flipping rules

Page 2 of 3  


I am not an expert on much of anything, but your contention that short term loans are always a higher interest rate is not always true. If for example a lender believes that rates are going to rise they might not wish to commit their funds for a long term at a rate that they might regret later.
The primary criteria for determining an interest rate is risk, the higher the risk the higher the interest rate. You are accepting a risk when lending construction funds. In the event of default by a builder suppliers are the first in line with their mechanics liens on the property, and you have no control over the market that may tank dwindling the value of the parcel of land.
What you are doing is betting that the borrower will be successful in bringing his development to fruition, selling it and having enough left over to pay you. I also suspect that your friend with the initials after his name got his cut off the top after selling you the proposition, making his risk zero.
I hope your investments pay off, but their aint no such thing as a free lunch and hocking the family home to lend money to someone else is taking a risk that can go south, especially if you do not have funds on hand to cover mortgage payments in the event of default.
Good luck.
--

Roger Shoaf

About the time I had mastered getting the toothpaste back in the tube, then
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Enter LLC's, corporations and family trusts. Lovely legal protective shelters. Roger, I've been doing this a while. I have a guy that I trust 200% who does a major AM radio program all over the nation on investments. This ain't my first rodeo. I'm 58, and fully retired. I do NOT work.
What I do is not for everyone. What I do can't be done by everyone. But it works for me.
Bottom line is, there are lots of investment programs and profitable ventures for every pocketbook. You just have to decide whether or not you want to pay $40,000 for a $20,000 car or drive less and invest more. Goes down from there to lots of everyday choices from shopping coupons vs. going out to eat all the time. Even if you just put $20 a payday in the bank at low interest in a savings account.
All life is choices. No need to be stupid, and get into things where there is high risk, and the only one who makes out are the principals and the brokers.
The whole thing started over "flipping rules". What, exactly are they? Answer ...... there are none. You can make good money, or you can lose your ass. It's a crap shoot, but only for those who want to take risks.
I love Teddy Roosevelt's quote regarding critics ..........
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat."
Good luck in whatever you choose to pursue.
Steve
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

I have not failed. I've just found 10,000 ways that won't work. Thomas A. Edison
-- Oren
"If things get any worse, I'll have to ask you to stop helping me."
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Fri, 06 Apr 2007 22:25:31 -0700, Tim Smith

FTR, I wasn't talking about letting them move in. I said that I had heard that was a bad idea, and your objection is one of the reasons it is a bad idea.
In the second paragraph, I was asking why the seller had to wait the whole winter until the 6 mos. minimum time had elapsed so that the original buyer could complete the sale. When the buyer didn't get financing in time to complete the purchase in the time limit stated in the contract, he could have sold the house to someone else.
I've noticed on tv court shows that when someone sells a house or a car or rents an apartment, and other people call later, at most they say, "Call back in a few days. Maybe the sale won't have gone through." What they should do is save the phone numbers of everyone who calls, before or after, in case a deal falls through. This is better for all concerned.
In this case, when it was clear that the buyer needed 6 months, the seller might well have been able to end the contract in less than what the contract stated, certainly if he had the agreement of the buyer, and maybe without it if the buyer was making no efforts to get a non-FHA mortgage. I would check with a lawyer on this of course, but if the FHA has already told the buyer she won't get a mortgage within the contract time, and the buyer is making no other demonstrable efforts to get a mortage within that time, the seller might be able to buy her out of the contract say for 100 dollars, if another buyer is found, and that's a lot cheaper than the seller paying mortgage, taxes and utilities for the rest of the 6 months.

