[00:00:00] It's around the house. We're talking about flipping houses here and kind of the good, the bad, the ugly, you know, and how it works, how do you start and some of the mistakes you can make out there. And when we went to break, we were talking about the cost of money because that's a big one because if you've got a three month, six month project on this, you're carrying that loan, which means you're making payments and you're having to pay back on that high interest loan.

[00:00:29] It's not going to be the same thing as what you got. Third year mortgage for your primary residence. So this is where you need to really, really pay attention to the market and demand and how long it takes to even a house to close. So, you know, this is much more complex than your traditional, uh, buy low, sell high kind of thing, because you need to figure out how this is going to lay out and, um, where your money's coming from.

[00:00:52] And of course, how is this going to work? When it comes to remodeling and renovating your home, there is a lot to know, but [00:01:00] we've got you covered.

[00:01:06] Welcome to the most out of your home through information and education. Thanks for joining us today. Well, I wanted to talk today about one of the kind of dirtiest little secrets out there that everybody seems to hammer on these people. But I thought, you know, it's a good time to show both sides of that coin today.

[00:01:25] And we're going to talk today about house flipping. And, you know, there has been a lot of people, including me, that go, Oh, those darn house flippers roll my eyes, and, and you've got a house that has been poorly remodeled. But, That's not always the case, even though that, um, you know, it does serve a purpose to some point, but it does also lead to some, well, things that happen that make things unaffordable for others.

[00:01:52] So there's, there's multiple sides to this coin here. And I thought we'd talk about it. You know, uh, if you want to find out more about us, head over to [00:02:00] around the house, online. com. And you can send me a message there if you want to debate any of this. But, uh, my first rules here for house flipping is that.

[00:02:10] You know, it does serve some purpose out there. You know, you can find a house that has been maybe there was somebody suffering from hoarding disorder, or it was not maintained for 30 years and you're trying to get it cleaned up back on the market and having it look like a piece instead of being the eyesore in the neighborhood.

[00:02:29] You now have. One of the nicer homes in the neighborhood. And you know, sometimes that can be very good for the house values around there as well. Now there's other people that will say that that same person is taking that house that could have been affordable for somebody and making it less affordable by, you know, making 30 percent on that house flip and turning it around.

[00:02:52] And if especially, you know, I can start to see that when it's not done correctly. And you're paying a high retail on a [00:03:00] project that wasn't done correctly. And so there's more hidden work. And that's where you start to get a little bit of a head scratcher going, okay, I can see where that is a problem. And, and so here are some of my rules and thoughts on house flipping today.

[00:03:15] First off, don't fall for the famous TV home improvement celebrity trying to sell you a seminar. You know, there's so many people out there in the house flipping world on HDTV that are out there pitching their seminar of how you too can. You know, be a house flipper and make money. And a lot of times they're the ones making money off of you.

[00:03:37] And, uh, it's not going to help you down the road. So you might pay a thousand or 2, 000 to go to this house flipping seminar, and they're going to give you all the things for it. And if you don't have the skills, you don't have the knowledge, you don't have the sales skills, you're going to fail on. It's going to cost you a lot of money.

[00:03:52] And that's the one thing with house flipping is, especially in today's economy. It is sketchy because there are a lot of things that sneak up and can [00:04:00] cost you so much money that you could actually lose your own house just trying to gamble this other house. So it's, it's a business venture that takes a lot of effort.

[00:04:10] It's a business venture that takes a lot of skill and there's a significant risk as well, especially when you're dealing with something that's hundreds of thousands of dollars. So, you know, I wanna talk right now about the house flippers that are bad. And just like any trade out there, there's a number of bad house flippers.

[00:04:30] And, and I'll tell a story here of one that I'm still following on social media, but they took down the most offending posts 'cause everybody beat them up and these people actually bought. This house in Portland and decided to do a house flip on it. Now, it had, you know, engineered truss system up there and they wanted to make the ceiling.

