Flipping houses

[STAMPEDRED]

Originally Posted by Kobatuzzied

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

I'll give em all a $1.50!

My old boss said this 5 years ago that people would be selling their houses for a buck in a year or two cause they couldn't afford it any more... well if some of them did, I sure missed the boat on getting their house for a buck!

[photon]

Originally Posted by DementedReality

well, as long as he has the cash flow, who says he has to sell it at a loss? just hang on until the value returns.

Plus you have tenants who are paying down your mortgage for you.

[DementedReality]

Originally Posted by photon

Plus you have tenants who are paying down your mortgage for you.

well, the dynamic of a lowering of the home values means a segment of those who are renters in a high market now can become owners which lowers the pool of renters and reduces the "asking price".

the ability to ride out a low market is key to not losing your shirt.

[STAMPEDRED]

Originally Posted by photon

Plus you have tenants who are paying down your mortgage for you.

I've got a rental in Bowness, a condo no less, and have it rented for $1200! Heck, I would never rent for that amount, 2 years ago or even now! But it is high enough that it cash flows ~$100-$150/ month... it actually cash flows the full rent amount cause land titles takes sooooo long to get through which in turn paid for a new fridge and stove in the meantime!

Happy tenants, Happy Landlord!

In all honesty though, the rent I'm getting is high, but that is where the market has pushed it to.

My goal is to renovate after their 6 month lease is up and sell, and they are even willing to stay until it is sold!!

My thoughts on RE is there is money to be made form it in ALL market conditions. It is just a matter of having your game plan and exit strategy together before you buy. If not, things will happen (even in the above situation for me I got hit with almost $1000 of unexpected expenses right away!) that will cause you to panic and most likely lose your shirt and never want to touch another property again.

If you do not have an exit strategy before you buy, then you have no idea what you are getting yourself into and will pretty much guarantee yourself a sure hit from not having a proper strategy to walk yourself through the day to day dealing with it!

[V]

Originally Posted by Red

Or they can go down to where they were 2 years ago and you'll be 100K in a hole.

I guess that's always possible, but I'll bet my money that won't happen.

I suppose I could just leave my money in my bank account and retire at a ripe young age of 95, but that doesn't appeal to me. I've gotta do something to try to get ahead. What would you suggest? You seem to suggest that the (slim) possibilities for big losses should keep folks out of the market. What's a better alternative right now? Mutual funds??

[V]

Originally Posted by Wookie

Wow, I shoulda bought in 1985.

[Red]

Originally Posted by Dominicwasalreadytaken

I guess that's always possible, but I'll bet my money that won't happen.

I suppose I could just leave my money in my bank account and retire at a ripe young age of 95, but that doesn't appeal to me. I've gotta do something to try to get ahead. What would you suggest? You seem to suggest that the (slim) possibilities for big losses should keep folks out of the market. What's a better alternative right now? Mutual funds??

There is no perfectly safe investment plan. That's what I am trying to say, you and a few others seem to treat RE as a surefire way of getting rich. That's simply not true.

re: above, if the houses go down to where they were two years ago the rents will follow. It will become a $1500 mortgage + taxes, maintenance and $800 rent revenue. Not suggesting that this WILL happen, but people need to be aware of it. How long would you subsidize your investment if it cost you 12K a year?

What if the market correction is caused by high inflation and the BOC had rised the interest rates by 1.5 or 2%? That's another $200 a month loss per 100K borrowed. In your example that's $700/ month more.

My problem with RE investing in Calgary right now is that it's just like buying a stock that has been really hot for a while. You're buying at a bloated pric. Some will continue to go up, but most will correct themselves and leave the investors in the red.

[V]

Originally Posted by Red

There is no perfectly safe investment plan. That's what I am trying to say, you and a few others seem to treat RE as a surefire way of getting rich. That's simply not true.

It's something that's done well for me so far, and while I understand everything could fall flat on its face, the likelihood of prices reverting to early 2005 prices is highly unlikely. So even if I don't make another cent on these houses, I'm doing well enough. And I don't think I've ever claimed you'd be stupid not to invest in RE. Only that it's worked for me, and I don't really see things crashing.

re: above, if the houses go down to where they were two years ago the rents will follow. It will become a $1500 mortgage + taxes, maintenance and $800 rent revenue. Not suggesting that this WILL happen, but people need to be aware of it.

And all my stocks could crash overnight as well. Who cares? I don't think anyone goes into an investment thinking that the only possibility is big gains. There can be losses too. I just don't see those losses in RE for another 5 years or so. Personal opinion, maybe.[/quote]

My problem with RE investing in Calgary right now is that it's just like buying a stock that has been really hot for a while. You're buying at a bloated pric. Some will continue to go up, but most will correct themselves and leave the investors in the red.

Is that how you came across your username? You really do sound like someone who's been burnt in the past. Which is understandable, there's nothing wrong with caution. I just can't see myself sitting on the sidelines ignoring investment opportunities. Maybe it's just a mindset thing. Once again I ask, what would you suggest? I've seen a lot of negativity from you regarding investing. Do you suggest doing nothing in this economy? Because that just seems crazy to me. Tonnes of people are making good money out there. Why shouldn't you try for a piece of the pie?

[Sylvanfan]

Well buying real estate a year ago, and buying it now are two totally different things. I agree with DM that you will make money in the long term, but you have to have the means and patience to do it for that term. You can't put yourself in a position where you have to cut ties 6 years from now if prices drop. Than you get into the arguement that any investment strategy will yield profit if you stick it out for 25 years. I was looking at real estate and determined that right now it's not the best investment for me right now because basically I ****ed up and missed the boom by being a year too late in getting my **** together, and a lot of it has to do with me not being willing to stick with that investment for 25 years.

[Red]

Originally Posted by Dominicwasalreadytaken

It's something that's done well for me so far, and while I understand everything could fall flat on its face, the likelihood of prices reverting to early 2005 prices is highly unlikely. So even if I don't make another cent on these houses, I'm doing well enough. And I don't think I've ever claimed you'd be stupid not to invest in RE. Only that it's worked for me, and I don't really see things crashing.



And all my stocks could crash overnight as well. Who cares? I don't think anyone goes into an investment thinking that the only possibility is big gains. There can be losses too. I just don't see those losses in RE for another 5 years or so. Personal opinion, maybe.

Is that how you came across your username? You really do sound like someone who's been burnt in the past. Which is understandable, there's nothing wrong with caution. I just can't see myself sitting on the sidelines ignoring investment opportunities. Maybe it's just a mindset thing. Once again I ask, what would you suggest? I've seen a lot of negativity from you regarding investing. Do you suggest doing nothing in this economy? Because that just seems crazy to me. Tonnes of people are making good money out there. Why shouldn't you try for a piece of the pie?

No, I haven't been burned. In fact I, just like every other Alberta homeowner over the last 10 years have done well in RE, but that doesn't mean that things can't change.

I guess I have a bit of a problem with people that haven't been around for a full cycle to claim that they have all the answers and that the money is just laying there to be grabbed. It's not that easy, and you'll find that out sooner or later. You've only been "in it" for a year and that's during historic highs, you don't have much of an experience yet.

Like I told you once in the past, maybe there isn't easy money out there? You seem to be convinced that there has to be a way to make a quick buck. If there is, I hope you find it, but chances are you won't.

Don't take any offense to what I said, I really mean no harm, I am just trying to make you realize that you may be wrong.

[The_Dude]

I know so many families that have become "rich" by flipping houses these past 5 years. I wish I started doing it, but I never had enough time to keep doing it.

Guys that have been here from another country for less than 2 years have more money than people I know who were born here.