bubbleinfo.com

The guy from the TV show, Flip This House, wants to show you how to do it too.

He has a seminar tomorrow to discuss how he is going to make $150,000 profit on this house at 1036 Edgemont in South Park.

The house had been purchased at the trustee sale by our favorite flipper J.Mann for $330,000 (corrected, $269,800) in March, but apparently things didn’t work out, and he sold to our new flipper for $270,000 a month ago.

The new guy has invested enough that he’s looking for $600,000+ now.  Link.

Here is his website promoting the seminar, with video: Link.

Listing photos by our friend Jakob!  Link.

The media wants you to believe that foreclosures are tanking the values of every neighborhood. 

 They need to look a little harder at what is really happening on the street.  If the banks were more realistic about their opening bids at the trustee sales, they could be blowing out more of their defaulted properties, because there are plenty of investors looking to flip everything in sight. 

We’re in a foreclosure economy!

Yes, this flipper hasn’t sold this yet, and he might only get what he paid for it – although this particular long-time investor is known to rent, rather than dump.  But at whatever price he sells this for will define the true retail value.

If almost a third of trustee sales are being flipped for retail, the media should not only report it, they should factor the new values into the overall equation – and quit pushing the standard garbage.

Hat tip to MB for sending this along, from the wsj.com:

Reports of mortgage fraud, which have been increasing since the housing boom, rose to their highest level on record in 2010, Treasury Department figures showed.

The Financial Crimes Enforcement Network, a Treasury agency, reported 70,472 “suspicious activity reports” related to suspected mortgage fraud, up from 67,507 in 2009, or a 5% increase. That’s the highest number recorded by the government since tracking began in 1996.

At the height of the U.S. housing boom, in 2006, more than 37,000 fraud reports were recorded. In 2001, before the housing market heated up, there were 4,695 reports of suspected mortgage fraud.

Much of the suspected fraud being reported took place several years ago and is only now coming to light, according to Lexis-Nexis’s Mortgage Assert Research Institute, a data service, which issued a report Monday highlighting the statistics.

The past suspected frauds are surfacing as financial institutions and mortgage lenders, still handling a high number of mortgages falling into default and foreclosure, take “a look back to see if people misstated or misreported their income,” said William Grassano, an agency spokesman.

Fraud artists are refining their schemes to take advantage of market distress, the report said. For example, some real-estate brokers, in a scheme known as house “flopping,” target homes that are underwater—meaning their owners owe more than the market value of the house—and obtain artificially low valuations of homes.

Then, using these valuations, the brokers convince the lender to agree to a short-sale, in which it sells a home for less than the mortgage. The buyer, in turn, quickly sells the home at market value, profiting, along with the broker, from the difference in sale prices.

“If people are about to lose their jobs or lose their homes, there are scammers out there who are ready to go in for the kill,” said Grassano.

Evidence of mortgage fraud is one by-product of the broad investigations federal regulators and state attorneys general are conducting of the industry’s practices following ast year’s “robo-signing” scandal. Facing the possibility of a costly settlement, mortgage-servicing companies are being pressed to revamp their foreclosure paperwork-filing practices, hire more staff to handle the heavy volume of foreclosures and impose tighter standards on their dealings with borrowers.

Last July, the Obama administration began a broad effort to investigate and prosecute mortgage fraud that resulted in 485 arrests and 1,215 criminal defendants in cases that resulted in the recovery of about $147 million of $2.3 billion in losses, according to the Department of Justice.

The first installment on flopping:

http://www.bubbleinfo.com/2010/11/15/flopping-fraudulent-short-sales/

A counter-offer is out for signature, so this might sell - but if it doesn’t come back signed by lunchtime, Bryce will be conducting open house 1-4pm today at 925 Daisy Ave in Carlsbad:

Our blog-friend Tom Tarrant is wrapping up his last flip in San Antonio, and bringing his talents back to San Diego.    Hopefully once Tom and family are back in town we can experience some of his fine work in person.  Here is the youtube of the latest project (love the Chevy truck in the garage!)  from his blog, tomtarrant.com:

We had tons of fun this year sharing our adventures on the blog and attracted alot of attention doing it. This Spring my blog was voted Top 10 Real Estate Investing Blogs by Biggerpockets.com. This summer I was approached by 2 different production companies to do Real Estate Reality Shows and we completed and sold 2 big rehab high-end projects;  The Neighbors House and The Target House.  My killer rehab called The Hat Trick House was also featured on the front page of the local newspaper this summer which drew the attention of a local City Councilwoman who called us in to consult on urban redevelopment for the City. Our blog traffic doubled from last years numbers to over 80,000 visitors and my YouTube channel is blowing up. Happy New Year to everyone who’s followed along with us, thanks for all your comments and in less than 4 short weeks you’ll get to see a Great change of House Flipping Scenery from us, San Diego here we come!

Hat tip to Susie for sending this along from the Idaho Business Review:

What a great way to make money! Buy an old house, fix it up, and then resell it for a tidy profit. Let the good times roll!  Of course, the A&E reality show “Flip This House” well documents how painful the process can be.

Sure, there are professional house flippers who are good at what they do and who can count on making a handsome living from their dealings.

But given the speculative nature of the real estate market, it still comes as something of a surprise that a California jury would award $600,000 in lost profits to an experienced house flipper who was snubbed in his efforts to purchase a decrepit San Francisco home.

Read the rest of this entry »

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.

Read the rest of this entry »