[00:04:51] So it had a vaulted ceiling. So instead of coming up with an engineered solution, they cut the trusses and made them scissor [00:05:00] trusses with no engineering. And I tell you what, the first big snowstorm that house gets, or you get 2 or 3 people on the roof to re roof it, Okay. The whole section of house is going to come down because they didn't tie anything together correctly up there.

[00:05:12] And in the video that they have since taken down off YouTube, you could see where things were just scabbed together with two by fours. And they thought they had the load calculated. And I don't even know how it was handling, holding up the sheet rock that was up there, let alone put somebody on a roof.

[00:05:27] Cause I tell you what, you're going to go for a ride. And when it comes down, it could be pushing out walls. You could have a natural disaster in that living room. So this is something that I want you to really be careful with. And understanding what's going on, because this could be really, really bad when these things go sideways.

[00:05:44] And so there's a lot of those house flippers out there that are just not fixing things, right? They're covering up outlets, they're covering up stuff. They're just doing the cheapest thing. And it looks absolutely horrible. And for the potential homebuyer, this is where it gets bad is that they come moving [00:06:00] in.

[00:06:00] They're like, Oh, they didn't put the floor down correctly. Wow. Why is the electrical not working? And they get absolutely burned on buying this house. It was supposed to be their first house or even if it was their forever house. And these are the things that we see time and time again, that gives the house flipping market a bad name.

[00:06:19] And I don't like seeing that because those people are basically criminals ripping off future homeowners and that is not the experience I want people to have with a house that they just bought and so it's something to think about What I want you to do if you're gonna get into looking at doing this is being a good steward to the house and not Taking advantage of new homebuyers that are out there trying to afford a place that they love.

[00:06:44] Oh, this is beautiful I want to get it. Well Maybe it was done poorly and they're going to have to redo it again. And the problem is is when you buy a house flipped house like that Most of the time you're buying it at the upper end of the market So you need to have a market in the near [00:07:00] future that is going to be continuing to grow for that to make a lot Of sense so that way you don't buy the house that's now upside down and that's where it gets expensive Now one of the things that I want to talk about here today is for the people that are thinking about getting into house flipping And there's a lot of things going on right now with real estate markets, with high interest rates, with, um, you know, materials and construction labor.

[00:07:29] These are all absolutely crazy costs if things don't go correctly. And there's things you need to pay attention to, like the cost of money. And that's where you get into it. I mean, you think about house flipping costs that you see out there, right? So you got to buy the house, you got to pay the commissions on the real estate, the broker's fees, title search, owner's title, insurance, um, lenders, title, insurance, inspections, appraisals, any surveys, you know, all that [00:08:00] stuff.

[00:08:00] And then on the selling side, that's just on the buying side on the selling side, you get the same thing. Commissions, broker fees, appraisals, staging, professional photography, uh, closing costs, home warranty, you know, any termite sewer inspections, uh, title insurance. Any of that other stuff. And so there's a lot to it.

[00:08:24] And so, you know, broker's fees, you know, a lot of these fees, you're talking about 300, 500, you know, maybe 800 bucks to a thousand bucks for title insurance, you know, all these different things, appraisals for 500 bucks, um, you know, any of these things. 6 percent of your selling cost is going to go back to the realtor.

[00:08:48] That's just a good, even number. And then again, you can have thousands of dollars into staging, you know, hundreds to hundreds of dollars in professional photography. And [00:09:00] then, you know, you have to get into it. If you got termites where you're in a termite issue and they see that they're, you have to pay for that.

[00:09:07] 000 bucks pretty quick. Most of the time it's four or five grand for that. And then some of the things that you have to be careful, and this is where it gets you is the What's it costing you on your lender? So you could be paying anywhere on the low end to 7. 5 percent, which I don't think you're probably getting to more reasonable out there 18 And that gets really expensive Really quickly.

[00:09:38] So that is something that you've got to really be careful with On the lending side of things. And we'll talk more about this when we come back, because there's some really things you need to know about house flipping. We'll do that just as soon as Around the House returns.

