Remember 2005? Stand in line to snap up a purchase contract from a developer, wait for prices to go up during construction, and flip for $50,000 profit at close of escrow. Rinse and repeat. Are we back there again? The Oracle of ArrowCreek seems to think so.
11670 Verazae (looks like the listing has been yanked from the MLS) was bought by a local investor for $199,136 3/19/2013 cash. Relisted for $259,000 4/7/2013, drifted down to $239K, and just slashed to $199,900. Coldwell Banker is the listing agent.
11660 Verazae was bought by the same Coldwell Banker broker on 4/1/2013 for $209,734 with a $160K hard money 1st and a $30K hard 2nd. Listed for $259K on 4/28/2013, and has drifted down to $244,850.
The investor has seen the writing on the wall and is bailing (or is trying to ignite a bidding war). The Oracle is burning $2500 month interest for his hard money financing, and is now competing to unload his investment with his client.
I think there really IS a profit potential in flipping developer houses in this over heated market, at least in the lower end segments. But it is pretty slim when you factor in transaction costs on both ends of the deal. And I hope the profit potential stays slim to none, or here we go again.
PERMITS – I put together a list of notable Reno Permits every week. You can subscribe to it my emailing me at firstname.lastname@example.org or wait until the RGJ publishes it sporadically on slow news days. For the last month or so, I have been pounding on the developers for hyping their sales activity while their permit activity has been minimal. That changed last week, when 50 Developer SFR permits got pulled, compared to 44 total in May. Has the median risen to the point where the Cartel feels good to go?