker born every min, and it's true.
It really bogs the mind to see people are still buying real estate, even though all figures point to a housing correction later this year and a crash next year. Either they have deep pockets, nerves of steel or some marbles missing up there.
A friend of mine just sold a new construction custom home on a hilly street - $780K. he sold one he built and lived in a month ago - full price $540K. This bubble has not popped yet in huntsville, AL.
But why would anyone pay sooooo much for a house? $780K??? I could build a 4000 sqft house (including 1350 sqft of wraparound porch), and a 3 car garage with extra room, and a 50 x 50 hangar, all on my 20AC private grass airstrip - and still have $350K less in the place. I just do not understand the subdivision mentality. There are fools coming into this town with the fool's gold in their pockets. These fools never seem to learn.
Subdivision mentality - we did a study on this in a college psych class and detemined that many people are uncomfortable with some aspect of themselves that makes them want to meld in with a crowd. Just like few would go to a football game wearing the opposing teams' jersey, these people feel more comfortable buying in a subdivision where most people seem to prefer conformity to a common standard. The Suburban was the standard vehicle for a couple years. Boring tract homes are the standard. Everything is the same, those people have the same boring lives, and shop the same boring places and do all the same boring things.
It's amazing to experience in person. Good friends of mine have been transformed from being independent and once moved into the housing subdivision they all started to dress the same, believe the same values, drive the same cars, try and outdo each other, and participate in the same events (Bill is redoing his floor this week so we are doing ours next week). It's herd mentality at it's worst.
"It's amazing to experience in person. Good friends of mine have been transformed from being independent and once moved into the housing subdivision they all started to dress the same, believe the same values, drive the same cars, try and outdo each other, and participate in the same events (Bill is redoing his floor this week so we are doing ours next week). It's herd mentality at it's worst."
It's not just subdivisions, but regular towns to. In mine it started with cars, and then fences - everyone had to have the same kind of plastic white fence and if you bought a cheaper brand, they all talked about it! It's so insane.
so high-school!
Pardon me for saying this but this post does not make any sense. Last week I put an offer on a 3 bedroom condo, offered at 799K, for 800K. The condo is nice, but probably not worse 800K, but I am tired of renting.
Anyway, there were total 9 offers for this property. My offer was at the bottom of the stack. The highest offer was for 925K. The owners made a counter offer for 999K and it was accepted. Lesson learned that there are no bubble. People keep buying and selling properties and hot ones go fast and for a lot of money.
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