Why Flips Failed and Why they are coming back?
 Real estate is legendary for creating wealth through flipping. It is not surprising, therefore, that I regularly get questions about how to flip a house and whether flipping is back. So I have decided to start a series of articles on the mechanics of flipping a house, but before I do that I want to first address why for the last couple of years attempts to flip houses have been sorely frustrated.
Obviously, there are two sides to a flip--buying at the right price and getting out. The last couple of years have seen an unprecedented and most precipitous drop in housing prices. Prices were falling so fast that regardless of how well positioned you were at the time of purchase, by the time the property was repositioned for sale the equity cushioned had been obliterated. Even in markets that held their value longer, prospective buyers felt so emboldened by the general market panic that they placed unreasonable conditions on their offers.
The net result was that a time tested, repeatedly proven strategy for generating healthy returns was tarnished by bad experiences. This is not by the way an argument for flipping over buying and holding. As many of you know, I firmly believe in buying and holding. What many of you do not know is that I began my career by flipping, and there are definitely circumstances where flipping makes a lot of sense. Here are a few:
1. Cash Build Up: when I started I didn't have a lot of cash so I flipped properties in order to accumulate enough money for my first buy and hold
2. Cash Flow: Because flips generate immediate cash, it is often a very effective way to offset other expenses or negative cash flow from other properties.
3. Damaged Credit or No credit: If you have liquidity but your credit has been damaged by this market or you have no credit, flipping is one way to take advantage of the current deals by using shorter term (one year), higher interest (12%) loans.
4. Market Preference: Sometimes there are incredible flipping opportunities in a market where you are not interested in permanently holding a property either because of the caliber of the neighborhood or the distance.
Why is flipping back.
1. Affordability: In certain areas prices have become so affordable that properties are receiving multiple offer which preventing values from dropping further despite fresh waves of foreclosures.
2. Government Incentives: There are incredible government incentives now that make allow homebuyers to get into a new home with little or no money down and little or no closing costs.
As a result, we believe it is time to start educating our readership about how flips really work. Among the issues we will be covering will be:
1. How to purchase at foreclosure sales
2. How we track the results of foreclosures sales in a market to determine lender willingness to move properties
3. How we track whether first time homebuyers are really buying in the areas where we are tracking foreclosure sales to determine the likelihood of a successful flip
4. How renovating to flip is different from renovating to rent
And much, much more. If you are interested in actually participating in a flip click here to contact us.
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LOL - Laughs OnLine
"The illegal alien problem worsens."
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Shaken or Stirred?
by Kwame J. Granderson
For those of you who do not have a sufficiently discriminating palette to consistently distinguish between "oaky" and "toasty" when sampling wine, I would invite you to join me in the wonderfully intoxicating world of martinis. By martinis, I do not mean gasoline in a glass with two olives. I mean flavored martinis (yes...the ones that are sometimes pink and may in a spirit of joviality sport an umbrella). I stumbled onto how fun martinis can be the first time I attempted to make a lychee martini (a lychee is a delicious Japanese fruit). To make it well, lychee martinis required a little investigative work to find the right lychee syrup. I also discovered that both the choice and combination of fruit for flavored martinis is similar to the pride that people from the Caribbean (which is where my family is originally from) take in making many of the exotic, typically non-alcoholic, drinks made there such as Sour Sop. For example, adding just a little pear juice to a lemon drop martini transforms an already refreshing drink into a summer fiesta. As I make new discoveries, I will, as always continue to share.
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Share If You Care
Our goal with this newsletter is simple: Cover every important topic that might help homeowners and investors make more informed decisions concerning real estate. You can help in two ways:
1) Send us any articles or information you come across that might be of interest to other readers
2) Forward this newsletter to anyone and everyone you know that owns or plans to own real estate!
Sincerely,
Kwame J. Granderson
Equinaire
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Check out our new webinar series:
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"Flipping The Smart Way"
First in the series:
"How to Identify a Flip Friendly Neighborhood"
Date: Wednesday, July 22
Time: 7 PM - 8 PM
Register by clicking here
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Upcoming Webinars
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Be on the lookout for upcoming webinars in the "Flipping the Smart Way" Series:
How to Identify a Profitable Flip Project
How to Write a Winning Offer
What to Look for in the Home Inspection
How to Market for Resale
Analyzing Your Profits
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