“Flipping” Miami housing market in Jan 2006 ? Is he crazy or does he know something that you don’t? (1 of 5)

So there’s all this talk about the housing bubble, much like the internet bubble of the 90′s, which will someday come crashing down.  If you look at the news articles, you can probably find people supporting all side, from people who think it will fold like a house of cards, fast and painful, to people who think it will be a soft landing.  The difference between this housing market and the internet bubble is that people are seeing the bubble coming because of all these news outlets prophesying the end of the bull housing market.  Then again, you will find that some of these same people have been saying the same thing for the last few years.  But not everyone believes in the bubble, enters my friend John.

John has just bought a one bedroom, one bath condo south of miami.  He is a twenty something white collar professional in the real estate management industry, just a few years out of school.  His mother has been in the real estate brokerage business for years.  It’s not a big purchase by “Big City” standards, but as a first purchase; he’s definitely diving right in.  I asked him whether he did all the math first in Excel to see what kind of profits he expected; he shook head with a big grin, like a kid who just got into the candy jar. 

He does have something to smile about; he just close the deal last friday and spent the weekend with some contractors putting in new cabinets in the kitchen and the bathroom.  It will be another weekend before it’s finished, but already, he has two potential buyers and rentered lined up this weekend to see the place.  Tell him he is crazy, but he expects to sell the place before March 1st, when the first mortage payment is due.  (Yes..in the closing cost, he already paid the mortgage payment for Feb, but we’ll forget that detail ).

I did a quick search online and found hundreds of condos for sale near his asking price (he did purchase his property at a 20k discount).  Maybe his redone kitchen and bathroom will set his condo apart.  Also he is selling the property via For sale By Owner.  If things do not go well for him, I am sure his mother (real estate broker) will lend him a hand. 

So John is out to prove all you naysayers wrong.  Look out for a follow up post to this.  I will let you know whether he is on his way to his second flip or sitting on his empty condo (with new cabinets!)