Las Vegas Hold ‘Em

This is not a good market for flipping houses—I’ll say it again. It’s a great time to buy a house. It’s a terrible time to sell a house. Buy in a buyer’s market, and sell in a seller’s market.

It’s always hard to tell a client that this is not a good time to sell their house. When Don H. bought this home in December (yes, just 60 short days ago) I counseled him that this was not a market for flipping houses. I took the affirmative nods to mean that he understood this, and wholeheartedly agreed. Perhaps he was just blinded by my brilliance; if that’s the case, he seems to have gotten over it. Because here we are, a mere 60 days later, meeting to look at comps.

Don bought this house for $250,000 less than it sold for the last time it sold. In a normal market, he could probably turn this house the day it closed escrow, and pocket a nice profit. This is not a normal market, however—not yet. But auction fever has taken hold, and Don’s convinced he can buy homes for $1 at one of the many auctions he’s seen advertised. Don, an avid poker player, needs to remember that he’s got to know when to hold.

Fixing up a rehab home is a great way to turn a profit providing you sell when the time is right. It doesn’t matter how inviting that new spa looks—the home will not sell until buyers are buying again. While buyers are now returning to the market, they are gobbling up the best deals.

Don could sell this home now, pay all of the costs of the sale, and make a small profit. But as I tell all of my clients, real estate is a long term investment. In a year or two, Don will be able to cash in and reap bigger rewards for having invested at just the right time. Today I gave him a little lesson in how to play Las Vegas Hold ‘Em.

[Email Blogger]