Flipping houses

[Gobsgraham]

Thanks for everyones advice. It is appreciated.

[V]

It's also completely unprofessional advice. Keep that in mind. We like to talk, but do we really know what we're talking about?? Maybe, maybe not.

[Shazam]

Originally Posted by Dominicwasalreadytaken

Over the next ten years? Why not? My salary has increased by 75% in the last five years. I expect it'll go up by 10% again next year.

I honestly wouldn't be surprised if the economy stays strong for the next ten years. And if it does, I wouldn't be surprised if house prices keep rising and rising. I also wouldn't be surprised if 1 million bucks in ten years isn't going to be close to what it is right now.

Not everybody gets their salary increased by the rates you have given. And thank god; I'd hate to see that inflationary spiral.

The economy is not going to stay strong for the next ten years. We are firmly in a boom right now; it will eventually bust. And it's going to be a hard bust.

There is no real reason why houses here are as expensive as they are. It is driven right now purely by demand. There are no virtually no limits to where Calgary can expand, unlike Vancouver, L.A., Toronto, Paris, London, etc...

[photon]

Originally Posted by Dominicwasalreadytaken

photon's more of a flipper, I think.

Actually I mostly buy and hold too, but we are doing one flip right now. And it's the one giving me the most stress; I may have bit off more than I can chew cash wise, but we'll see

(Good input BTW)

Originally Posted by Kobatuzzied

If it is not your principal residence then you have to treat it as a capital gain. However you could put it in the name of a family member who doesn't own a house..... hehe.

That depends too, If I understand it right (according to my accountant anyway) if you do it more than a few times be prepared for the government to deem it a business and tax it at full rates.

[Gobsgraham]

Originally Posted by Dominicwasalreadytaken

It's also completely unprofessional advice. Keep that in mind. We like to talk, but do we really know what we're talking about?? Maybe, maybe not.

Everything is taken with a grain of salt. I have heard almost everything here before so it is just up to me to determine which comments I want to listen too and which I don't.

I do appreciate everyone's comments though.

[Mike Oxlong]

Originally Posted by Shazam

Not everybody gets their salary increased by the rates you have given. And thank god; I'd hate to see that inflationary spiral.

The economy is not going to stay strong for the next ten years. We are firmly in a boom right now; it will eventually bust. And it's going to be a hard bust.

There is no real reason why houses here are as expensive as they are. It is driven right now purely by demand. There are no virtually no limits to where Calgary can expand, unlike Vancouver, L.A., Toronto, Paris, London, etc...

Please explain why this current economic climate isn't going to continue. I would love to hear why you think it is going to be a hard bust as well. What is it you predict will happen? Do you think we will start using alternative fuels to Oil on a mass scale within 10 years? Will we find tons of new Oil supplies to drive prices down?

I understand that there are cycles to Real Estate and sometimes prices may go down but in the long run Real Estate ALWAYS goes up. It is one of the driving forces of Inflation. As people make more money they spend more on shelter which is one of mans primary needs. Think of what a house cost 30 years ago compared to now. There have been tons of peaks and valleys in the real estate market between then but overall the price of Real Estate has gone way up.

There are lots of real reasons that Calgary's houses are as expensive as they are. You said it yourself DEMAND. When you have 30,000 people a year moving here it doesn't always matter that you have tons of land. You still need building materials and labour to build the houses. That is a finite resource and one of the causes of house prices to rise. The CMHC predicts the average cost of a NEW home to be $500,000 in 2007. There was an article in the paper about it last week.

Even if we are fortunate to have a good supply of land at our disposal here in Calgary it isn't a finite resource either. There is a very limited amount of land available throughout the world, they simply don't make anymore of it. However we are continually making more and more people all the time. The earth's population continues to grow all the time and eventually we are going to run out of space. That may be a long time before we run out of space around Calgary but that just means the houses closer to the city core are going to be worth more than those an hour's drive away.

[Claeren]

^Exactly, real estate prices can only go up.

They can't go down, it is impossible and has never happened before - So why would it happen now?



Geez guys, stop your worrying!


Claeren.

