Posted by Bill Jacobsen on February 11, 2009 at 10:30:57:
In Reply to: income posted by susan on February 11, 2009 at 05:30:54:
The changes seem to be: lower buy prices, lower sell prices, less customers and more time required to sell.
Obviously, the first two are not a problem as they cancel each other out. The problem occured when the trend changed from upward to downward.
More buyers are FHA which means 91 days from my going on title until I can enter into a contract to sell. Adding 30 days to that number to close means 121 days minimum.
I have always budgeted two to four weeks to rehab depending on house plus 3.5 months to market and close. Basically, it is 2.5 months to market with one month to close. So I am usually ready to market within 30 days but can't enter a contract for 91. I try to build it into my profit margin but can't always.
In my opinion, negative cash flow is not bad if planned for. My entire retirement plan is built on a small initial payment with subsequent monthly payments. Over time you build equity. If this was not your plan and you can't afford it you must sell.
Bill