Engineer X asks . . .
Posted on September 7, 2006 - Filed Under My Strategy |
From last weeks post, Engineer X asks: So, you’re predicting that the quick flippers are doomed in the short term, but isn’t that what you’re trying to do right now? And aren’t you planning to do very much the same thing as soon as your place sells?
"Doomed" is such a dramatic term. And one that I didn’t use.
I really wrestled with this one. I admit I wrote a large response, dispelling this notion that I am a flipper, not an investor. In the end, I remember the saying "If it walks like a duck, sounds like a duck, swims like a duck then it’s a duck."
So yes, I’m flipping this house. I maintain that I’m not a flipper but I am flipping this property.
I didn’t inhale and I didn’t enjoy it . . .
I spent a good deal of time, talking with the real estate agent about this. He stated that I am flipping this property and for good reason: some of which I outlined yesterday. In a nutshell, I’m doing this to generate capital.
The key difference is I don’t intend on flipping every piece of real estate I purchase. The Real Estate Agent reminded me that our objective is to buy and hold. If I want to be a professional flipper he advised me to work with another agent.
When I started out, my objective was not to replace one job with another. That is to say I didn’t want to rely on flipping houses for my income versus sitting in a cubicle. If I’m 70 years old and need to flip a house in order to pay my electric bill then there’s a serious problem.
Second Question: Did I misunderstand what you wrote, or is Signal Hill/LBC immune from the problems facing other flippers?
Actually I said the contrary. I believe "flippers" are going to feel the pinch in this market. It doesn’t matter if it’s in Signal Hill, Capitol Hill or Sand Hill, Oklahoma. When your business relies on moving real estate fast, the last thing you want is to see inventory sitting on the market for months on end. Flippers hate making mortgage payments and they certainly don’t want to deal with renters.
In the Long Beach/Signal Hill area, there are still great deals to be found due to the gentrification that is going on. When I’m talking about great deals, I’m referring to those areas where property is (1) affordable and (2) makes sense to purchase. Gentrification is by no means a fast and quick process. This typically happens over a period of years which, per the flipper definition, goes against their business model.
If you liked that post, then try these...
In the blocks on January 15th, 2008
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2007 Inventory on December 27th, 2007
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I admire your optimism. I imagine the following headline as written by you:
WORLD TO END SOON, experts say Real Estate market should pull through.
Just remember, old bean, that more has been accomplished with optimism than with pessimism.