[Red]

Originally Posted by Mike Oxlong

Please explain why this current economic climate isn't going to continue. I would love to hear why you think it is going to be a hard bust as well. What is it you predict will happen? Do you think we will start using alternative fuels to Oil on a mass scale within 10 years? Will we find tons of new Oil supplies to drive prices down?

I understand that there are cycles to Real Estate and sometimes prices may go down but in the long run Real Estate ALWAYS goes up. It is one of the driving forces of Inflation. As people make more money they spend more on shelter which is one of mans primary needs. Think of what a house cost 30 years ago compared to now. There have been tons of peaks and valleys in the real estate market between then but overall the price of Real Estate has gone way up.

There are lots of real reasons that Calgary's houses are as expensive as they are. You said it yourself DEMAND. When you have 30,000 people a year moving here it doesn't always matter that you have tons of land. You still need building materials and labour to build the houses. That is a finite resource and one of the causes of house prices to rise. The CMHC predicts the average cost of a NEW home to be $500,000 in 2007. There was an article in the paper about it last week.

Even if we are fortunate to have a good supply of land at our disposal here in Calgary it isn't a finite resource either. There is a very limited amount of land available throughout the world, they simply don't make anymore of it. However we are continually making more and more people all the time. The earth's population continues to grow all the time and eventually we are going to run out of space. That may be a long time before we run out of space around Calgary but that just means the houses closer to the city core are going to be worth more than those an hour's drive away.

Real Estate prices are not always going up.

What houses cost 30 years ago is irrelevant unless you mention cost of living and earnings for that time too. House ownership is more expensive now than 30 years ago, a lot more.

http://www.theglobeandmail.com/servl...2.whousing1122

The earning aren't catching up. Until last year the inflation ate up all your pay increases and then some. That was happening for the last 20 years or so.

The salaries have increased a lot in the last year, but that may or not continue. It was the first time in a long time that regular people actually saw the booming economy on their paychecks. Most people will continue to get their 3% raises every year. Those people are getting priced out of owning houses.

Apply more logic and less hype and hopefull wishes. If you wanna make big money on RE in Alberta you're about 5 years late.

[photon]

^Exactly, real estate prices can only go up.

Did you miss the part where he said sometimes they may go down?

[Sylvanfan]

Originally Posted by Red

Apply more logic and less hype and hopefull wishes. If you wanna make big money on RE in Alberta you're about 5 years late.

I think the key word there is big. I still think you can make money at real estate and theres various ways to do it, but it won't be anywhere as big as if you'd been in the game 5 years ago. I also think you need to be a fairly schrewd investor if you're going to get into the market right now. As the world has globalized our once super fantastic standard of living in North America has declined. Families need two working parents and people have more debt now than they've ever had. Still compared to 90% of the planet our standard is great, so I think that housing has the potential to still eat up more of our income as our standard of living still has a lot of room in which it can decline.

I don't think you can simply buy a property, and make money flipping it a month or two months later. It was mentioned earlier in the thread that you make money flipping a house when you buy it. IMO you buy a house that needs work at a discounted price and than you get it back up to standard to bring the price in line. Last year a few people got luckey with the boom, but that was timing the market and luck as much as anything. In order to consistantly make money flipping houses you need to be pretty handy and understand how the build and finish a house.

[Mike Oxlong]

Originally Posted by Red

Real Estate prices are not always going up.

What houses cost 30 years ago is irrelevant unless you mention cost of living and earnings for that time too. House ownership is more expensive now than 30 years ago, a lot more.

http://www.theglobeandmail.com/servl...2.whousing1122

The earning aren't catching up. Until last year the inflation ate up all your pay increases and then some. That was happening for the last 20 years or so.

The salaries have increased a lot in the last year, but that may or not continue. It was the first time in a long time that regular people actually saw the booming economy on their paychecks. Most people will continue to get their 3% raises every year. Those people are getting priced out of owning houses.

Apply more logic and less hype and hopefull wishes. If you wanna make big money on RE in Alberta you're about 5 years late.

Not sure I understand your argument. You say Real Estate prices are not going up and then state home owenership is even more expensive than it was 30 years ago. Unless the average salary has decreased in the last 30 years would that not indicate housing prices have increased?

