Flip This! The Virtues of House Flipping
Today I am posing the question: Is house flipping, either on a part-time or full-time basis, an honorable profession? My answer: It depends. The stories of two flipped homes that I saw recently on two different home improvement TV shows illustrate my point.
The first home, on the East Coast, started out a disaster. Garbage, mold and a garage door that was mostly gone were just a few of the maladies that this home suffered. Major repairs and some TLC were urgently needed. However, by the time the renovations were made, it looked great!
The second home was in Costa Mesa. This home was basically in good condition, but the flippers made some cosmetic changes. Renovations such as upgrading the kitchen appliances to the currently popular stainless steel were the type of changes made. These changes did add features that are appealing to many potential homebuyers, but no substantial improvements were made.
Here is my conclusion: It took a certain amount of creativity, know-how, money, and hard work to turn around the first house. Value was added, and a service was provided to the community and the potential homeowner. No substantial value was added to the second house; the flipper was hoping to drive up the price without concern for adding benefit to the community or for the potential homeowner.
In short, flipping can be an honorable endeavor if the goal is to add real value to the home and neighborhood. However, when the goal is simply to increase the price and make a quick profit, flipping is not something to be admired.
Many factors contributed to our current housing difficulties, but the large number of flippers of the second kind had a role in getting us to the current unfavorable housing situation.
Side note: The first house ended up making a profit. The second house, in Costa Mesa, had a loss of over a $100,000. However, I think this had more to do with the market conditions in each location than with the motives behind the flippers. Many flippers of the second sort made big profits during the housing boom and, as I said, helped to get us to our current detrimental housing situation. (For more on the Costa Mesa housing market conditions, see “The Costa Mesa Market Report: January 2008.”)
Just for fun:
Dr. Phil, Jan. 16, 2008: The topic on this January day for the Dr. Phil show was Get Rich Quick Disasters. In other words, trying to make it rich without putting in the groundwork. The segment on Rash Real Estate Investing was on house flipping.
“Back on the Market: Jeff Lewis’ Los Feliz House”: an update from our Redfin LA blog on Jeff Lewis’ flipping activities as seen on the BravoTV reality show “Flipping Out”
A little more serious:
“House Flipping Is In,” Dan Caplinger February 15, 2007
“Flipping,” wikipedia
Flip That House
More on Costa Mesa housing:
Bernard Street Bungalows: California Craftsman Style
“Sold Signs” in Costa Mesa’s Mesa Verde
Your Own Personal Economist
PHOTO COURTESY Charles and Hudson, Make It Your Home
Note: Charles and Hudson’s is a good site for Do-It-Yourself (DIY) information.
