[garysears]

“BTW, many of those home being flipped in East County were likely formerly uninhabitable and would not qualify for loans in their former condition. The flippers are fixing homes and making them marketable. The FHA buyers are getting homes they can afford (remember qualifying is tough) that are in turn key condition and they dont have the money to fix up even cosmetic fixer homes. In low end markets like that, I think the flippers serve a far more important role than in higher end ZIPS.”

I concur with this. I just can’t quite pin down what a reasonable return should be. In my mind I separate “flipping” from “rehabbing” but maybe this is a false distinction. I call the value added in depth repair/remodeling “rehabbing” and the speculative cosmetic fixups “flips”. A rehabber is due a profit margin commensurate with risk but I don’t want to pay off a flipper. The problem is telling the difference.

When I look up the prices flippers paid I just don’t want to buy a house for 270k that was bought for cash for 150k. I assume I could fix the house for much less myself.

Where are the 150k houses on the MLS? They do not exist. The government lending is putting money straight in the pockets of the speculative flippers. They are really a big beneficiary at the expense of the ultimate buyer. I know I focus on insane margins and it is probably true they have come down a lot. Minus the easy money, the speculative flippers would probably disappear. Legitimate rehabbers will always have a market.

[garysears]

I side emotionally with CAR and jpinpb. The low end zips I follow have significant numbers of “newly rehabbed” overpriced homes. There are fewer REOs compared to a year ago and it does seem easy to blame flippers for sucking up the supply. For one reason or another the REOs just aren’t making the MLS like they used to. This corresponds to the past year’s significant rise in prices. Mostly I see some short sales, a few REOs (which will probably have to end up cash only or 203k), and a lot of flips.

I am not against the wholesale market for homes but I would be totally out of my element among rehabbers and real estate pros at the auctions. So I sit on the sidelines waiting for the current manufactured demand spike to subside.

Since I am looking at the low end I can positively state the FHA buyer is absolutely who is targeted by the flippers. Again, it appears to be all cash or FHA at the low end and not a lot of middle ground for the significant down payment crowd. I see the issue as a 2 sided coin. FHA easy terms and the tax credit provide the access to money/demand. Flippers provide the supply. Most REOs won’t meet government lending guidelines so flippers don’t compete directly with the government money. For a short time before the government stepped in, and as lending was contracting, organic buyers could get REOs on the open market for much less than today.

Flippers need someone to flip to. At the low end most buyers don’t have any money unless government provides it. Absent government induced demand, organic 20% down buyers would be competing with rental investors.

[garysears]

I side emotionally with CAR and jpinpb. The low end zips I follow have significant numbers of “newly rehabbed” overpriced homes. There are fewer REOs compared to a year ago and it does seem easy to blame flippers for sucking up the supply. For one reason or another the REOs just aren’t making the MLS like they used to. This corresponds to the past year’s significant rise in prices. Mostly I see some short sales, a few REOs (which will probably have to end up cash only or 203k), and a lot of flips.

I am not against the wholesale market for homes but I would be totally out of my element among rehabbers and real estate pros at the auctions. So I sit on the sidelines waiting for the current manufactured demand spike to subside.

Since I am looking at the low end I can positively state the FHA buyer is absolutely who is targeted by the flippers. Again, it appears to be all cash or FHA at the low end and not a lot of middle ground for the significant down payment crowd. I see the issue as a 2 sided coin. FHA easy terms and the tax credit provide the access to money/demand. Flippers provide the supply. Most REOs won’t meet government lending guidelines so flippers don’t compete directly with the government money. For a short time before the government stepped in, and as lending was contracting, organic buyers could get REOs on the open market for much less than today.

Flippers need someone to flip to. At the low end most buyers don’t have any money unless government provides it. Absent government induced demand, organic 20% down buyers would be competing with rental investors.

[garysears]

I side emotionally with CAR and jpinpb. The low end zips I follow have significant numbers of “newly rehabbed” overpriced homes. There are fewer REOs compared to a year ago and it does seem easy to blame flippers for sucking up the supply. For one reason or another the REOs just aren’t making the MLS like they used to. This corresponds to the past year’s significant rise in prices. Mostly I see some short sales, a few REOs (which will probably have to end up cash only or 203k), and a lot of flips.

I am not against the wholesale market for homes but I would be totally out of my element among rehabbers and real estate pros at the auctions. So I sit on the sidelines waiting for the current manufactured demand spike to subside.

Since I am looking at the low end I can positively state the FHA buyer is absolutely who is targeted by the flippers. Again, it appears to be all cash or FHA at the low end and not a lot of middle ground for the significant down payment crowd. I see the issue as a 2 sided coin. FHA easy terms and the tax credit provide the access to money/demand. Flippers provide the supply. Most REOs won’t meet government lending guidelines so flippers don’t compete directly with the government money. For a short time before the government stepped in, and as lending was contracting, organic buyers could get REOs on the open market for much less than today.

