Don't Mess With Taxes

No, that's not a thinly disguised epithet for an annoying neighbor.

It's a description of our almost neighbor.

It's a bit of a tale, so bear with me. When we moved into our house in 2005, a home around the corner was vacant. And it's stayed that way.

Most of the time, it just sat there, a guy coming to mow the grass when it got really, really, really bad.

Then, in 2006, the "for sale" signs appeared. First one realty company, then another.

2007 rolls around and, after a couple months, the dreaded word "foreclosure" appeared atop the sale sign. The placard "reduced" soon followed.

After a couple of price drops, which the hubby and I were pleased to see still kept the asking price above what we paid for our place, someone finally decided the house was a bargain.

Neighboring yards: Part of the property's backyard abuts our backyard. Shortly after the "for sale" sign became a "sold" one, we saw two guys digging out some of the neighboring yard's out-of-control plants.

The hubby sauntered out to see what they were doing, especially since they were hacking at a plant along our fence.

We figured they were hired hands, but it turned out it was the new owner and his brother, who appeared to be a less-than-enthusiastic landscape conscript.

The hubby chatted up the new neighbor, a guy in his late-30s/early-40s named Skip (we're presuming it's a nickname). He confided that the house had never been lived in -- apparently it was a real estate investor's pipe dream -- so it needed a bit of work before being occupied.

The hubby welcomed Skip, wished him well in his home improvement efforts and we sat back waiting for him to move in.

And we waited and waited and waited.

Skippy becomes Flippy: Seems Skippy, as I took to calling him, was doing most repairs himself or employing very small companies that had only a few crew members. A good money-saving move, but a real time suck.

But, hey, it's his house and if he can wait to move in, then who are we to say anything.

Well, it seems Skippy truly can wait to make the place his new home. Apparently forever.

The hubby came back from running errands the other day with the news that yet another "for sale" sign was in the front yard of the house.

Skippy has become Flippy.

Interesting. Austin's real estate market hasn't suffered as much as many places when it comes to overpricing. And investors did flock here several years ago.

But, as indicated by how long it took for the house around the corner to finally be bought by Skippy, Austin's housing market, while warm, is not exactly one on fire.

The neighbor watch resumes: So now we wait some more, for a couple of things.

First and foremost, a good neighbor. We've been through this a couple of times in other locales. You always wonder whether the owner will be your new BFF or the neighbor from Hell.

We also are really curious about how long it takes Skippy to flip the property and, of course, just what he gets for it.

Not that we're planning to move or anything, but it's always good to know the possibilities.

Flipping perspectives: Despite the housing bubble burst or leakage or whatever you call it where you live, some folks are still investing in real estate.

The hubby and I are, too, but via a real estate investment trust mutual fund, not by buying actual properties that we literally have to mess with. Our property plate is quite full, thank you, just keeping up the personal residence!

And, as I noted in a previous post, investing in real estate is risky, especially when you take actual possession of real properties. With a REIT fund, it's all on paper and you have a financial manager handling the details.

But if you're more adventuresome and have done your property homework, good for you. And when you do flip your real estate investments, this story has some tips on dealing with the tax consequences.