Boise Real Estate Flippers Who Flopped
Greed is an amazing thing.
Just three short years ago, the Boise real estate market was overrun with flippers and speculators flooding into our market hoping to get rich quick.
There was even one day when two busloads of “investors” (I use the term loosely) from Sacramento drove into one Meridian subdivision and tried to buy every existing home!
I first noticed the beginning of the feeding frenzy when I started getting offers above list price and multiple offers on my listings from people who hadn’t even seen my listings.
I also encountered buyer agents with Powers of Attorney from their absentee buyers, with instructions to “just get it bought and don’t worry about the price”.
Many of those buyers financed their purchases with “liar loans” (no documentation/stated income) loans or Option ARM loans (where you can skip payments, pay interest only, etc.)
This financing often resulted in substantial negative cashflow, not to mention no reserves for vacancies and repairs.
Well, guess what, folks?
Many of those absentee investors held on too long, failed to flip those properties for a profit, and have since become absentee landlords who haven’t a clue what’s going on with their properties.
I routinely see listings of these homes with burned up lawns, occupied by tenants with multiple Pit Bulls, with several cars parked in front of what’s supposed to be a single-family residence.
When the hapless sellers decide it’s finally time to take their beating and sell in our now-declined market, the properties are in poor condition and showings are obstructed by tenants who will do everything they can to keep the property from selling so they don’t have to move.
Worse yet, many of those properties were purchased with little or nothing down and now are “upside down” (see my previous post) with negative equity.
Flipping and speculating is not investing.
Investing requires a prudent analysis of present market conditions, future potential, cashflow considerations, and a long-term view.
Investing in real estate is not a get-rich-quick scheme.
November 25th, 2008 Posted in About Boise, ID, About Our Area, Inside Real Estate
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3 Responses to “Boise Real Estate Flippers Who Flopped”
By Nordaune at Real Estate in Rochester MN on Nov 25, 2008
Too many people used to view flipping Real Estate as a quick and easy way to make big bucks … thank you HGTV. If it’s too good to be true, than it probably is!
By Phil Hoover on Nov 25, 2008
HGTV e-mailed me a couple of years ago, asking me to work with them on a “Flip This House” episode to be shot in Boise.
I turned them down without hesitation.
By Kelly on Nov 30, 2008
Thought you may find this article interesting, as I recalled the similarities when reading your post.
http://www.theweek.com/article/index/90757/The_last_word_Subprime_U.S.A.