Flippers need someone to flip to. At the low end most buyers don’t have any money unless government provides it. Absent government induced demand, organic 20% down buyers would be competing with rental investors.

[garysears]

I side emotionally with CAR and jpinpb. The low end zips I follow have significant numbers of “newly rehabbed” overpriced homes. There are fewer REOs compared to a year ago and it does seem easy to blame flippers for sucking up the supply. For one reason or another the REOs just aren’t making the MLS like they used to. This corresponds to the past year’s significant rise in prices. Mostly I see some short sales, a few REOs (which will probably have to end up cash only or 203k), and a lot of flips.

I am not against the wholesale market for homes but I would be totally out of my element among rehabbers and real estate pros at the auctions. So I sit on the sidelines waiting for the current manufactured demand spike to subside.

Since I am looking at the low end I can positively state the FHA buyer is absolutely who is targeted by the flippers. Again, it appears to be all cash or FHA at the low end and not a lot of middle ground for the significant down payment crowd. I see the issue as a 2 sided coin. FHA easy terms and the tax credit provide the access to money/demand. Flippers provide the supply. Most REOs won’t meet government lending guidelines so flippers don’t compete directly with the government money. For a short time before the government stepped in, and as lending was contracting, organic buyers could get REOs on the open market for much less than today.

Flippers need someone to flip to. At the low end most buyers don’t have any money unless government provides it. Absent government induced demand, organic 20% down buyers would be competing with rental investors.

[garysears]

I side emotionally with CAR and jpinpb. The low end zips I follow have significant numbers of “newly rehabbed” overpriced homes. There are fewer REOs compared to a year ago and it does seem easy to blame flippers for sucking up the supply. For one reason or another the REOs just aren’t making the MLS like they used to. This corresponds to the past year’s significant rise in prices. Mostly I see some short sales, a few REOs (which will probably have to end up cash only or 203k), and a lot of flips.

I am not against the wholesale market for homes but I would be totally out of my element among rehabbers and real estate pros at the auctions. So I sit on the sidelines waiting for the current manufactured demand spike to subside.

Since I am looking at the low end I can positively state the FHA buyer is absolutely who is targeted by the flippers. Again, it appears to be all cash or FHA at the low end and not a lot of middle ground for the significant down payment crowd. I see the issue as a 2 sided coin. FHA easy terms and the tax credit provide the access to money/demand. Flippers provide the supply. Most REOs won’t meet government lending guidelines so flippers don’t compete directly with the government money. For a short time before the government stepped in, and as lending was contracting, organic buyers could get REOs on the open market for much less than today.

Flippers need someone to flip to. At the low end most buyers don’t have any money unless government provides it. Absent government induced demand, organic 20% down buyers would be competing with rental investors.

[garysears]

Well, here are two houses next to each other in La Mesa. Almost identical, mirror image floor plans.

7880 Michelle
Asking: $399,000 (looks like flip)
MLS #: 100036138
3bd/2ba 1248 sqft
9100 sqft lot
Pool
Master Bedroom Expansion

7890 Michelle
Asking: $300,000 (short sale, asking for cash)
MLS #: 100024115
3bd/2ba 1248 sqft
8600 sqft lot
No Pool

There may be 2 different “market prices” depending on whether you are paying cash or putting it on credit. If the 399k sells for asking, undoubtedly some flipper will score the 300k, fix it up for the FHA buyer and resell.

20% down conventional doesn’t seem to be any advantage in this market. The problem is the “conventional” financing must be Fannie Mae conforming, which is a pretty similar standard to other government financing. So, properties pretty much can go FHA/VA or they go all cash. Your 20% down crowd will be outbid in most cases.

[garysears]

Well, here are two houses next to each other in La Mesa. Almost identical, mirror image floor plans.

7880 Michelle
Asking: $399,000 (looks like flip)
MLS #: 100036138
3bd/2ba 1248 sqft
9100 sqft lot
Pool
Master Bedroom Expansion

7890 Michelle
Asking: $300,000 (short sale, asking for cash)
MLS #: 100024115
3bd/2ba 1248 sqft
8600 sqft lot
No Pool

There may be 2 different “market prices” depending on whether you are paying cash or putting it on credit. If the 399k sells for asking, undoubtedly some flipper will score the 300k, fix it up for the FHA buyer and resell.

20% down conventional doesn’t seem to be any advantage in this market. The problem is the “conventional” financing must be Fannie Mae conforming, which is a pretty similar standard to other government financing. So, properties pretty much can go FHA/VA or they go all cash. Your 20% down crowd will be outbid in most cases.

[garysears]

Well, here are two houses next to each other in La Mesa. Almost identical, mirror image floor plans.

7880 Michelle
Asking: $399,000 (looks like flip)
MLS #: 100036138
3bd/2ba 1248 sqft
9100 sqft lot
Pool
Master Bedroom Expansion

7890 Michelle
Asking: $300,000 (short sale, asking for cash)
MLS #: 100024115
3bd/2ba 1248 sqft
8600 sqft lot
No Pool

There may be 2 different “market prices” depending on whether you are paying cash or putting it on credit. If the 399k sells for asking, undoubtedly some flipper will score the 300k, fix it up for the FHA buyer and resell.

