Friday, January 18, 2008

Upside of down housing market

This flip is not expected to be a big moneymaker. I knew this from the start.

The potential for big profit will be sucked up by a 100-foot long retaining wall (if the ground ever unthaws for it to be installed). The old one was built incredibly wrong, and the foundation kind of relies on it.

So why bother?

The flip initially appraised at $48K, about half of what houses have been selling for on my street. Prime material for a crap-ass rental, which could mean methheads, domestic screaming matches and junk cars in the yard.

With neighbors like that, I could easily lose five grand or more when I go to sell my own house. And I would be miserable living here in the meantime.

Now my potential flip profit depends on the ridiculously unstable housing market.

Good news:
  • It likely will be sold to a first-time homebuyer so the purchase won't hinge on the buyer selling their current home.
  • The price will be in the lower $100,000 range, which features a lot of craptacular homes (certainly very few with a new kitchen that doesn't have gross white laminate cabinets).
The latest silver lining:

Much of the flip financing is coming from money I had set aside for investments.

And look at that stock market tank!

To improve my outlook, I am tracking how much my IRA has lost in the time I've had the flip.

After yesterday's stock plummet, I've lost nearly 7 percent!

That makes the flip's potential profit seem like a smart investment.

If I'd kept that money in the stock market, I would have lost money! Granted, I wouldn't have spent my free time covered in plaster dust, but ...

I cannot say enough good things about this software to track flipping financials:

Flipper’s & Rehabber's Cash Flow Analyzer Pro

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