People that are getting priced out of homes are now starting to look at 30 to 35 year ammortization periods to make the monthly payments more affordable. Also if these people can't buy homes they have to live somewhere so renting is their next option. Guess what?, people who invest in Real Estate just might have a place for them to rent.

As I tried to clearly state before there will be ups and DOWNS in Real Estate cycle but they have always gone up in the long run and will continue to. Look at housing prices throughout history.

Now I know this thread is about flipping which can be a bit more of a gamble because you are looking at a very short term investment. However my argument is for long term investing in Real Estate. Over the long term the value of you house will continue to rise. If you have rental properties then you have appreciating assets that someone else is paying the mortgage down on for you and if you are lucky you are also making some money every month. I'm not saying it is for everyone. Obviously lots of people here don't agree. Tons of people last year said it was too late to get into the Alberta Real Estate market. Well for those if us that still did we made quite a nice profit last year and I expect to in the upcoming years as well.

I appreciate your advice about applying logic instead of my silly hype and hopeful wishes to make big money, but I am doing just fine with my investments thanks. Made lots of money already and plan to make more.

Good luck with your ultra logical investments

[Nabber]

The best way to make money in real estate is like everyone else says to make your money when you purchase the home. That said at the start of this year it was very hard to buy "fixer uppers" as people were over paying for them as they were looked opon as guarantee money no matter what you paid. Now as the market cools there are so called deals out there, they're just very hard to find as everyone in the city has seen the profits made and now there are so many people who want to invest in real estate. Welist was a great source for investors at the start of the year as people didn't know what their home was worth and were selling way under value, now it's the exact opposite as everyone thinks their home is worth millions.

As a real estate agent my advice to make money flipping is to buy in the slow months (now til january), pay less than market value by finding a motivated seller or uneducated seller look for vacant homes. Have a longer possession date say 90-120 days then come May-July do your fixes and sell during the hot time. Gobsgraham you'll need a realtor who will work with you on this as it's very hard to determine profit on homes right now and be very careful picking one as some will put you into a house will no potential just to make a sale. If within a week that realtor has how every many house that are guarantee profit he's just trying to sell.

[Shazam]

Originally Posted by Mike Oxlong

Please explain why this current economic climate isn't going to continue. I would love to hear why you think it is going to be a hard bust as well. What is it you predict will happen? Do you think we will start using alternative fuels to Oil on a mass scale within 10 years? Will we find tons of new Oil supplies to drive prices down?

$60/barrel oil makes virtually every form of alternative energy source viable. It also increases oil production capacity. I am also not a believer in "Peak Oil", and we are certainly not even close to tapping out our current oil reserves.

Current oil demand is driven by India, China and USA. The problem with India and China is their lack of a transparent financial market. Those two countries are fairly corrupt. This volatility could lead to a recession in those countries.

Also, please show me a long term period of time where an economic boom was not followed by a period of recession.

I understand that there are cycles to Real Estate and sometimes prices may go down but in the long run Real Estate ALWAYS goes up. It is one of the driving forces of Inflation. As people make more money they spend more on shelter which is one of mans primary needs. Think of what a house cost 30 years ago compared to now. There have been tons of peaks and valleys in the real estate market between then but overall the price of Real Estate has gone way up.

I did not make any suppositions about how real estate behaves in general. Of course it goes up in the long run. But then again, in general, so does the stock market, in the long run. So what?

There are lots of real reasons that Calgary's houses are as expensive as they are. You said it yourself DEMAND. When you have 30,000 people a year moving here it doesn't always matter that you have tons of land. You still need building materials and labour to build the houses. That is a finite resource and one of the causes of house prices to rise. The CMHC predicts the average cost of a NEW home to be $500,000 in 2007. There was an article in the paper about it last week.

So you firmly believe 30K people/year are going to move to Calgary for the next ten years? Without any economic consequences?

Even if we are fortunate to have a good supply of land at our disposal here in Calgary it isn't a finite resource either. There is a very limited amount of land available throughout the world, they simply don't make anymore of it. However we are continually making more and more people all the time. The earth's population continues to grow all the time and eventually we are going to run out of space. That may be a long time before we run out of space around Calgary but that just means the houses closer to the city core are going to be worth more than those an hour's drive away.

Again, I was referrring only to Calgary's situation.

