Sunday, April 02, 2006

Flipping Looks Fun, But What If You Flop?

Link To This Post.

A mediocre story about flippers in the LA Times today. It focuses on an experienced speculator, Eddie King, who's also a former USC football player and seeks to offer advice to those thinking about getting into flipping. Here's an excerpt:
Inspired by exuberant real estate pundits and late-night TV pitchmen, many homeowners who have watched prices appreciate by double digits for several years may now be convinced that home flipping is a better investment than the stock market. But advocates of the nothing-down, double-your-money-in-a-year strategy often fail to mention potential pitfalls. There are the obvious downsides — failing to budget properly and overspending on repairs — but the bigger hazards include market volatility and unforeseen tax consequences. As a result, brokers and accountants who work with flippers say that for every smart investor like King, there are dozens who lose their shirts or, worse, their savings.
— The Boy in the Big Housing Bubble