Jan 31 2006
When the Music Stops for Real Estate Flippers
- “A speculator puts down a deposit of a few thousand dollars on a house that won’t be built for several months. By the time the house is finished, the market has boosted the value far more than the contract price. So he sells it without ever stepping inside.The question — as the real-estate market cools — is whether it still works like this.”
That’s a clip from an Orlando Sentinel article on one of the hottest flippers markets in Florida, “If Baldwin Park values plummet, we’re all in trouble”.
The analogies are many — from musical chairs, where folks get stuck empty handed when the music stops, to just a good old fashioned Ponzi scheme. Whatever the case, their is a rule of common sense that tells you that when things defy gravity for too long, and too boldly, eventually they must return to earth. Some things just don’t add up.
Where real estate goes, so could go the economy — and probably your portfolios. Learn it and know it.