Let me clarify my position a bit: The economic situation in Alberta will not be rosy for the next ten years. To say this is the height of naivety. Such unbridled growth inevitably leads to inflation; mitigated only by productivity increases. Judging from the current labour shortage we are already at a very high productivity; I'm not sure there's much capacity left. If inflation does rear its ugly head, the BoC will have no qualms about raising interest rates to painful levels to ease off such economic growth.

As for the real estate market, the only thing that would concern me only in regards to Calgary is that I don't see anything here that makes me thing houses are going to keep their presently very high values other than demand. In other words, if demand drops, I believe that house prices here will drop, and drop 25-40%. Other parts of the world with very high real estate valuations keep their value because they have no land left.

Of course, given the current real estate market here in Calgary, it is quite feasible to make money in it.

[Red]

Originally Posted by Mike Oxlong

Not sure I understand your argument. You say Real Estate prices are not going up and then state home owenership is even more expensive than it was 30 years ago. Unless the average salary has decreased in the last 30 years would that not indicate housing prices have increased?

People that are getting priced out of homes are now starting to look at 30 to 35 year ammortization periods to make the monthly payments more affordable. Also if these people can't buy homes they have to live somewhere so renting is their next option. Guess what?, people who invest in Real Estate just might have a place for them to rent.

As I tried to clearly state before there will be ups and DOWNS in Real Estate cycle but they have always gone up in the long run and will continue to. Look at housing prices throughout history.

Now I know this thread is about flipping which can be a bit more of a gamble because you are looking at a very short term investment. However my argument is for long term investing in Real Estate. Over the long term the value of you house will continue to rise. If you have rental properties then you have appreciating assets that someone else is paying the mortgage down on for you and if you are lucky you are also making some money every month. I'm not saying it is for everyone. Obviously lots of people here don't agree. Tons of people last year said it was too late to get into the Alberta Real Estate market. Well for those if us that still did we made quite a nice profit last year and I expect to in the upcoming years as well.

I appreciate your advice about applying logic instead of my silly hype and hopeful wishes to make big money, but I am doing just fine with my investments thanks. Made lots of money already and plan to make more.

Good luck with your ultra logical investments

I said the Real Estate doesn't ALWAYS go up and that's not a popular scanario for you, which is fine, no need to get snappy.

And no, I don’t offer financial advice, like you suggest.
I can offer simple truths though:

• It’s better to miss on a great investment that get burned by a bad one.
• People who have or make a lot of money never say they do have or make a lot of money.

[Mike Oxlong]

Originally Posted by Red

I said the Real Estate doesn't ALWAYS go up and that's not a popular scanario for you, which is fine, no need to get snappy.

And no, I don’t offer financial advice, like you suggest.
I can offer simple truths though:

• It’s better to miss on a great investment that get burned by a bad one.
• People who have or make a lot of money never say they do have or make a lot of money.

What I have been trying to say is that in the LONG run real estate has always gone up. Yes there are peaks and valleys but LONG term it continues to rise. I understand the argument that Stocks go up in the long term as well but that is like comparing apples to oranges. With Real Estate your investment (that you likely put a maximum of 25% into) is going up in value while someone else is paying the loan on the rest of the money off. Plus with Real estate the market in a region moves as a whole generally. The Calgary market will usually fluctuate at the same pace throughout the city. With Stocks you have to be far more careful which stocks to pick. Maybe Oil and Gas stocks for the most part are rising but you could potentially pick the wrong company and that stock will go down.

Sorry didn't mean to get snappy and by no means am I boasting about making lots of money. My investments have done well and I am very happy with them and have performed well contrary to some arguments on here.

