Home flippers' investments flop

[DoYouEverWonder]

May 21, 2006

PORT ST. LUCIE — Joe Passarelli wakes up anxious and sweaty some nights, wondering how much longer it will take to sell his never-lived-in townhouse south of Stuart.

Despite slashing his asking price by $55,000 to $285,000 and keeping vigil at sparsely attended open houses for six months, he still has no takers.

"They come, they look, they give a low-ball offer and they leave," said Passarelli, 50, a New York native.

If he doesn't sell the four-bedroom home, he'll have to walk away from contracts on two other investment homes — one in the new Port St. Lucie community where he lives and another in West Palm Beach. If he pulls out of those deals, he's down $80,000.

http://www.palmbeachpost.com/localnews/content/local_news/epaper/2006/05/21/c1a_INVESTORS__0521.html

Did I just hear the sound of bubbles bursting?

[Tandalayo_Scheisskopf]

1. Schaedenfreude.

It's a guilty pleasure, you know?

[napi21]

2. Well, life's tough all over Joe. Ans just how much did you make on the

ones you already flipped?????

I can't feel any sympathy for guys like this. RE is like the stock market. There's risk and reward. You TAKE the risk, and SOMETIMES you get the reward, then sometimes you don't!

[sutz12]

3. I wish I was rich enough to lose $80k.. nt

[Robbien]

4. The flippers have a lot to answer for.

Too bad it is the small ones getting hurt the worst. The big investment firm flippers were the first ones to get out.

[SpiralHawk]

5. 'pop' goes the repulican-nomics balloon

the neocon repubs have poisoned the economic waters, and all is foul and beginning to fester.

Republiconmics = VooDoo Skull & Boner Economics.

Uncool.

Really uncool.

[WinkyDink]

6. Like I care that this greed-head is in trouble.

He only wanted to gouge his fellow citizens.

[1932]

10. Please. This guy isn't Enron. He's only asking for what the market was

willing to pay. If he did't make money from the sale, somebody else would have, like the developer. Furthermore, he's not asking for anyone to assume his risk and cover his losses or guarantee him a profit, like many mega-corps ask taxpayers by way of their senators.

[BiggJawn]

21. I've heard drug dealers make the same claim...

"I'm just supplying a need, if I didn't sell it, somebody else would".

I don't have any sympathy for him, either. Shit like him is what's driven the bubble so high that a low-income schmoe like me will NEVER be able to afford to own my own home again.

[bahrbearian]

7. Maybe he could get a $50 hr job picking lettuce on McCain's farm

[FreakinDJ]

8. So much for the "Paper Economy"

How long does anyone suppose we can continue to thrive on a Re-Fi / Hummer economy. Even the person in this story knew the end was enivitable

[jody]

9. He gambled and lost. Casinos are full of people like that and I have no

sympathy for any of them.

[1932]

12. I have sympathy if this was what this guy was doing because his old,

good job was off-shored to India.

[jody]

17. Job off-shored or not, people like that are speculating, i.e. gambling.

If they lost, that's just the risk they took.

I feel the same way about people who built houses on barrier islands with minimum insurance coverage. If they lost their home to a hurricane or other disaster, I would feel sorry for them but I would not help them rebuild their house on that same piece of high risk property.

On the other hand, I give to charitable organizations that help those struck by disasters or other catastrophes that they could not anticipate or for which they could not properly insure.

If you can't stand the lost then don't play the game.

[Wilms]

18. Keep trying.

:eyes:

[wakeme2008]

11. Apartments all over South Tampa are going condo and looking for

Flippers. I will be moving out of my 550 sq apartment at the end of Aug. The owner is a year late and just in the last month started the convertion. He wants $130,000 for an almost 45 yo apartment with "new floors and kitchen" When I am out of town for a month I have to run the water in all pipes for a couple minutes to get the rust out.

Crazy...

[hippiechick]

13. On the brighter side ...

... I'm in the process of closing on a house that's sat on the market since last July. I've had my eye on it since November and have watched the price drop from $84k to $65k (my accepted offer).

The seller is a multi-property owner who I guess could be considered a flipper - lives in a gorgeous estate up in the luxury part of the city, and buys these little rundown old bungalows on the fringe of the arsty district, renovates, re-sells and walks away with a nice profit.