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

More annoying than this:

Seems to me if the buyer is qualified, (you have their credit application and financial data from the purchase agreement) then they are able to pay the rent and have every incentive to behave themselves. Most places right now the market is on the soft side and a 6 month delay while paying a mortgage and expenses is a toss it in the sewer kind of loss, so it may be worth the hassle of accepting the risk.
It is another story all together when a strong sellers market exists and you are getting all cash offers over the asking price.
--

Roger Shoaf

About the time I had mastered getting the toothpaste back in the tube, then
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

What's that got to do with anything in the present market?
WHY, I REMEMBER when gas was twenty cents a gallon, and a candy bar was a nickel.
Steve
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

And coke was a dime, bet cha!
-- Oren
"The voices in my head may not be real, but they have some good ideas!"
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote

HOT DAMN! I was in your neighborhood today, and in the corner of the garage was a red Coke machine. The one with the silver push down handle, and the single hole door.
I talked and talked and talked to that lady, but no luck. It was nice, and I don't think I've seen one of those since the sixties.
Steve
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote

I found one online:
http://www.pastperfectbiz.com/cokemachines/vendo39.html
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Not every flip makes someone rich, but it comes down to value and what you can/will pay. Besides, if the person did not do the repairs for a flip, could the buyer afford to do it?
If YES, he should have done it himself and saved a lot of money.
If NO, he should thank the other person for making a nice house available to him.
Don't you just love capitalism when it works?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

Yes, but HUD, VHA, and like programs aren't about capitalism. They are, at heart, socialist programs.
I'll admit that I though OPs problem was they he wasn't allowed to sell the house w/out a penalty because of the terms of HIS loan, but I'm still not prepared to be outraged.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
COME TO MY SEMINAR!
We hear this all the time re: real estate.
We are led to believe by HGTV and others that flipping houses is as easy as reconditioning hammocks. And every one pays off BIG TIME.
They don't tell you the downsides.
And the only ones that really make money are the ones who PUT ON the seminars.
COME TO MY SEMINAR! Only $999, includes lunch. Guaranteed to show you things you could have found out for free, but were too stupid to do in the first place.
Steve
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

But is capitalism all about using government subsidized loans? Good on folks for enterprise, but should they get to snatch up subsidies too? So much for being risk-taking enterprisers.... :-/
And I don't know if it works that way - either a house that can be move-in livable fixser that a bootstrapping low income person should want, vs. a flip, so a buyer should be happy to have it all done.
First off, a flip has a lot of stuff that is a matter of what moves in a market, not what an individual lower income buyer may care about. Maybe that bathroom really needed to be fixed (but the perfectly functional harvest gold fixtures could have stayed), but does the linoleum kitchen floor really have to go - it's functional.
Secondly, I doubt that flippers only take the lost causes (really bad fixers) - naw, they pick up the easy fixers and turn them around. Just what a low-income buyer, who needs to work on a house while living in it, would want instead.
Flippers get to live somewhere else while they work, they get benefit of a lot of experience and connections, and they make the houses into something over the heads of a lot of folks who otherwise could buy the house. I mean, good on them for their enterprise and their work, they do have good benefits to neighborhoods as well. But that's not what the FHA loans are for.
Banty (tired of capitalists who are capitalists until they discover they don't qualify for some gub'ment bennie then it's waaah waaah waaah...)
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I have since closed on the home a few weeks ago to a single mom with 2 kids. She has called me twice to ask me questions & I have gone over and helped her out. Not that it matters but she's also about twice my age. So I am not in it for the ass. There are people in this world that aren't self centered pricks. I guess if you could all of us... I make: "one".
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Can't quite parse your last sentence, but anyway...
No need to take it personally. My response was to Edwin's statement about 'capitalism' wrt to the FHA loans.
Sounds like you're a nice guy, but still, you *are* in it to make money, right? Again, that's not a bad thing.... just not what the FHA loans are set aside for.
Banty
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

could = count
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
longshot says...

The loans are made available for the purchaser, I can't see a single reason why the FHA would care how long the seller owned the home.
--
Roger Shoaf
If you are not part of the solution, you are not dissolved in the solvent.
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

ahhh.. now someone sees my point.... apparently it's about the poor basturds our tax dollars are paying that have to fill out paperwork. that's the only thing i could think of
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Flipping a house; does not mean 'helping" the buyer after the close. You got maybe to emotional in this house. Get in and get out, close up the deal.
If you do get "in it for ass", pre-qualify the buyer. Insist on a pre-approved letter from the lender.
You paid cash for the house and fixed it; sold it being aggravated by government, Why not be your own BANKER?
-- Oren
"My doctor says I have a malformed public-duty gland and a natural deficiency in moral fiber, and that I am therefore excused from saving Universes."
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
.

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Related Threads

HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.