Tonights Flip This House

[bob007]

flipping is ethical. Why should it unethical ?

I think government ought to to tax flipped properties at a higher rate than investment properties/primary residences.

[no_such_reality]

They are taxed at a higher rate. A house that is sold in under two years will be taxed at the capital gains rate.

If sold in under one year, a typical flip, it is taxed as a short term capital gain, which is at the same rate as income.

[Doofrat]

I believe there are two kinds of flipping. One kind is when you take a dilapidated residence and get a great deal because it doesn’t show well or is uninhabitable. You then fix it up by making actual changes to the house to make it presentable and liveable such as fixing that giant hole in the bathroom floor.
The other kind of “flipping” is really post 2000 day trading. Buffy and Skip quit their job and buy a place that is fine to live in, but has a popcorn ceiling. They fix it up by hiring a contractor to remove the popcorn. They have the contractor also install a granite countertop, new appliances, and carpet. The escrow when they bought the place takes one to two months and the ‘fix up’ takes a couple of months. In that time period, the market is so hot that the value of the place has risen and they make a profit when they sell it. Buffy and Skip think they are geniuses, when all they really did was hold a rapidly appreciating asset for a few months in a hot market.
Eventually, the market will take care of amateur flippers the same way it took care of daytraders. No need for laws or regulations.
I wonder what the next get rich scheme will be? Maybe commodities will come back into fashion, but I doubt it. The difference between housing and commodities (or stock) is that you actually have to have money to enter that market, not like housing. Maybe the next get rich scheme won’t be about getting rich, but be about getting food.

[BikeRider]

doofrat, in the future the flippers might NEED to have money to enter the market if enough lenders get caught holding the bag on defaults of these 100% financing exotic loans.

I must admit that I am addicted to the shows. Property Ladder, Flip that house, Flip this house. The Trademark Realty did seem to have their act together on Flip This house. They seemed to always win, though I didn’t expect they would let the show depict them in a bad way.

I feel sorry for the newlyweds on Property Ladder that are stuck with that house in the undesireable neighborhood.

[Doofrat]

On the one hand, you do kind of feel some pity for some of the people who get involved in this because they are just so naive. You really have to seek out a business/economics education in the US. High Schools don’t even teach the basics of business, they just teach math, english, PE, and some computers now. Sure there are some home economics classes, but come on.
Alot of people have no idea what they are getting into when they get into these half million dollar 20 and 30 year term business deals. They lack the critical thinking and math skills to analyze even basic mortgage and interest calculations.
On the other hand, you get kind of sick of hearing some of these people just parrot that same old things they’ve heard before: Can’t lose money on real estate, you get to write off the interest, need to build equity, paying rent is throwing away money, everybody wants to live here.

[what_a_disasta]

Hi,

After watching that dirtbag Armando Montelongo on A & E’s flip this house tonight, I was wondering if there was any other instances of these flippers failing to sell the properties they show TV. Kinda hoping that Armando has got a hole heap of festering flips! Fingers crossed.

[RottedOak]

The professional flipping companies will probably continue to do fine, because they focus on buying and improving the most distressed properties.

“Flip This House” has started doing “flip forward” updates on what happened to their old flippers. Most of them are from far enough back in the boom that they did make money, but the updates finally tell the truth about their profits. In the original episodes, they just took the realtor’s proposed selling price and subtracted the purchase and renovation costs. They didn’t take into account carrying costs, realtor commissions, closing costs, etc. The updates acknowledge these costs when calculating the final results.

A few of the flips flopped. This is sometimes papered over by the flippers, who declare that they “fell in love” with the flip house and decided to keep it to live in themselves. I did see one admit that “the market changed,” so they put it out as a rental. They haven’t shown anyone getting foreclosed, but I doubt someone in that situation would put their face on TV for an update show.

[what_a_disasta]

How dissapointing. I was hoping that snake would have been served some humble pie by now. 🙁

[waiting hawk]

On my site I posted a bunch of these guys that were taking it up the you know what. Here was the one from Palm Springs I use to have on my site:

We first posted on this place on 10-9-06. Now it’s December 3rd and this flip is a $121,000 loss right off the list price. That doesn’t include all the monthly payments for 10 months or selling cost. This is going to be a fat loss for the bank and flipper. THANKS TO TLC FOR THE FIND! THAT’S ALMOST 30% LOWER FROM THE ORIGINAL LISTING AT $929,000.

Original post on 10-9-06

Yes sir we got ourselves a regular, “I’m going to flip this and make tons of $ on TV” flipper debtor from “Flip That House” TV program on TLC. After watching this I told myself they are dead meat if they are still listed. SURE ENOUGH! But reality TV works both ways.

Bought on 02-22-06 for $580,000 Plus $200,000 for flippage cost =$780,000 without ANY selling cost or holding cost for over 7 MONTHS.

Was listed at $929,000 now ~15% off sale at $799,000 ($679,000 Dec. 3rd 2006)

2051 E CALLE FELICIA, Palm Springs, CA 92262**

Nice red door (barf). So the question of the year is:

Did these guys win or did the guy in year 1995 win by paying $142,500?

Have fun and look at the 799k 3,000 sqft “McMansions” that blow this 2177 sqft home away. Here is a bigger home and bigger lot FOR LESS!

Link to “Flip This House” Flipper Debtor

Here is a comment I found about this house:

The second episode is in Palm Springs and the flipper is Mark Cassie. He bought a 1953 house for $580,000. It has 2177 sq ft, 3 bedrooms and 3 baths. He wants to renovate and keep the 1950 retro feel of the home and get rid of the 1970’s mediterreanean redo with the low wall in the front yard and the arches on the front porche and inside. He has a budget of $60,000 and wants to get it all done in 4 weeks.The timeline is blown by 3 weeks and the budget by $140,000, yeap a $140,000. The final buget was $200,000. I wish they had shown why the budget blew up so much cause this guy is an experieced flipper. The realtor mentions that pricing the house is very important cause you don’t want it too high you want people to think its a great price and buy it quickly. Mark was very surprised when the realtor wanted to list the house for $929,00 cause Mark would have been happy with $879,000. Still if it sells at $929,000 Mark is looking at a potential profit of $149,000 (now it’s $121,000 loss off the list price).

Is there such a thing called “negative profit”? Just checking!

They did sell it at a fat 100k loss (without carry cost)in March to a sucker:
Sale History & Tax Info Sale History
03/15/2007: $679,000
02/22/2006: $580,000
06/23/1995: $142,500

[what_a_disasta]

Thanks for the update. What is the url for your site? It sounds interesting.

[Author]

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