[00:09:58] What's up? This is Dick [00:10:00] and Satchel from Steel Panther, and you are listening to Around the House with Eric G. Yeah, we love Eric G and you should too.

[00:10:24] Welcome back to the round the house show. This will be helping you get the most out of your home through information and education. Thanks for joining us. Then let's talk about flipping houses here and kind of the good, the bad, the ugly, you know, and how it works. How do you start? And some of the mistakes that you can make out there and we went to break, we were talking about the cost of money.

[00:10:43] Cause that's a big one. Cause if you've got a three month, six month project on this, you're carrying that loan, which means you're making payments and you're having to pay back on that high interest loan. Cause it's not going to be the same thing as what you got as a 30 year mortgage for your primary residence.

[00:10:59] So this is where you [00:11:00] need to really, really pay attention to the market. And demand and how long it takes to even a house to close. So, you know, this is much more complex than your traditional, uh, buy low, sell high kind of thing. Because you need to figure out how this is going to lay out and, um, where your money's coming from.

[00:11:19] And of course, how is this going to work? So, you know, you have to have property appreciating to make money in house flipping. So it has to be worth more when you're done. And it's interesting. I saw this happen down the street here on the way to my home center. There's a house that a guy built. He looked like he was the general contractor because he was living there in a trailer.

[00:11:39] And he built this custom house that looked like he was going to build it to flip it. And the style was always a little wonky. It was goofy. It didn't really make sense. It looked like somebody had not designed a house before, but they could draw it out and had it engineered. And so there was a lot of things style wise that didn't work together.

[00:11:57] So it gave an instant dated look. [00:12:00] And I think this is where you got to be really be careful. With having the wrong design talents in the process, because you want this to look better and to have a mass appeal. This house had 5 or 6 different competing styles, different colors. It's been on the market for probably 18 months, and they haven't sold it.

[00:12:18] I think it's on its 3rd or 4th realtor. And, if the outside is anything like the inside, it's a hard house to sell on a not so great street. Now 1. 5 million, maybe. Could be 1. 2, haven't looked it up. But to be honest, it is so crazy on the style, they're not selling it. And so somebody is carrying that loan for 18 months is going to be just losing your shorts on it.

[00:12:48] So many times you see those end up going into foreclosures when they get that far out because There's no profit to be had and the market right now is not growing in my area at least where it should be So these are things [00:13:00] that get really expensive really quickly. So in that situation right there a proper building designer architect Designer could have made that project So much more because you know what their costs are on carrying that for so long and that is going to be super expensive Compared to maybe the five or 10, 000 they could have paid to get some architectural or design help along the way.

[00:13:25] And, uh, you could tell that the bones of the house are good, but just the materials they used on the exterior are just absolutely clashing with no apparent design style to it. So it's a really not thought out well, and that gets expensive, right? That, so you just really need to make sure that, uh, you know, if you're tackling this, you know what you're doing and that, uh, ego isn't getting in the way of.

[00:13:49] Good design decisions and we see that all the time on the flip shows where ego gets involved and creates, you know, almost manufactured situations in some of the [00:14:00] television shows. And yes, are some of those house flip shows like zombie house flipping and stuff. Yeah, a lot of those are very well scripted and they create some of the drama because if they don't have the drama, it's a really boring show.

[00:14:12] And so that's where they create those dramas to make sure that you're sucked in. Yeah. That you'll come back after that commercial break and, and that's why those are manufactured and that's why they're not taking that seriously. So you've got to be very careful with some of those shows if you're thinking you're going to be expecting that process to go that way when a lot of the drama is manufactured to make quote unquote great television and you know, something clearly it works because a lot of people watch some of those shows.

[00:14:40] So it's something to think about now if you're looking at a house and you're out there shopping around going Hey, this might be a good candidate Here's some of the things that you should be taking a look at one You know, you need to look at what the house value is now compared to what it should be You know, I mean, how [00:15:00] is that gonna look?

[00:15:01] Is that gonna be okay? And and here's the thing dabbling in real estate is super expensive You know, when you think about it, so you're going to sit there and you have the acquisition cost, which is the 1st thing for the, uh, that you're buying a piece of property and you need to make sure that you're making.

