Would-be Flipper Flops
Flipper says good-bye to Jersey
I've spent five months in New Jersey chasing my tail. I'm acutely aware that I could have written a book or learned French or picked up some marketable computer skills. But I had this dream that I could flip middle-class housing, and it was a pretty powerful dream: cash for distressed sellers, better housing for middle-class buyers, a decent living for me.
Alison, you were looking for the easy money. Don't try to justify it. Cash for distressed sellers, better housing for middle-class buyers? Who do you think you are kidding? You should have spent a day on this blog, we could have saved you a few dollars and alot of your time.
At the point where I'm ready to throw in the towel – starting down the path of getting my license in New York – there's one last swing I want to take: to speak at a sales meeting at my firm's South Orange office.
The office manager is incredibly eager to have me. He says that the office I'm based in is too upper-middle class (read: too rich and too white) and that the agents in his office will have the kind of properties I'm looking for.
...
I kept going because I am classy or stubborn or something, and then sat down. One of the agents in the back beckoned me over.
"What made you think you could find a house like that?"
"I went over it with my partners; we put together a business model; we expected to find six a year," I said.
"And how many have you found?"
"None."
"Didn't you wonder why? The reason is, if any of us found a house like that, we'd flip it ourselves. You're looking for something that is too good – and the people who own this company should know better."
...
I thanked him and went over to the next agent, who told me the same thing – the kind of house I wanted to flip would be a winning lottery ticket, and who wouldn't want to pick it up? And then again.
I made my excuses to my partners and then left, collapsing into sobs. I cried for three hours. First I wandered blindly for a few moments: Night, on foot, in suburban Jersey, with no Springsteen soundtrack isn't a beautiful thing. Then I got on a train home, the other passengers looking at me sideways, sympathetically, trying to figure out who died.
I was so upset I called my mother, who isn't the right person to call when you've just f---ed up a career, not because she doesn't have sympathy but because her tolerance for stupidity is small. I got home and had a fight with my husband for somehow not understanding me, and cried some more. Poor me. Poor poor pitiful. I felt conned. All the risks I had taken, and the money I had blown through, and for what? A dream that didn't exist; a mirage. And I had learned that it didn't exist because my firm's own agents had told me. Couldn't somebody have pointed this out five months ago?
Caveat Emptor!
Grim
25 Comments:
No sympathy here. I hope flippers get wiped out. I'm only sorry she didn't learn the hard way after buying a house and getting stuck with it.
Callous ? Hey, flipper scum are driving up prices for everyone else.
Ms. Rogers,
I think you quit to soon, you should pay the asking price of any house you find, in fact buy the 6 in your plan this weekend. Are you not familiar with Real Estate? It never goes down in value, only up. Plus think about all the people you will be helping. Quitters never win. You should really consult your local realtor/mortgage broker before quitting, they regularly offer "free" financial advice.
I hope this helps :)signed someone who doesn't give a damm about a dumb b#$@%.
Hey Bagholders.
Gonna look pretty stupid and broke soon.
Hehehehe
I swear I don't get it: calling people "flipper scum" and laughing at "bagholders." If you're so smart, why didn't you buy when prices were way lower (lower than there likely to drop in the near future)... and if you did, or sold a house you already owned and are timing the market to get back in, aren't you "scum" also.
Because anonymous fool at 7:41 PM, we're only looking for a house for ourself. Flipper scumbags drive up prices for everyone else. A few bankrupt flipper scum will bring sanity back into the market.
There's a house near me that a flipper painted, installed some new carpeting, and sold for $300,000 profit 8 months later.
An idiot actually bought it for $850K, even though this tiny cape sitting on a 50x100 lot was priced over $150K over every comp within miles. The buyer offered $50K over asking price, on the first day the house went on the market.
Flipper paid $550K, sold for $850K.
Botht the flipper and the buyer make me sick. One is greedy, and one is stupid. But the buyer is the biggest fool I've ever seen, who pays $300K for some paint and carpeting?
Unrealtor: Some dummy playing with OPM, I have said it before and anyone who also has had the experience please chime in...when you write the check out of your account and those funds go to the sellers account it sharpens you up big time.
ps: I notice that a lot of the posters on here are very angry etc., I was too up until about a year ago, when I looked at the big picture and realized that all of these debacles in the making are what will create our opportunites.
