The Matthias Chronicles

Friday, September 26, 2008, 12:26 AM

House Flipping

by Mar Matthias Darin

"House Flipping" is a term that describes the process of purchasing a house, renovating it, and then reselling it for a profit, often small compared to the labor put into the process. These people often buy property that are eye-sores, run down, dilapidated, fore-closed on, and have devalued the entire neighborhood.

The people involved in this, called Flippers, usually handle the entire renovation process themselves. I have personally seen the dramatic impact Flippers can have on a neighborhood and it is unquestionably welcomed by the neighbors. There are many houses that would succumb to a safe haven for drug dealers, homeless people, and gangs without their diligent labor and the willingness to take a risk on renovating such a property.

Ironically, the Flippers are often the ones that feel housing crises before the rest of the market even knows about it and often suffer the highest loses, including loosing their own homes. They often do not have a way to protect themselves from economic disaster when the housing market suffers turmoil.

Flippers have been warning of the current housing market crises for a long time coming. Its clear that the Congress, Senate, and SEC have ignored this vital resource. Historically speaking, the Flippers are a valuable neighborhood resource that have been under estimated and often unappreciated. A great deal of hard work and sweat goes into renovating houses for new families to move in. Houses that would otherwise be left abandoned are given a new life thanks to Flippers.

So now we have a housing market melt down and a lot of people are suffering. There are many people we know about and many we will never hear about. This vital group of people falls into the later category.

Comments from lvs

Is this a term that you have coined. I didnt know that such a business even existed. But now that you have pointed it out it makes perfect sense. I am surprised that the lending organizations didnt see this coming. If flippers could see it then surely their own field agents should have foreseen it too!

Comments from Christina the coffee lady

I can see how the market situation would hurt the "Flippers". It is hurting alot of people.

Just out circle surfin' with LBP. Have a great week end! Christina

Comments from Ann

I like the idea of flipping, to a point. When I got rid of cable, I also stopped watching all of the shows on HGTV about flipping houses. As soon as those shows started, I thought, there goes the market. In Florida, at the time, home values were going up so rapidly that investors didn't even have to "flip" homes in order for them to make a profit. Flipping the homes, and showing people how to do it on the cheap, just helped to inflate the prices of homes. And in Florida, (especially where I live in Florida) there just isn't enough high-paying jobs to handle the comparatively high price homes. So now, all those homes that were flipped (and more homes, not just the flipped homes) were sold at these higher-than-they-should-have-been prices... people can't afford them... they foreclosed... then has gone to crap... and the neighborhoods are worse than they were before.

I don't blame flippers for this, btw. I'm sure that it appears that way. It's just that when there were so many shows on HGTV about flipping homes, I thought that this is going to have a negative impact.

Comments from HotMomma

Hello! Yes, I am familiar with this term and the business because I love watching housing and lifestyle shows, where house flipping falls under. In fact, I admire the guts and business sense of flippers. They know how to play with their money and help keep the housing market afloat at the same time. Most of them also have this vision of rejuvenating an unattractive area by putting up decent housing in them.

I hope the housing market will be able to recover soon, both in the US and here in the UK.

Comments from Mar Matthias Darin

lvs: I wish I could say I did, but I didn't. I believe it was coined by the housing industry because the Flippers usually constrain themselves to a very limited time table to complete the renovations. I longest time I've seen is about 12 weeks. That was because of removing lead paint and other hazzardous material. The average, from what I've seen, is about 4 to 6 weeks. They try to move as quickly as possible to bring the house back up to market and code standards. Flippers, generally speaking, aren't always favorable in the minds of the lenders because of the time the flippers spend in control of the properity as the lenders tend to loose on the interest charged. There is a program on one of the Discovery Channels that shows people going through the entire process. Its quite interesting and some of the houses shown have been complete disasters.

Christina: The people that should be feeling the pain aren't and I find that totally discusting.

Ann: Florida really shows the negative side, unfortunately. Louisiana, on the other hand, shows the positive side.

What you are describing sound more like a real estate investor, not a house flipper. House Flippers, from what I have seen, aways go after cheap, run down older houses that need some serious help. Greedy real estate investors can be the demise of any neighborhood.

This link has a large amount of information on House Flipping and is worth the time to read.

HotMomma: I too pray the housing market recovers.