20% down conventional doesn’t seem to be any advantage in this market. The problem is the “conventional” financing must be Fannie Mae conforming, which is a pretty similar standard to other government financing. So, properties pretty much can go FHA/VA or they go all cash. Your 20% down crowd will be outbid in most cases.

[garysears]

Well, here are two houses next to each other in La Mesa. Almost identical, mirror image floor plans.

7880 Michelle
Asking: $399,000 (looks like flip)
MLS #: 100036138
3bd/2ba 1248 sqft
9100 sqft lot
Pool
Master Bedroom Expansion

7890 Michelle
Asking: $300,000 (short sale, asking for cash)
MLS #: 100024115
3bd/2ba 1248 sqft
8600 sqft lot
No Pool

There may be 2 different “market prices” depending on whether you are paying cash or putting it on credit. If the 399k sells for asking, undoubtedly some flipper will score the 300k, fix it up for the FHA buyer and resell.

20% down conventional doesn’t seem to be any advantage in this market. The problem is the “conventional” financing must be Fannie Mae conforming, which is a pretty similar standard to other government financing. So, properties pretty much can go FHA/VA or they go all cash. Your 20% down crowd will be outbid in most cases.

[garysears]

Well, here are two houses next to each other in La Mesa. Almost identical, mirror image floor plans.

7880 Michelle
Asking: $399,000 (looks like flip)
MLS #: 100036138
3bd/2ba 1248 sqft
9100 sqft lot
Pool
Master Bedroom Expansion

7890 Michelle
Asking: $300,000 (short sale, asking for cash)
MLS #: 100024115
3bd/2ba 1248 sqft
8600 sqft lot
No Pool

There may be 2 different “market prices” depending on whether you are paying cash or putting it on credit. If the 399k sells for asking, undoubtedly some flipper will score the 300k, fix it up for the FHA buyer and resell.

20% down conventional doesn’t seem to be any advantage in this market. The problem is the “conventional” financing must be Fannie Mae conforming, which is a pretty similar standard to other government financing. So, properties pretty much can go FHA/VA or they go all cash. Your 20% down crowd will be outbid in most cases.

[garysears]

Awesome thread. I share the frustration. A year ago was a MUCH better time to be shopping on the low end. If prices don’t get back where they were I will not ever be buying in San Diego. Part of me thinks there is no way to put off the fundamentals forever but part of me has given up on reality ever asserting itself. I’m tempted to move to Florida and pay cash at 1/3 the price.

I blame the flippers for the lack of reasonably priced inventory, but more the FHA for spiking the demand at the the low end. Until big gov stepped up to fill the lending void deals were close to getting reasonable. Perhaps they are gone. I don’t know. I do know I intend to sign a 1 yr lease soon. I don’t intend to compete against the no/low money down crowd.

[garysears]

Awesome thread. I share the frustration. A year ago was a MUCH better time to be shopping on the low end. If prices don’t get back where they were I will not ever be buying in San Diego. Part of me thinks there is no way to put off the fundamentals forever but part of me has given up on reality ever asserting itself. I’m tempted to move to Florida and pay cash at 1/3 the price.

I blame the flippers for the lack of reasonably priced inventory, but more the FHA for spiking the demand at the the low end. Until big gov stepped up to fill the lending void deals were close to getting reasonable. Perhaps they are gone. I don’t know. I do know I intend to sign a 1 yr lease soon. I don’t intend to compete against the no/low money down crowd.

[garysears]

Awesome thread. I share the frustration. A year ago was a MUCH better time to be shopping on the low end. If prices don’t get back where they were I will not ever be buying in San Diego. Part of me thinks there is no way to put off the fundamentals forever but part of me has given up on reality ever asserting itself. I’m tempted to move to Florida and pay cash at 1/3 the price.

I blame the flippers for the lack of reasonably priced inventory, but more the FHA for spiking the demand at the the low end. Until big gov stepped up to fill the lending void deals were close to getting reasonable. Perhaps they are gone. I don’t know. I do know I intend to sign a 1 yr lease soon. I don’t intend to compete against the no/low money down crowd.

[garysears]

Awesome thread. I share the frustration. A year ago was a MUCH better time to be shopping on the low end. If prices don’t get back where they were I will not ever be buying in San Diego. Part of me thinks there is no way to put off the fundamentals forever but part of me has given up on reality ever asserting itself. I’m tempted to move to Florida and pay cash at 1/3 the price.

I blame the flippers for the lack of reasonably priced inventory, but more the FHA for spiking the demand at the the low end. Until big gov stepped up to fill the lending void deals were close to getting reasonable. Perhaps they are gone. I don’t know. I do know I intend to sign a 1 yr lease soon. I don’t intend to compete against the no/low money down crowd.

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