"If you're so smart, why didn't you buy when prices were way lower"
Because I was a recent college graduate when the boom started. Buying was simply not an option. Now that I have been working for a while, am married and have saved a respectable down payment, I have been priced out of the market by flippers and dimwit buyers who have no idea what they are signing up for
Am I understanding this correctly? This woman decides that she could make a lot of "easy money" by flipping middle class-priced houses, houses that hold appeal to a broad range of buyers. And she is shocked to learn that her idea is such that anyone with half a brain would do this if they had the opportunity, thus decreasing the likelihood that she herself will be able to find such houses? And she wonders why no one told her this would be next to impossible 5 months ago?
Sounds like she did not fully think through her plan before acting on it. Dollar signs and the lure of easy money can do that to the mind.
Poor dumb thing.
just because there are a few people who buy without knowing a market doesn't mean it'll have much of an affect on prices. The market brings what the market will bear.
Just as prices went up, they're now coming down. Seem very fast at that. Stop crying and be patient.
Your price, or something close to it, is coming very soon.
Anonymous 8:04, I was Anonymous 7:41 and I do not appreciate you calling me a "fool". Makes me want to grab you by the neck, you little punk. (Now I feel big like you, nitwit)
I am not Anon 7:41/1:12 or Anon 8:04/11:25 but I have something to add:
aside from someone needing soap for their mouth, let's leave the fighting for the real fighters, which I don't claim to be one, I'm an amateur.
The hatred for flippers isn't callus, just not well thought out and hypocritical.
So-called "flippers" are entrepreneurs, just like the small restaurant owner, a grocery store owner, the barber, the butcher, the doctor, or the insurance broker.
Why do any of them provide us with any of the things they need? Because they profit by doing so.
Complaining about real-estate "flippers" looking for "easy money" without complaining about the "obscene" profits of doctors, lawyers (don't get me stated on them), or any other successful business, is hypocracy and jealousy.
You will one day thank the flippers. They take less desirable houses, put some work into them, and put them back on the market. Their buying also encourages professional builders to build more homes, further increasing the supply.
With the builders of new homes adding to supply, as well as flippers, you will have a wide variety of homes to choose from, once this insanity subsides.
Robert,
I agree with you, but there are two kinds of flippers. Well, in reality one, because the other is a legitimate businessman.
I know more than my fair share of reputable builders who engage in the business model you mention. These are honest guys who have been in the business longer than I've been alive. Yes, they are in business to make a profit, but they typically care about the areas they practice in. They've been bearing the risk for years and improving the local housing stock. These are not flippers, calling these people that is an insult. They've been doing this long before the bubble, and will continue to do it long after.
The second group of people deserve to be called flippers. These are typically neophytes to the housing industry drawn in by the lure of easy money. They don't typically know anything about building or construction. They will hire the cheapest contractors they find, and use the cheapest materials available. They don't care about the community, nor do they care about preserving continuity across the community.
You can tell the work of a flipper. Painted kitchen cabinets with granite countertops, the cheapest home depot pressboard cabinetry. Low quality roofing. And some of the poorest quality construction you'll ever find.
These people don't care about improving communities. They do not have the same pride in quality that an established builder has. These folks do not even deserve to be referred to as entrepreneurs. They are, purely, a product of this insane market. These are the flippers.
grim
"The second group of people deserve to be called flippers. These are typically neophytes to the housing industry drawn in by the lure of easy money. They don't typically know anything about building or construction. They will hire the cheapest contractors they find, and use the cheapest materials available. They don't care about the community, nor do they care about preserving continuity across the community."
And what is the long run consequence of a business that doesn't cater to the needs of consumers? Failure.
My point is simple. When a profit opportunity is spotted, people will flock to it. It ultimately reduces the profits in that industry, increases supply, and consumers benefit.
The flippers you dislike are no different from people who go into nursing or medicine, just because there currently are profits to be made from it.
The whole point of abnormal, or excessive profits in a sector is to encourage more production in that sector, ultimately driving them down.
