[4RE KLR]

Warren,
I said in different areas the numbers would be different, or something to that effect. I realize when your on the water general common sense as far as $ is concerned goes out the door.

What I meant was if you buy the reasonable size homes in the lower price ranges of whatever area you are in you will not likely get hurt but could make some. I know it is different everywhere, but a general rule of thumb in trying to flip homes is buy what the majority of the community can afford. That way if the local economy goes up, you sell to the first time home buyers. If it goes down you sell you the down-sizers. It is a great rule of thumb and has served me well for many years.

Where the flippers got into trouble this time is they would go into communities and buy ten homes next door to one another and try to sell them before they were completed. It worked fine for a few years until they told their buddies and they told their buddies and before long developments would sellout on opening day. The problem come to light when the builders (guilty) built these homes for investors. Yes they put up many hundreds of thousands of dollars in earnest money and yes we kept every dime of it. However the reason builders are in trouble now is they have all the inventory and no buyers. Six weeks ago a publically traded national builder had 644 QDH (quick delivery homes) they now have well over 2,200. The houses will not appraise for what they cost to build. Some by as much a 50% less.

If you want a great deal on a new home go visit a new home development. Tell them you want a home someone else could not close on. Tell them you want the retained deposit money credited to the asking price. I have seen some builders ask as much as $250,000.00 less than a home cost to build.

The market is in a very precarious spot right now. I have seen some investors jump back in and buy a home then sell it for less than the builder can sell the other homes for in the same development. Builders wised up quickly and now most have no investor clauses in their contracts.