This is the second in our duration-yet-to-be-determined series on real estate flippers who appear to be in a bit of trouble. What makes someone a property flipper? Not much these days. You buy a place with the expectation that you can make a profit by selling it in a short period of time. Sometimes that short period is only a few weeks, and sometimes it may be a year or longer. Often the flipper will make some cosmetic upgrades to imrove the selling price. In the days skyrocketing appreciation, many wouldn't even bother.
Our last Flipper in Trouble was a Hermosa Beach Townhouse. The losses appeared to be around $65,000, with some pretty generous assumptions. Our second flipper is in the same region, Redondo Beach. Check it out:
Address: 1xx S Guadalupe Ave #x, Redondo Beach, CA 90277
Last Sale: 07/07/04 $651,000
Current Asking Price: $665,000
Price Reduced: 06/13/06 -- $689,000 to $675,000
Price Reduced: 07/17/06 -- $675,000 to $665,000
Days on Market: 71
Carrying Cost: $2712.50 per month assuming interest only at 5%, plus $125 in HOA dues. Total: $68,100 (24 months). This number does not include property taxes, insurance.
Assuming Realtor Fees of 3% in and out.
Current Gain/(Loss): ($93,580). That is a loss of nearly One hundred thousand dollars. IF he gets his asking price. He has already had two price reductions. Do you think a third is around the corner? If not, then the carrying costs may continue to mount.
By the way, for more Flippers in Trouble, see Bubble Markets Inventory Tracking Blog.
Note: The information for this post was obtained from ziprealty.com and zillow.com. The information is deemed reliable, but even if it is not, this is definitely not advice of any kind. In fact, it is a big fat "Caution" sign.
nice to have you do all of the research for us. It makes our decision making so much easi
Posted by: mbt shoes clearance | September 24, 2011 at 09:08 PM