It strikes me as sour grapes to complain about flippers. This is a free country, and to be free also means free to be stupid, much like that "flippper" you featured on the blog.
I just don't see any reason to get high blood pressure over it.
Prices will come down, and with a little patience, many here will probably be able to get a much better house than they currently imagine.
"Complaining about real-estate "flippers" looking for "easy money" without complaining about the "obscene" profits of doctors, lawyers"
Oh, gouging from them annoys me too!
But at least a doctor went through 8 years of medical school, most of these flippers go through a dozen gallons of fresh paint and think that translates into $100K profit.
It's a free country, and they can do whatever they want, but some of these markups are silly. But more silly, are the brain-dead buyers who bay $300K+ for a fresh coat of paint.
"I believe they are different. It has to do with the “value-added” component. Most other professions add something of value to the economy. I am willing to pay more for a hamburger in a restaurant than in a grocery store because the restaurateur went to the store for me, cooked it for me, served it to me and will clean up after me when I am done. "
This is my point. Your argument that "flippers" offer nothing of "value" is a subjective and arbitrary judgement.
EVERY business or profession, whether it is flipping burgers, or flipping houses, is a speculation. There is no unobjectionable criteria that can separate "value added" business from "greedy speculators."
Many doctors, and the vast majority of lawyers, do not offer any additional "value", despite their years of schooling. The system is rigged by producers to limit entry, reduce supply, increase demand, and raise prices.
The years of "education" they receive is just a barrier used to prevent more competition.
The only difference between a greedy land speculator and a greedy lawyer is that it is much easier for the greedy speculator to be exposed.
Apparently from the excessive profits you so strenuously object to, others do not share your judgement of flippers, and find value in what these flippers do. If they didn't, they wouldn't go into hock to buy a house from them.
The price of a good or service doesn't depend on how much labor is put into it, (which is what socialists believe) but how much someone else values it and is willing to pay for it.
What does that mean? Well, things that require a lot of labor don't necessarily justify high prices or profits.
Likewise, very simple things can be very profitable, even though the cost of labor is nil. Those who are wise enough to spot these opportunities will reap the profits, and despite these profits, the market is better off.
What is problematic is how people complain about "speculators" and how "something" should be done about them, presumably by govt.
Then in the next breath, they will complain about zoning laws that reduce the supply of land for housing, the lack of affordable apartments, or confiscatory taxes.
Yet, it was these same taxes that they supported when they wanted to teach "the greedy rich" a lesson.
Then they are shocked to find out that the govt. considers them
"rich", and takes more and more money from them.
Ultimately, the complaint about speculative profits amounts to: "If govt. only did what would benefit ME..."
It is this type of thinking that allows the crooks in Trenton to get away with what they do. They will ALWAYS triangluate, play one group against another, promising govt. benefits. And the public falls for it every time.
The legislature and governor can pass a hodgepoge of contradictory and conflicting laws that benefit some special interest groups at the expense of the entire community, all in the name of "public interest."
The politicians don't care about the best interest of the community. They just care about getting re-elected.
The nonsense in NJ will continue as long as people can be easily misled by envy and jealousy, and that includes the envy and jealousy of lucky property flippers.
The only difference between a greedy land speculator and a greedy lawyer is that it is much easier for the greedy speculator to be exposed.
I can hopefully (keep my fingers crossed) get through life without dealing a greedy lawyer. The problem is that I need a place to live and therefore can't avoid the RE market.
Rob Riley, I just have to respond here:
"Many doctors, and the vast majority of lawyers, do not offer any additional "value", despite their years of schooling. The system is rigged by producers to limit entry, reduce supply, increase demand, and raise prices."
I don't understand what you're saying. Doctors and lawyers don't need to offer "additional" value because they already bring tremendous amounts of value to the table in the first place: through their education and experience. Who else can you go to when something is wrong with your body but a doctor? When you're in legal trouble, would you trust your fate with anyone but a trained lawyer? The services these two professions provide are invaluable to the community.
"The years of "education" they receive is just a barrier used to prevent more competition."
Are you saying that anyone should be able to hang out a shingle and call themselves a doctor or a lawyer? They're should be barriers to these professions. Anyone who does not have the proper training and preparation should not be allowed to practice, period.
