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  1. Something is very much messed up with this current situation that buyers have few houses to buy and like Tom said millions are not making payments. Is someone out there going to do something about it?

  2. Most flippers I know are twiddling their thumbs and nervously checking their bank balances. Many of them are already using the “grass roots” approach Tom mentions. What they are finding is underwater sellers will not sell until they have to. Many of these folks are already being solicited daily by agents looking for short sale listings and flippers are just more flies to be swatted.

    The leap from 60 day flipper to developer is difficult. The market is pretty stable over 60 days. Not so much over 6 to 8 months. Interest rates could go up or we could be in another recession in December/January. There are a lot of risks with developing and it is usually more capital intensive.

    Tom does nice work and he has developed a reputation for that. He also seems like a conservative guy that only takes on well thought out risks. He has a better chance than most of making the transition.

  3. Jim, in my area it is both a shortage of inventory and a shortage of well priced inventory. Recent publicity trumpeting rising median prices has encouraged sellers to list too high and to keep their prices high. Cash buyers know the market and don’t bite (for the most part) and buyers who have to get financing can’t get the properties to appraise.Here’s an oddity, I checked the MLS and there were no homes priced between $1MM and $1.5MM but 211 homes priced $1.5MM and up, out of 957 active listings..

  4. Tom,

    I couldn’t agree with you more on the people not paying their mortgage. Every dollar they steal is taken out of the pocket of a young couple thats working but unable to buy a home.

    Have you ever considered remodeling people’s homes to get by during the flipping drought? I don’t know the typical margins for remodeling. But if flippers are working for 10% profit there has to be more than that in remodeling.

    I’ve got a 40s home were looking to update and add on to.

  5. Hey Jim, I think the video came off like its impossible to find deals. That’s not the case at all, I landed another non-MLS 15% deal this month and wholesaled it to a friend who’s on number 30 this year. I’m just being picky.

    One interesting change this summer is the buy and hold guys are now in the game. When you see a 200k house that needs 40k in rehab get bid up to 170k this is whats happening. I’ve confirmed it after talking to listing agents.

    I’m getting 2 emails a week from new investors asking me to teach them how to flip houses in San Diego, pretty funny.

    Investors are now over paying with the hopes that by the time the rehab is done they can get more than the comps show.

    I’ve always sneaked through the crowd and had no problem making my way to the keg and filling up 2 cups, nothings changing on my end. But, for the unimaginative, lipstick flippers who just jumped in the game here in San Diego because it was so easy anyone could do it, their seasons will come to an end when all the low hanging fruit has been picked.

    Its probably better and they can go back to doing whatever it was before all the distressed inventories littered every block. If you add real value to a house, you will make money.

    My year is in the books already with the spec we have coming up. I’m already looking at projects for next year. Its anyone’s guess what the market will do but I know I can adapt. I’m not looking to become a developer per say, just continue with larger structural projects that the crowd cant take on/or make any money with, working with GC’s.

    Have fun with whatever you do, keep it low stress and enjoy your family and life! Afterall, this is why we are self employed.

  6. Always insightful, thanks Tom and Jim. Love your refreshing outlook on life Tom!

  7. A lot of ppl would be more comfortable with and not aversive of buying houses that need remodeling/updating if guys like Tom are for hire to take on the job.

  8. This was great. Thanks Tom and Jim.

  9. Nice work Tom! Where did you buy the wall sconces?

  10. Thanks Local Boy. Here is the only place I could find that hour glass sconce in brushed aluminum. They could be used outside too. Kinda pricey but a real show stopper for MCM design for sure.

  11. Thanks Tom and Jim. Nice to see there flippers out there who are creating some real value.

    I also laughed when Tom gave the number of cash offers on that property. I don’t know where all these people are coming from either, but there can’t be an infinite number of these people.

    The amount of people out there not making payments is disturbing. Logic would dictate there is another decline in prices on the way.

  12. Thanks for the update Tom & Jim, also congrats on finally getting Sparks closed.

    Best wishes to Tom T. on the new build and I’m also curious about what he’s planning on doing with the mobile home. Is it on land or in a park? I hope he’ll mention it on his blog again.

    As others have already said, I wish I could find somebody like Tom to handle remodeling at my house. I could sure use somebody with his vision, taste, and ability to execute quickly!

  13. I agree Tom–Those lights are sweet!

  14. @interesting, thanks for asking…The mobile home deal is not anything special, but more of an exercise for me to learn another investing angle. A private seller contacted me about buying it through our website. I’ve turned down 3-4 already but thought what the heck I want to try and learn a little and do one.

    Mobiles are not real property, so essentially its a depreciating asset. The lady wanted 25k. Its a 1976 double wide in a clean and established Lakeside park. I negotiated her down to 10k. There have been sales around 32k. I thought it would be a great little ROI and with little skin in the game so I’m giving it a shot.

    All I’m doing is carpet and cleaning, heck I cant even paint it because its paneling inside. I plan to list it for 22k and go for a quick sale.

    The great thing is that in its current condition nobody could move in (cats). The lady owns it free and clear and has already bought a house. In order to buy it the park has to approve you as a resident (2400/mo income).

    It was interesting when the park manager learned I wasn’t moving in after approving me, he initially told me “no flipping allowed” in his park. I quickly turned him around assuring him that what i was doing was a win-win for everyone. I’ll find him a good tenant and there wont be a low MLS comp that hurts everyone else’s values. In the meantime I’m responsible for his space rent. It will be interesting, the 700/mo carrying costs for space rental is the unknown for me so hopefully I can turn it at a discount quick. I’m already in contact with all the agents who have recent listings and sales, one guy says he has a buyer for me already so we’ll see.

    ..all this being said, the real way to do mobiles is supposedly owner finance, set it up to pay back your investment in no longer than 18 months and then cash flow 300-400/month. Owner finance is great because you don’t get landlord calls and you get a nice deposit up front. Additionally its common that buyers default so you end up selling the same mobile home and getting deposits multiple times. Just not my style though: )

  15. Thanks for the reply, Tom.

    Interesting stuff, I can remember my dad having to take back a property on an owner financed sale, not fun. I wouldn’t want to have to foreclose on somebody in the current environment though. 🙂

    Best of luck to you, I’ll keep checking out your blog for progress reports on the new build!

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