dstark, I hope one of your friend’s partners is an agent so they don’t have to pay commission. Selling a house itself can be costly.
My S has just applied to refinance his coop with the same lender The coop board wants him to submit the whole package for them to take a look and will charge him $750. He just bought it two years ago and they know all his finances and he’s not pulling any money out. Just crazy.
Cbreeze, no…he they used a realtor.
That $750 charge is bs.
The HOA and coop associations are just trying to get money any way they can from people. It is complete BS, it’s not like these things are costing them so much money to look at. They can do it, so they will. We have one HOA who raised the charge for move in/move out, to $300 each way, so if you have tenants, it can be costly. What does it cost them to receive your fax with information about a new tenant? Nothing, but they can charge you, so they will. What can you do about it?
artlovers,
Am not understanding how you lost money. And yes, the market is definitely improving, but the carrying costs (taxes, etc) would have to be taken into consideration, etc.
How I read it, is that artlover could have more money (and had to do a lot less work) just by hanging onto the original property for awhile longer. All that buying/selling/fixing up is hard work. I also would be irritated if I realized that keeping the first property would have netted me more profit for doing less.
When the housing market tanked a few years ago, some investors bought up lots of properties and sat on them. They’d still have to have some utilities on (depending on the location, some can get mildew-y if there is no A/C) or some might have to be winterized, and then there are those pesky taxes and insurance. But if the values increased, as they finally did, they could flip them to other investors without doing the remodeling themselves. Nice option. Others remodeled them as they got closer to selling, but then of course the supplies/labor costs probably went up as well.
I thought briefly (very briefly) about hanging onto my dad’s house after he died and waiting until the market improved. But all of the above issues, plus paying the mortgage, lawn/snow clearing and any repairs that would probably have been needed even with an empty house was not worth the aggravation. I have a healthy respect for people who can do that.
It is an aggravation. The four condos we have are an aggravation. But I’m glad that instead of taking a smaller profit, we hung onto them, as it’s even more of a pain to go through selling them, buying new ones and fixing them up. I would much rather do the minor stuff to keep them up, than go through the entire process again to get a new one. Tenants are easy to find for a discounted rent. It’s not for everyone, that’s for sure, but once you have the ball rolling, it’s pretty easy to keep up. In today’s inflated market, it would be tough to find properties at a decent price to get a positive cash flow, unless you’re buying distressed properties like artlover is. I wouldn’t care to deal with evictions.
Still a super hot market…
Going from ridiculous to outrageously ridiculous. DS and fiancée are thinking of changing their wedding registry to have things like: pay to service the sprinkler system! Buy us a new hot water heater! ( that’s actually covered under the homeowner warrantee but it’s on the “to do” list), paint the front of our house! etc
Jym, I kind of like it. It’s ridiculous at first, but when you think about it, it’s more meaningful than cash, and people can feel that they’re more “invested” in the young couple than they would be with a gift of, eg, a place setting. When the time comes, if it ever does, I’m going to suggest it to my kids.
I had the same response, ixnay. Let me start by saying it was my idea to put these things that are on the “new homeowner to-do list” in what is called the “honeyfund”. We were talking about something his future MIL and I bought together for them for their honeymoon and gave as a gift at the bridal shower, as well as a gift I had just bought from the “honeyfund” of a friend who is off at her destination wedding as we speak. I discovered that the $ doesn’t really go to any one item per se, but just to a general pot of $. He said they do not need any more dishware, etc, so I suggested he take those types of items off the registry. He said that the problem was that people were suggesting they add more to the registry. It was shortly thereafter that he told me about the hot water heater problem (and guess when the new regulations for hot water heaters went into effect-- yesterday!) and the sprinkler system needing to be serviced (the beautiful plants that were planted for the staging of the house are wilting), the repainting of the front of the house, etc. So I suggested the idea, which we first made light of, but the more we talked, it took on a life of its own, and went form a silly joke to a real concept. He said he could take before and after pictures of the repair items, could put a sign on the hot water heater with the name of the person who “gifted” it, and could write very personal thank you notes. The more we chatted, the more he started to like the idea! He also has an option to make donations to certain non-profits in their name. I suggested he add himself and fiancee to the “donations” list but he nixed that one.
Anyway, he will run it by his fiancee, but he thought it was funny/clever and they may do it, especially since their cashflow, with the home purchase, is in as much of a drought stage as their state. And 30 years from now they will remember who paid to fix the sprinkler system, or paint the front of the house, and the plaque will be affixed to the new hot water heater! I hope they do it. He can write something clever if he posts it to their wedding website.
^^^ I actually would like to receive a compressor, a paint sprayer and a nail gun for my birthday gift, but no one wants to give those to me!
jym, it is a great idea to put water heater on the wedding registry! Yes it is covered under home warranty, but it has to break first. If you want a new one and the old one isn’t broke, you have to pay for it.
Its broken, artlovers. The guy came out to service it and couldn’t get it working Put in the order for the new hot water heater. And of course it worked when they bought the house but now stopped…
Regarding me lost money, busdriver is right, these buying/selling and renovation took a lot out of my life, As a “material runner” I had to run to the Home Depot many times a day and to handle those construction people is not an easy task. The sweat equity cannot be calculated in monetary value.
Artloversplus, post 713… True.
Unless it is a total renovation situation.
Whenever I bought a “new this old house” I always have a plumber to change all the angle valves, water heater and hose bibs and faucets regardless it it is leaking or not. I learned it the hard way, one night, I was just about to leave a house just bought, I heard noise came out of toilet and by shear coincidence, I looked down and the angle valve is leaking. Water spilling out of the valve, I immediately turned off the water main and went to Home Depot to buy a new one to put it on. Had I leave few minutes too early, it would be a disaster, just imaging the water flood the house over several days where I was not planning to return?
Just a few weeks ago, the TPR on the water heater broke, fortunately, the plumber was there doing some thing else. I had to run into Home Depot to get a new TPR. Water was all over the place, the hot water heater closet was flooded with 2 feet of water.
Been following coralbrook’s flipper saga. Ugh!!
And to clarify, what I initially meant in post 708 is that the NorCal market is going from ridiculous to absurdly ridiculous. In the 6 mos they tried for a house, the prices and cost per sq foot just kept going up and up.
dstark
Your friend is absolutely right, to “rebuild” a house like that took a lot of work among partners, 15% is chump change for the headache they had. A developer will never do some thing like that, they make well over 15% and on much larger scale. With the market risk they took, a 30% net return is expected, otherwise why bother? I serve those developers, therefor I only bring deals to them when it makes sense.
@artloversplus, The deal was $250,000 over budget and took a year longer than expected.
There were two or three prior deals that worked out much better.
I just loaned a few bucks to a potential flipper on a property in Tiburon. Loan to value is about 65 percent. I am one of several lenders. The owner is going to put additional money in the place and maybe flip it. Nice views of the bay. I will be happy to own this place if the guy gets in trouble. Getting paid 9 percent annually.
I make less money than the developer but I have fewer headaches.