Mortgages, Credit, Income, Down Payment, and FLIPPING Property... So many ??!

[Creditaddict]

Does anyone currently flip realesstate?  It had been many years that I really heard of anyone doing this but now I see at least 2 shows on TV related to it and I spoke with a friend several months ago that use to do it about 5 years ago just flipped the first one since then and I guess "Luck, timing, whatever works for you" Flipped it in under 90 days from buying, fixing, selling and made over $100k

Clearly different market then where I am here but still kind of shock...

Well recently started looking into it around here and spoke with a Realestate agent yesterday who was saying houses are being swallowed up in seconds by all cash buyers! (I was like CASH!!???)

I asked about FHA, living in it while you did the renovations or what not or just get in and get out.

He said you can't even bother with FHA or conventional mortgages because these cash people will come in and be done and out before you even got to signing....

So my question:

He told me I need 20% CASH DOWN, and then he can get me pre-Approved with a Cash Mortgage, or a Now Mortgage (err forgot his wording) but kind of sounded like the mortgage that you could get back in 2007 but this time instead of no money down it's 20% down... but income does not matter and credit does not matter and it won't even report to your credit report if paid on time andhopefully paid off in under a year but interest a bit higher.

The prospect of the idea is both scary and exciting...

The arguments for stupid is endless so if we can possibly try to keep the topic to if you have heard of this, or if you have done this.

Besides the extra say $200-$500/month additional in mortgage payment because of a higher interest and the $20-$50k Cash down you will loose if you don't flip and can't pay what are other downsides that I am missing?

[chasmith]

I think you'll find those flipping shows are reruns from 2005-2009.

[Creditaddict]

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@chasmith wrote:

I think you'll find those flipping shows are reruns from 2005-2009.

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The one crazy one is that guy that's been on Survivor twice, he is in Texas and is partnered with his brother for the flipping business and has the reality show following it... It's HEAVELY scripted and stuff... it's actually basically the worse show to watch it comes across SO stupid.... it's like if that "blank" can do it then I would be amazing at it!

Then "Sell LA" but not sure that is so much flipping vs. seeing what the market is like for buyers and sellers... still just catching up on it as far as what they are trying to show you.

I REALLY want Jeff Lewis to go back to Flipping instead of design, although I love his design too, it's just I want to see what he does with the flip and "then" the design to finish it off!

[drkaje]

In many areas, flipping has flopped. A with all things, people who really know their business are likely still making profit but the no-doc, low-doc, interest-only, and other scams, err I meant opportunities to help take advantage of otherwise unfundable people with crappy credit, bundle the risk and pass it off on big banks disadvantaged buyers into dream homes they can't afford are drying up.

Cash will always be king. Someone selling a property cheap wants to get paid. Waiting for buyers to get approval, funded, fix their credit, kill zombies, etc... may not be doable under their cash flow plan. A buddy of mine does a lot of the "No money down" stuff with owners holding the paper. He basically does 10 year loans, rents the properties, and has someone manage day to day aspects of keeping everything up. He does well and is one of those dudes who really knows his market and when a deal makes sense.

[drkaje]

Jeff Lewis?!

I can't think of anyone (on TV) more over-indulged, LOL!

[Creditaddict]

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@drkaje wrote:

In many areas, flipping has flopped. A with all things, people who really know their business are likely still making profit but the no-doc, low-doc, interest-only, and other scams, err I meant opportunities to help take advantage of otherwise unfundable people with crappy credit, bundle the risk and pass it off on big banks disadvantaged buyers into dream homes they can't afford are drying up.

Cash will always be king. Someone selling a property cheap wants to get paid. Waiting for buyers to get approval, funded, fix their credit, kill zombies, etc... may not be doable under their cash flow plan. A buddy of mine does a lot of the "No money down" stuff with owners holding the paper. He basically does 10 year loans, rents the properties, and has someone manage day to day aspects of keeping everything up. He does well and is one of those dudes who really knows his market and when a deal makes sense.

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AND that is the TRUE Answer in the end!!!

My friend back home that I told about, him and his 2 partners... they know the business in and out... they watch weekly, monthly, yearly sellings, prices, etc. in the neighborhood they are buying and city wide vs. other cities, etc.

Then it's about how much can and will you do yourself, where are you buying the supplies, wholesale, etc. it is not a quick easy process or thought that's for sure.

[drkaje]

@CA,

Another thing that surprised me was he pays full asking price in many situations. In a nutshell: real estate is flat in our area but people are always looking for rentals. He basically says; "It's tough out there, I'll give full asking price if you privately hold a ten year mortgage." and shows them his track record, credit, properties, etc... It's not much riskier than paying the mortgage, taxes, maintenance, and whatever else is associated with a vacant property of being a landlord while waiting for property prices to bounce back. He knows the market and understands when the numbers make sense to have certain properties as rentals.

[Catacam]

All of those shows are crazy. Some of our friends are getting ready to film for HGTVs House Hunters. It is totally fake. They have been building their house for 5 months. The producers are now finding their other "Two" houses to view. RE Agents are contacted by the producers in certain areas and their agent was contacted. Their show airs in December.