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Tom Tarrant is an ex-San Diegan who is flipping houses in San Antonio.  Here is a youtube of a 1923 Craftsman-style house that he painted with seven colors!  Click here for more details.

From HW:

Fortuno, a company that bills itself as the “Costco of real estate,” has been sued by investors in Los Angeles Superior Court for allegedly duping them into buying what were essentially worthless REO properties.

The unrelated plaintiffs claim they were mislead into investing in an REO property flipping scheme that left them with virtually worthless properties, while Lodi, Calif.-based Fortuno made money off the deals, according to the suit, filed by the Law Offices of Andrew M. Wyatt of Los Angeles.

The suit claims Fortuno and four executives — CEO William Yotty, CFO Harry Martin, Senior Vice President of Operations Barbara Thomas and President of Customer Service and Sales Bruce Grogg — misrepresented to plaintiffs that it would sell the investors homes at low-price mark-ups and that it could then help them re-sell the houses to third parties at substantially higher prices. The 24 plaintiffs in the suit bought a combined 41 REO properties in Ohio and Michigan for prices ranging from $25,000 to $31,995 each.

“Through the use of other independent real estate marketing sources, the Fortuno Enterprise sells dilapidated condemnable homes for $10,000 to $20,000 more than they paid for and were not ‘fixer uppers,’ ” the suit claims. “After relying on these representations, Plaintiffs purchased the homes to find that they were not inhabitable and required extensive repairs.”

“The Fortuno Enterprise also promised to find a buyer for the properties at a substantial profit to plaintiffs. The so-called buyers were unqualified and often failed to make payments thereby creating a hold-over tenant requiring eviction,” the allegations continue. “For other plaintiffs, no purchasers could be found and the houses were unmarketable in their current conditions.”

The plaintiffs claim they were told Fortuno would “do everything for them” to facilitate the sale, and once the investor took ownership, the company could help the investor either make repairs necessary to sell it as a nondistressed home or ready it as a rental property, at substantial profit to the investor.

Instead, the suit claims Fortuno sold the plaintiffs homes in poor, unmarketable condition with high-price mark-ups, while also failing to find qualified buyers. After the purchase, the plaintiffs allegedly unforeseeably encountered significant “fix-up” costs; threats of condemnation by local government officials for safety violations; an inability to sell the houses due to their dilapidated condition and lack of qualified buyers; negative cash-flow; high property taxes; and eviction legal costs when the buyers defaulted on payments.

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We’ve seen and heard about flippers paying more and more (too much!) in the competitive trustee-sale environment at the court house steps.  With the backlog of occupants not vacating the foreclosed properties, there is bound to be some overlap.

The 3,278sf house in this video went back-to-bene in December, but only recently vacated.   A few doors up, a flipper paid $810,000 on April 28th for a slightly bigger model on the same side of the street, but there you have to look through the trees to see the golf course.

Lo and behold, both hit the MLS within three days of each other, both priced at $899,000 -  and the race to get out first, was on!  This one was marked pending today:

I don’t want to beat a dead horse – we know that realtors are committing fraud and deceit. Here’s an example of one guy, the previous listing agent of this house, who has been inputting short-sale listings onto the MLS for the last 1+ years, with the vast majority (over 75% of them) marked pending or contingent immediately.

If your clients are getting what they want, then maybe you can sleep at night. But when just as many of a broker’s listings are being foreclosed on, as are selling, there’s a problem:

This is the second half of the ‘luz tour, covering the western side. 

At the end of the video there is mention of a flipper who just paid $1,430,500 at the trustee sale on January 13th, and then closed escrow with the new buyer on February 26th for $2,175,000 cash. If you’d like to see photos of it, click here:

Another round of postponements today, but hopefully this youtube will keep you in the hunt: 

A tour of the recent flippers around Carlsbad, +1:

We already know that flippers are flooding the streets in search of profits, so it’s inevitable that we’ll see them competing…..with each other! Don’t be surprised if we see surges of new listings, especially around recent high sales – here’s a youtube video:

Tom Tarrant is a San Diegan who moved to San Antonio to remodel and sell historic houses while waiting out the California Real Estate Collapse.  He has a great blog with videos about the details of home remodeling, selling flippers, and snippets about Texas!

I asked Tom about featuring him here, and how it all came together. He responded, “There were alot of California investors flipping and parking cash here in rentals in 2007-2008. I think Bruce Norris was writing about moving your money to Texas around that time. The local realtors had a hayday selling multiple properties to them so it was a mini bubble in its own way. Now its slowed down a bit, but all in all SA’s managed to escape most of the national housing mess. Most of the California investors are now gone or it seems cashing out to move their money back but thats o.k. with us as there is less competition on the fixer uppers.”

A link to his blog (scroll down to the beginning):

Tom Tarrant – Adventures in House Flipping

An excerpt, with links to two of his videos:

The Hat Trick House is finally done and officially on the market and in MLS. We’ve had a swarm of buyers throughout the rehab and 3 great offers before it was even finished. We went 9% over budget but luckily our estimated sales price is surprisingly up 25% due to market conditions! Our list price is $359,000, this will be the highest sale in our area and set a new high comp if it sells for that price. My wife and I staged the house and it’s all ready for an advertised open house this Saturday. We already had one showing today, one scheduled for tomorrow morning and an agent that sold another one of our properties (The Abandonded House) just called and her “picky” client found it today on Realtor.com and wants to see it. The agent from our first showing today said the master bedroom closet alone would sell the house. Really?

The bank may be exempt from disclosure and is selling “as-is”, but the flippers and agents are obligated to disclose all known defects. 

Flipper paid $945,000 on 11/18/09 at the ’steps, and re-listed for $1,395,000 to $1,495,000: