All Forum Posts by: Andy Hunt

It looks like the main source for this article came from ATTOM Data Solutions, which is owned by RealtyTrac - RealtyTrac, for those who don't know, consider themselves a "real estate information company" as well as marketplace for foreclosed and defaulted properties. 

What stuck out to me most from the article was this section: 

It's easy to overlook this quote, but this is worth watching closely, in my opinion, over the next year especially. I get the sense that any sort of bubble here would originate from a drastic increase in the foreclosure rate for investment property loans given all the capital that's flowing into this sector, especially as more articles like this one will only further push house flipping into the mainstream with people (even more so than it is already).

Like @Chris C. said, "The Big Short" was a way for us to understand that money was being loaned to people who shouldn't have qualified by banks who were being greedy. In this case, if banks get greedy to lend money to investors who aren't really qualified to flip homes, and they don't stay conservative in their underwriting, they will once again end up lending money to "newbies" as investors who make mistakes and could easily get under water in the event of a recession or correction in home prices. I'm not saying it would be as severe at what we experienced in 2009, but it would be enough that investors like the rest of us would feel it. But this is all just speculation on my part, obviously.

Thanks @Polar Prutaseranee, obviously my searching skills on BP need to improve! Really enjoying this discussion and appreciate the link. Take care!

@Justin Stanfield, great thoughts and super helpful for a property tour. But just to summarize your post, are you saying that investors should be trying to pinpoint these things so that they can provide further information to a structural engineer? Or that these are the areas to look for during your tour, and if any of them come up then you should definitely be hiring a structural engineer to take a look? Just wanted to clarify what you're recommending as 'next steps' after looking for these things. Again, very helpful and thank you.

I was looking at a home with structural problems a few months ago - the Seller had disclosed these problems in their listing and offered a reduction in the price. However, I was still skeptical. I asked for the structural repair quote from their broker, and after getting it I forwarded it to a structural engineer contact of mind, who quickly broke down what was happening - that the foundation was definitely in trouble, that the "fix" in the proposal was only a band-aid and wouldn't truly fix the problem for the long-term, and that the true cost of the repair would be double the amount the Seller was offering as a discount. Therefore, we made a very low offer on the house and the Seller didn't budge, ultimately keeping it and taking it off the market. But I was very, very glad that I had gone to a structural engineer for guidance, otherwise I definitely would have overpaid and been in a tough spot. Hopefully this just further clarifies the importance of getting good advice and understanding the true costs - even when you can get a report, you need to make sure it's truly fixing the problem, not just putting a band-aid on it!

I'm actually shocked that no one has posted yet regarding this article that came out in the Wall Street Journal today: http://www.wsj.com/articles/as-home-prices-rise-fl...

According to the article, 

• We've now reached pre-recession levels of the number of investors who flipped houses (2007 to 2016). 
• We're seeing more and more big Wall Street banks come into the space to support small shops that are doing lending to house flippers. 
• Profit margins have risen to an average of $61,000 per flip, versus only $19,000 during the heart of the recession in 2009 (the article defined these profit margins as 'the difference between the housing value when the investor purchases the home and when it is sold,' so this is somewhat disingenuous since it doesn't appear to take into account the costs of the flip)

Given that BP is the biggest and best forum to discuss this, I think it's worth having a discussion about the pros and cons mentioned in this article, and what we expect to happen next.

A few food for thought questions i'm wondering if anyone is interesting in discussing:

1. Do you think we're headed toward another correction in the housing market?
2. Does it concern you that institutional money (Wall Street) is getting into lending for house flippers?
3. Can beginners to house flipping realistically make money despite a lack of experience or access to good deals?
4. What are the keys to maintaining success in this competitive environment?

Interested to hear the BP community's thoughts.

No responses so maybe i'll ask this differently - I'm considering a remodel of a bathroom (new flooring, vanity, and shower), as well as adding a 2nd bathroom on an upper floor. Would love more insight into how to budget and think about something like this?

Does anyone have a nice "cheat sheet" of estimated costs for SFH renovations (bathroom, kitchen, etc.)? J Scott has a great one he posted to the files section of BP from 6 years ago, but I'm guessing an update might be needed just based on timing/cost increases. I also appreciated Justin Pierce's article about costs, but i'm looking for more of a detailed breakdown. If anyone can point me in the right direction, please let me know!