Archive for November, 2011

You Can’t Always Get What You Want

There are a number of analogies and expressions one could use to describe the feeling of not getting what you want for an extended period of time.  The dry spell, the slump, the doldrums, the cold streak, etc.  There are also a number of less socially acceptable terms that define the process of ceasing this period of time (the baseball derived “slump-buster” likely being the least socially acceptable of the bunch).   Whatever words are chosen, however, it is clearly not a desirable psychological place to be.

The life of an auction focused flipper is certainly not immune to this type of frustration.  Every day, 75-100 properties are considered for bidding, and if lucky, 1 or 2 is bought.  Sometimes zero.  Rarely, if ever, more than two.  Going 3 or 4 days without purchasing can be excruciating, considering the amount of work put into each property.  Moreover, having the wrong properties postpone/cancel at the last minute is even more frustrating, as it takes away the opportunity for massive profits just as quickly as it was found.

Right now… were on 9 days of non-purchase, and my slump-buster hormones are bursting at the seams.  This, however, is why you don’t get emotional in the property flipping business.  Rarely is a slump buster a good decision in the long run, and what could result in juvenile ridicule in some situations can result in catastrophic financial results in others.

While most of my posts will be to help you, the reader, learn more about flipping properties and buying at auction, this one is mainly for me to maintain self-awareness, as well as my sanity.

The good news is there are no auctions tomorrow, due to Veteran’s Day, so I can take the long weekend to get focused once again!

Desert Hot Springs is HOT!!!

Usually when a fisherman finds a particularly good spot to fish, he doesn’t make a large commotion.  Perhaps this is because he doesn’t want to risk upsetting the fish, and this is understandably a valid concern.  More importantly however, he doesn’t want to indicate to any other fisherman that might be lurking what a great spot he’s found, hence increasing his competition.  He would much prefer to relax, reel in the fish, and likely enjoy a frosty adult beverage while admiring his handiwork.

Such is the case with buying properties at Trustee Sale.  The less competition that exists for a certain area, the better our chances of buying at large discounts to market value.  The same logic of course applies to buying any thing in any market, but I thought I’d give some concrete examples of how we’ve been able to succeed, knowing that this blog is nowhere near popular enough for me to have invited the competition before making a ton of money on the properties.

On to the examples:

The following three properties we bought between very late July and mid-August.  All of them closed escrow in October.  The returns we made on two of them were outstanding, the third was pedestrian.  There’s was a reason for that, and I’ll explain that too in a future post.

DHS Flip #1: 9901 Cholla Dr

Purchased: 8/19/11 for $65,000

Sold: 10/18/11 for $93,900

Rehab: $0

CFK: $0 (Cooperative)

Lawyers: $0 (N/A)

Investors: Thrilled

Comments: Meth lab with semi-cooperative yet not fully cognizant occupants, who eventually left peacefully without doing (further) damage to the property.  Sold to cash buyer who bought without contingencies or inspections, and intends to again flip the property.

DHS Flip #2: 65940 Avenida Ladera

Purchased: 7/29/11 for $67,500

Sold: 10/20/11 for $110,900

Rehab: $12,500

CFK: $0 (Vacant)

Lawyers: $0 (N/A)

Investors: Thrilled

Comments: Granite counter tops make all the difference in Rancho Del Oro… buyers love them and were willing to pay a $10K premium for a $1500 install.  I will make that trade every day of the week.

DHS Flip #3: 66805 Flora

Purchased: 7/29/11 for $38,212.01

Sold: 10/14/11 for $67,500

Rehab: $12,500

CFK: $0 (Cooperative)

Laywers: $0 (N/A)

Investors: Tepid

Comments: Granite counter tops and other high end appliances again made all the difference, this time the wrong way.  This price point doesn’t require high end materials, which cut deeply into our profit margins, but taught a valuable lesson.  Buyer was a cash buyer that waived all inspections and this is his 7th buy and hold property in DHS.  We go back to him with other, similar properties or convince him to join our buy and hold fund.