Flipping Real Estate

[gregb]

I've been noticing a lot more get rich flipping real estate advertisements lately, which I've always taken as a sign we're in the musical chairs stage of the market cycle. I hadn't put much thought into it beyond that except the whole concept of selling instructions on how to compete in flipping seemed counterintuitive. I was talking to a developer friend this weekend and he commented that land is getting too expensive and margins are getting squeezed. That gave me the "ah ha" moment that we've probably entered the phase where it is more profitable to sell how to flip properties than to actually flip them.

 

[Deleted member 134708]

I re-watched "The Big Short" last weekend to re-visit. They were right, but 3 years of being wrong is tough to stomach. (They were 3 yrs early in their bets.

In no way gonna repeat that big of a downturn but a housing correction is coming. Within next 5 years I'd guess. I thought woulda already happened.

 

[Michigan CG]

Same scam different decade. I have been hearing a lot of those commercials on the radio too. 30 years ago it was Carleton Sheets selling the scam.

 

[Deleted member 134708]

The 1 thing I do know for sure; by no metric are things cheap. Stocks, housing, food etc.

There is no buy low, sell high available in any market. There is for sure a buy high, sell higher as seen in the past year all the way to current.

But with buy high, sell higher comes increased risk v. Buy low. That risk I'm not willing to take. Train can roll on without me.

 

[timd354]

In no way gonna repeat that big of a downturn but a housing correction is coming. Within next 5 years I'd guess. I thought woulda already happened.

The difference this time around is there is very little subprime financing and almost zero stated income financing (liars loans). Additionally, there is much less financing of investor properties. Thus, in this cycle, most mortgage loans have been taken out by owner occupants who can actually service the payments. There are some markets (especially in California and other places out west like Colorado, Portland, and Seattle that have become quite frothy and which may experience a slow down or correction at some point either when the economy slows down or mortgage interest rates substantially spike. It is possible however, that if Trump cuts tax rates (especially corporate tax rates) as much as he says and allows corporate profits that are now currently parked oversees to be repatriated this could lead to a very expansive and inflationary economy which would in essence correct housing prices through inflation as opposed to thru a decline in prices.

 

[Deleted member 134708]

The causes don't repeat. The effects do.

It's gonna come from something on no ones radar.

Feds $4.5t balance sheet, China's massive debt, nuclear war, student debt, temporary spike in massive unemployment due to oversees incentives, automation etc.

From 2018-2020 tons large retailers gonna have to refi their loans. A tiny jump in rates will have them go to BK and restructure.

Auto subprime loans have never ever been higher also.

 

[timd354]

The causes don't repeat. The effects do.

It's gonna come from something on no ones radar.

Feds $4.5t balance sheet, China's massive debt, nuclear war, student debt, temporary spike in massive unemployment due to oversees incentives, automation etc.

Real estate is cyclical, but sometimes frothy or bubble markets get corrected by inflation as opposed to a pull back in sale prices which is what happened during the mid 1970's to early 1980's as housing prices doubled in 5 years despite an absolutely horrible and stagnant economy and mortgage interest rates that skyrocketed to more than 18% for a 30 year mortgage without any resultant crash.

 

[Tim The Enchanter]

The radio ads say they have hundreds of thousands to invest.
It's easy peasy. Money for nothing and chicks for free. Buy our system.

It's the biggest no brainer in the history of mankind.
Wait, that's a mortgage company.

 

[techbiker]

I re-watched "The Big Short" last weekend to re-visit. They were right, but 3 years of being wrong is tough to stomach. (They were 3 yrs early in their bets.

In no way gonna repeat that big of a downturn but a housing correction is coming. Within next 5 years I'd guess. I thought woulda already happened.

You don't know that you're in a bubble until it pops. Obama and the dems have cracked down on risky lending practices severely. The recovery has also taken so long that I wouldn't be surprised if we have many more good years.

Back in the 1800's when the market was largely unregulated, huge booms and crashes happened often. Government regulation tends to keep growth OR decline slow and steady.

 

[Tim The Enchanter]

You don't know that you're in a bubble until it pops.

I could sure see the rocket market screaming heavenward circa 2005 - 2008. Couldn't you?
Had to figure it will explode like 4th of July fireworks.
The fallout is lasting a long time, longer than the rocket ride.
Should not be a surprise how long it takes to recover from a huge crash though.