"Apparently from the excessive profits you so strenuously object to, others do not share your judgement of flippers, and find value in what these flippers do. If they didn't, they wouldn't go into hock to buy a house from them."
I think Rentinginnj was alluding to the fact that many home buyers today are not well educated. They see stainless steel appliances and granite countertops and think they're found nirvana. When the fact of the matter is, they don't understand that they are paying multiple times more than what these so-called "improvements" are worth. People don't stop to think that developers can buy formerly expensive products like granite countertops in bulk and therefore pay very little for it.
"I don't understand what you're saying. Doctors and lawyers don't need to offer "additional" value because they already bring tremendous amounts of value to the table in the first place: through their education and experience."
This is all marketing talk from the professions involved.
Most of the common ailments doctors handle can be handled just as well by a NP (nurse practitioner), which doesn't require nearly as much training.
"When you're in legal trouble, would you trust your fate with anyone but a trained lawyer?"
Again, many legal problems are simple enough that a trained paralegal could handle them, or could be handled by self-representation. But the lawyer lobby doesn't want to permit that option.
There was a trend in California for people to handle divorce issues on their own, and have paralegals file the paperwork. Most people were happy with this arrangement. The lawyer special interests group said that this was "practicing law" and did everything they could to restrict and stop it.
Funny thing is, what happens when you go to a lawyer for something like this? They take your money, and get a paralegal to do the work!
Given the glut of lawyers, don't you think that the majority of the regulations and laws that are passed are done so as to increase the demand for lawyers? You should see how pro se (self represented) people, who are usually poor, are treated in municipal cort.
It is your right to represent yourself before the court in any matter. Yet, try to do that in NJ, even for a simple traffic ticket. The judges will demean you, intimidate you, and harass you to get a lawyer, even if you can't afford one.
"The services these two professions provide are invaluable to the community."
For doctors, yes (for the most part). For lawyers, no. They rig the laws to create more demand for their services. That is why we have such a lawsuit happy culture.
"I think Rentinginnj was alluding to the fact that many home buyers today are not well educated. They see stainless steel appliances and granite countertops and think they're found nirvana. When the fact of the matter is, they don't understand that they are paying multiple times more than what these so-called "improvements" are worth. People don't stop to think that developers can buy formerly expensive products like granite countertops in bulk and therefore pay very little"
Is someone who goes to Starbucks for a $5 coffee "uneducated" that they could get it for less at the supermarket, or the local deli? And if so, is the seller to be blamed for the poor decisions of an "uneducated" buyer?
Why do the cost advantages of a contractor matter to the ultimate buyer? All business have cost (and knowledge) advantages over a single retail customer.
You again prove my point--value, as it is demonstrated here time and again, is subjective. The flippers who are not properly estimating the future demands of the market will eventually be punished, and do not harm you in the least.
I find it fascinating that flippers, who are in an open, competitive industry, are reviled.
Yet lawyers, who despite the oversupply, can charge outrageous prices because laws restrict the amount of competition that is permitted, can find defenders, even in NJ.
LOOK THE FRIGGEN STORY IS OUT ALREADY. EVERY FOOL HAS PURCHASED WITH A PONZI LOAN ALREADY. NO MORE FOOLS TO BAG.
PARTY OVER. IT'S THIS SIMPLE!
Anon 11:38...Couldn't have said it better...It is what it is and it's gonna do what it does (tank).
Skep-tic,
I agree with you. If a couple is divorcing and the separation is amicable, obviously a lawyer need not be involved if filing paperwork is the only task involved. It's when divorce is not amicable that attorneys are necessary to protect the rights of both parties. Heck I fought a traffic ticket in court a few years back and won. But what were the stakes? If I lost, I'd have to pay a $50 fine. I'd be a fool to represent myself though, if the outcome could have been jail time.
And that's the point, you have to consider the stakes involved, and what I alluded to in my prior post was something above and beyond the simple and menial that untrained or less-trained professionals can handle.
Rob Riley,
I agree with you on one point and that is that our healthcare system could save some money by utilizing nurse practitioners and physicians' assistants more. To be sure, these are still highly trained professionals and should be sufficient in handling routine office visit procedures.
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