I am just trying to respond to everyone in this post and likely not doing a great job of it. One thing of note that Shazam said was that if the economy in Alberta caused inflation to rise too much you said the Bank of Canada would step in and raise interest rates to cool inflation. I understand the economics of this on a national level but what would that do to the rest of the country that isn't neccesarily enjoying the same "boom" that Alberta is going through? How can you raise interest rates nation wide and make housing less affordable for the rest of the country just to cool one region? (This is a serious question, I am not trying to be argumentative. I really want to understand how this would affect all of Canada)

[Shazam]

Originally Posted by Mike Oxlong

I am just trying to respond to everyone in this post and likely not doing a great job of it. One thing of note that Shazam said was that if the economy in Alberta caused inflation to rise too much you said the Bank of Canada would step in and raise interest rates to cool inflation. I understand the economics of this on a national level but what would that do to the rest of the country that isn't neccesarily enjoying the same "boom" that Alberta is going through? How can you raise interest rates nation wide and make housing less affordable for the rest of the country just to cool one region? (This is a serious question, I am not trying to be argumentative. I really want to understand how this would affect all of Canada)

The BoC has no problems with focusing their attention on a certain region. They've done it before to quell activity in Ontario, the rest of Canada be damned.

Also, I don't see why you have such a problem with accepting an inevitable downturn. For me, downturns represent a buying opportunity...

[Wookie]

Originally Posted by Mike Oxlong

What I have been trying to say is that in the LONG run real estate has always gone up. Yes there are peaks and valleys but LONG term it continues to rise. I understand the argument that Stocks go up in the long term as well but that is like comparing apples to oranges. With Real Estate your investment (that you likely put a maximum of 25% into) is going up in value while someone else is paying the loan on the rest of the money off. Plus with Real estate the market in a region moves as a whole generally. The Calgary market will usually fluctuate at the same pace throughout the city. With Stocks you have to be far more careful which stocks to pick. Maybe Oil and Gas stocks for the most part are rising but you could potentially pick the wrong company and that stock will go down.

Sorry didn't mean to get snappy and by no means am I boasting about making lots of money. My investments have done well and I am very happy with them and have performed well contrary to some arguments on here.

I am just trying to respond to everyone in this post and likely not doing a great job of it. One thing of note that Shazam said was that if the economy in Alberta caused inflation to rise too much you said the Bank of Canada would step in and raise interest rates to cool inflation. I understand the economics of this on a national level but what would that do to the rest of the country that isn't neccesarily enjoying the same "boom" that Alberta is going through? How can you raise interest rates nation wide and make housing less affordable for the rest of the country just to cool one region? (This is a serious question, I am not trying to be argumentative. I really want to understand how this would affect all of Canada)

That's one thing I've been thinking about for awhile. On the whole it seems more likely that interest rates would go down then up. Which would bode well for Calgary housing prices.

In my defence I think housing prices will continue to trend upwards.. However I'm concerned about where that trend is going in the next 12 months rather then 15 years. I'm going to be a buyer or renter decision maker in the next 6 - 18 months and thus that's what concerns me.

I'd feel more comfortable buying in 18 months or less if there was a slight correction or plateau then what happened last spring.

Why?

Because regradless of the long term trend I believe we're in for a plateau or correction at some point and I'd prefer to be buying during that.

Why?

Because I'd like to have options, if iI buy pre-correction I have less options then buying post/or during a correction.

My thoughts..

[Mike Oxlong]

Originally Posted by Shazam

The BoC has no problems with focusing their attention on a certain region. They've done it before to quell activity in Ontario, the rest of Canada be damned.

Also, I don't see why you have such a problem with accepting an inevitable downturn. For me, downturns represent a buying opportunity...

Holy ****!!

How many times have I said there will be peaks and Valleys in the Real Estate market? For anyone not clear on what I am writing "VALLEYS" mean downturns in the market. Yes I understand prices will drop at some points, but what I am trying to say is that they will recover and continue to rise.

There is a small downturn in the market right now in Calgary and my very first post said this is a good time to buy.

YES I agree there will be ups and down in the market. However in the LONG term real estate prices always go up.

Our main disagreement is that I don't think there is going to be a price decrease in Alberta for a long time. I say 10 years you seem to disagree.

[Wookie]

Originally Posted by Shazam

The BoC has no problems with focusing their attention on a certain region. They've done it before to quell activity in Ontario, the rest of Canada be damned.

Also, I don't see why you have such a problem with accepting an inevitable downturn. For me, downturns represent a buying opportunity...

Really? Neat, never knew that, but common sense to me assuemd they wouldn't... Although my common sense has let me down plenty of times.. assuming I actually applied it... hmmm...

[Bertuzzied]

I'm gonna buy all your houses for $1 each when interest rates hit 23%. That can't happen again can it? hehe