Help stop a soon to be flipper

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halfnote19_IHB

halfnote19_IHB

New member
<p>I was just having lunch with my dad this weekend as he was telling me about his great idea on how to make money. Unfortunately I don't agree with him and really don't have a good way of proving how his plan will not work and will ruin him. Please help!! I tried explaining how this was a declining market, but he says he knows people who are doing this and still making money.</p>

<p>Here is his plan buy foreclosed homes from the bank for less than what the bank paid. He will one either fix up the house and flip it for a profit (I doubt). His other option is renting it out and taking the equity out of the home to buy another and start the whole process over. I know this plan is a ticking time bomb and before he does anything I want to give him all and any information that will dissuade him from doing this. Examples or articles would be best so he can see how this is not working would be great!!</p>
 
<p>What ? He's going to blow your inheritance ? </p>

<p>These articles are plentiful....just do a google search.


</p>
 
<p>I don't expect an inheritance from my parents. I didn't know people actually inherited money anymore.</p>

<p>I would just hate to know I could have stopped my dad from financially ruining himself, but didn't.</p>
 
How computer literate is he? Just direct him towards some of the posts on IHB. A couple days of reading here might open his eyes a little bit to whats going on...
 
Halfnote





I would start out by printing out some of the wonderful analysis IrvineRenter has posted here. Then maybe do a google search and find some flips-gone-flops and show those to your dad.
 
<p><em>I would just hate to know I could have stopped my dad from financially ruining himself, but didn't</em>.</p>

<p>I have some handcuffs you could borrow......</p>
 
<p>I will not say it can't be done... but I will say he should look at the numbers and see what he NEEDS to put down on a foreclosure as well as how much the house needs to be rehabed. A swing of a few thousand dollars either direction would sink him either way. (I did this form almost 10 years before I switched to commercial property.... and even then there are people who are geniuses at this. I'm just a brute force type of guy).</p>

<p>My advice to him would be to make it a rental (but make it cheap enough to be a rental, apply the 100-130 rule (shoot for less)). Otherwise I would discourage him from doing so.... </p>

<p>The people that make money doing this are people who have done this for a living for a LONG time. He's not one of them. Goodluck</p>

<p>-bix</p>
 
There was just a story on KPCC on "Trump University" and their seminar on how to get rich with foreclosures. Or at least, on how to get rich offering expensive seminars on how to get rich flipping foreclosed properties.





Seems that foreclosure flipping is the new trend - new courses, web pages, etc sprouting like weed. You must be a fool not to do it.






 
HN19, How do you convince him? Try reverse psychology.



Early this year, a friend of mine was enduring unnecessary 'spousal conflict' because he didn't want to jump in and buy a brand-new home in the Inland Empire to rent out as an investment. The developer had worked out a "deal" with the RE Broker, and was offering an arrangement with some sort of cash kick-back (fraud??). My friends could use the cash to cover the difference between rental income and high mortgage payment until housing prices recovered in a year or two [LOL] and then they could sell at a profit. After "no" and "No" and "NO" didn't satisfy, my friend says to his wife, "OK, we're in! But let's look at the numbers!" Of course, the numbers didn't work out. Within a couple of years they would have had a monthly mortgage payment well over $5,500, plus taxes, insurance, etc. on a relatively modest home that would rent for maybe $2,500. Wife looks up in horror. "We can't do that!" and convinced hubby to not do the deal. End of controversy. Return to marital bliss.



BTW, I just LOVE those flipper shows on TV. Especially the ones that are now in reruns, where they show the actual results, not the promised results by the RE agent. When carrying costs, taxes, and realtor fees are included, the amateurs rarely make money commensurate with their labor.
 
what area of the country? what type of units? has he performed rental surveys?



It is not impossible to make money right now, but it is extremely difficult.
 
Friend of mine attended a Nouveau Riche University seminar, and now wants to be involved with them in sales. Anyone have suggestions?
 
<p>I don't know what type of units, he mentioned houses but it could be all the way up to four-plex in the Long Beach area.</p>

<p>He currently owns a four-plex right now so he generally knows rental prices.</p>
 
I have a friend that also likes to say it's a great time to buy rental property in Long Beach. Finally I'm not the only one disagreeing with her. In fact the tide has turned so far in the other direction I almost start to wonder if she's right... but the fundamentals speak for themselves. I find it hard to believe you could rent anything cash-flow positive w/ only 20% down in Long Beach right now. Surely the prices have come down that far?
 
<p>New, </p>

<p> You can do it, but you have to find the right opportunity as well as walk in with cash AND the right person. It takes work... ALOT of work. But you can do it, plus you have to be patient and wait for the right deal. All the same boring rules apply.</p>

<p>-bix</p>
 
We sold in Long Beach. Prices are crashing and there is no sign that they will not continue to crash for some time. I am just glad there was a knife catcher out there willing to buy our property.
 
<p>momopi,</p>

<p>Here is a website where the author, John T. Reed (a California real estate author himself) gives reviews of numerous real estate 'gurus':</p>

<p><a href="http://www.johntreed.com/Reedgururating.html">http://www.johntreed.com/Reedgururating.html</a></p>

<p>Perhaps you can find something here to persuade your friend that there are many 'get rich quick' schemes and scams out there and due diligence is of the utmost importance. If you click on the link this site refers to under Nouveau Riche, you will see an article written about what they are doing and how (including charging $16,000 for their seminars). </p>

<p>Best of luck in your endeavor.</p>

<p> </p>
 
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