Personally I don't give a crap what he does with his money, I'm just glad he made enough of the necessary updates to this little house (roof, furnace, water heater, central air, kitchen) and lowered the price to something a normal person could afford so that I'm good for probably 10 years ... works out for both of us, in this situation anyway.

[Mr.Green93]

14. Pigs get fat, hogs get slaughtered

Greed will get you.

[don954]

15. i live in a middle class neighborhood

in Lake Worth, FL, which is just outside of palm beach. There are 11 houses for sale within 4 blocks, there are only about 75 homes on these blocks. Its crazy. I cant find a single street in my area where there is no houses for sale, most of them have several. They are not moving either. I saw one poor guy put a sign out several months ago, 450k. Then a few weeks later, 425.. keeps slashing, its down to 325k now. The bubble has burst folks..

Folks, realize, most flippers operate on a morgage. They are just middle class folks trying to get ahead, to make money while the going is good, to make a future for their family, which is part of the American dream.

[Robbie Michaels]

16. Yes you do hear a bubble burst

I have no sympathy. These are the same kind of people who pool their assets together to buy apartment complexes to convert them into condos so they can put renters out in the street.

Flipping properties is like gambling. You win some, you lose some.

[rusty_parts2001]

19. Cry me a river--what vultures!

[NastyDiaper]

20. How many people are early into a VAR?

The flippers' problem are only the start. It's the monthy payment that is 'fixed'.

Interest rates go up, housing prices stagnate or even drop. If plan to live in your home a while, kinda washes out. Same home, same payments.

Gotta move, or have a Var? urfked.

[Skittles]

22. good

these greedy bastards get what they deserve

[QC]

23. People like this are why those in Florida who actually work for a living

are priced out of houses. Frankly, as one of those people, I hope he loses everything he's got and has to go back to New York.

[SLCPUNK]

24. It is sad to watch........

Many of these homes are listed 40k above their top price to begin with. Last year you could do that, because the next buyer would buy over market hoping to repeat it in six months.

Now the market has slowed down quite a bit in many areas. Those who over paid and now have it listed too high are going to sit on the market. I see plenty of homes around here that are listed 40k over that sit. Some finally "get it" and realize the gravy train is over and then slash the price. Some can afford to do this and make a profit while others can not.

Panic buying in a hot market and crossing your fingers reminds me of the people buying up until the last minute of the dotcom phase. Many people got stuck holding the bag, and many people are getting stuck again now. I am a "flipper" but not in that sense. I take my time and look for homes that are beat up, beat down and abused and then make an offer accordingly. I then turn around and bust my ass to make the home beautiful again and sell under market so it will move fast. I don't find anything greedy about this at all. I consider it great money, and a fair deal for everybody involved. When I am done renovating a house I can say with all certainty that it is better then 99% of the similar homes in the area at that time. Somebody will appreciate that home and I will make a good amount of money. Seems fair to me.

The last home I bought was disgusting inside and out. I bought it 50k under market, put in 8k, worked 12 hrs a day every day for 5 weeks and then listed the home under market. The seller wanted out and made money when they sold it. The new buyer loved the home and made an offer the day they saw it. It was complete bust ass work and I did that all on my own. All parties were happy with that deal. So I take a little offense to being considered a “flipper” in the sense that many are insinuating here. I would think most people could see the difference between what a guy like me does, although maybe you would not. I can and will do this in any market, regardless of price fluctuations.

People get swept up in what they think is easy money and all rational thought goes out the window. I have seen it in many different areas of the country. Everybody thinks it is their turn to get rich. Some luck out and get their lotto numbers called out to them. While others eat humble pie at the end. It is hard to talk to people when they get in this frame of mind because they think the sky is the limit and nothing will ever change. "People will always want to live in Florida" or "People will always want to live in Las Vegas". While those both may be true, the money they are willing to plunk down may vary considerably.

[cliss]

25. Stock brokers talk about the

"Greater Fool" theory. Once something good appears on the horizon, people quickly move into take advantage of it.

With time, more and more people decide they want a piece of the action. As the thing continues to grow, there is always a 'greater fool' who is willing to invest. Even when the investment has reached the point of market saturation and is starting to peak, there will still be people who want to jump onboard.