The unlucky flippers were the ones that jumped in at the end of the bubble - not realizing that they were at the end of the bubble. Paying top dollar for a property and making expensive improvements have not been making people rich - they are just leaving holes in the investor's pockets. Between the slow housing market and buyers not willing to pay for over-priced or unnecessary improvements many flips are now flops. Which brings us to today's featured example.
Here is the property -
Here is the property info -
Recently renovated colonial in sought after Wickham Woods. Spacious rooms, wonderful Family and Great rooms, 2 tier decking and level open yard. Great for entertaining.
Here are the financials -
- The property was purchased in February 2007 for $1,190,000.
- The original mortgage at time of purchase was for $850,000 with an adjustable/fixed ARM with CitiMortgage.
- A HELOC was opened February 2009 for $145,000 with PNC Bank.
- The property is currently for sale with a realtor for $1,175,000.
- The current year's property taxes are $17,078.21.
We do not know how costly the renovations were but just adding property taxes and the lower purchase price and the realtor pay this investor will lose at least $115,500 off of this investment - plus every penny put in the renovations. And on a property like this one would assume the renovations would have been expensive.
Update - It was just brought to our attention that what shows us as a realtor is a flat-rate listing service - costing about $500 not the 5 or 6 percent realtor fees. This owner is trying to save as much as possible - so the corrected loss will be approximately $45,500 plus renovations.
For those interest in purchasing the property, if they are able to put 20% down and received a 30-year fixed at today's Bankrate rate of 4.92% the monthly payments would be $5000.26. Adding in the property taxes and the monthly payments would be about $6423.44 per month - plus utilities and insurance.
For the other interested in parties that are unable to put even close to 20% down lets look at some other numbers. Using our favorite new calculator that includes the PMI charges and the new rate, a potential new buyer is only able to put down 5% or $58,740. The monthly mortgage payment would be $5937.81, plus a PMI of $725.56, and the taxes of $1423.18 totaling $8086.55. And for a buyer who puts only 3% down - the mortgage would be $6062.82, PMI now $987.78 the taxes stay at $1423.18 for a total monthly payment of $8473.78. Plus utilities and insurance of course.