[00:15:20] Enough profit to cover for the cost of the project, you know, making a profit. Um, I think I saw that the average gross out of a flipper last year was about 68, 000 bucks, which for them nationally, if you look at that was about 26, 27 percent of that. And that's a 3 percent decrease from 2021, when flippers earned a little over 70, 000.

[00:15:49] So that's where you're starting to see those numbers tighten up. And when you only have like 67, 68, 000 as a profit. You've got to be really careful because one mistake, two [00:16:00] mistakes, that money's gone. And you think about it, the things that are sitting there, all the utilities, all the, the uh, you know, cost to carry are expensive.

[00:16:11] So that's why the best flippers that go in there when they're looking at profits, time is on their side because they need to go and get it done as quickly as possible. And the problem is, is when you're doing something based on time, quality is Always when you're in a hurry, quality goes out the door, and that's where some of these problems are.

[00:16:30] I can't tell you how many house flipped houses I've walked in and went. Well, this is a flip because I can see the 29 sing from Home Depot, the 35 Home Depot faucet. That's when, you know, just the bare entry level of everything. And, you know, it's, it's not that great. So by the time you go through and figure this out, there is a lot of, a lot of things there that, that get expensive.

[00:16:53] And one of the other biggest things is that I've seen too, is people just not having the right skillset to do it. Right. [00:17:00] You know, uh, builders, professionals and, uh, project managers, these people have done this stuff for decades. And it's a learned trade, so they have to have it. You going in as a homeowner and not as a person in the trades, you have to learn all of these things yourself, all while every second is costing you money from the bank.

[00:17:24] So that's another part of this that you've got to really think about. And you really got to think about when it comes to doing these. Cash offers are where people make the money on it. So, you know, you think about a majority of home flippers out there are buying the house with that. They're going to flip with cash.

[00:17:47] And so that's, so they're not having to have all those carrying costs. So if they've got their own money, they can spend four to six months on it and get it really done and do it. Well, where people that have a [00:18:00] bank loan to do it, they're sitting there, they've got to turn it in 45 to 60 days. And time is not on their side because otherwise that starts costing them a ton of money.

[00:18:11] And so you've got to really plan this out either way, whether or not you're going to be using your own cash, you're going to be using a bank loan. But really the bottom line is, is that, that what you see on television is genuinely created to be entertainment television and not a DIY manual to how to flip a house.

[00:18:32] And so understanding that key piece right there is going to save you. Hundreds of thousands of dollars. If you want to do this right now, we come back. I've got some other tips for flipping houses, what to do and what not to do. Just assume it's around the house. Hey,[00:19:00]

[00:19:01] this is Ron Keel, the metal cowboy from Keel, the Ron Keel band and Steeler, we are rocking around the house with Eric G.

[00:19:13] Welcome back to the around the house show. This is where we help you get the most out of your home through information and education. Thanks for joining us. We've been talking about the good, bad and the ugly about house flipping. And one of the best pieces of advice that I would give you right now is it is a very dangerous time to be doing this.

[00:19:28] With interest rates high, with the market all over the place, I know people out there that thought they would sell their house in weeks and it's been months. And these are all things that make it very volatile for you thinking about becoming your first house flipper. And so these are things that I really want you to consider before jumping in.

[00:19:49] Because this can really get expensive and you can get over your head very, very quickly. Now, you're seeing a lot of different [00:20:00] things out there when it comes to house flipping. And there's all these different sales techniques and flipping techniques that you can buy into. And like I said earlier, stay away from this stuff.

[00:20:12] But really, there's a lot of different ways to get money. If you don't have it, there's private lenders. There's hard money lenders. Um, you could have partners. Uh, you can take a home equity loan on your own house. You can sometimes get options to buy. Sometimes you can get the seller to finance it for a short term.

[00:20:32] I've even seen people do crowd. Funding and then of course, there's your typical homeowner live in flip where you're buying it and over 2 years or so, you're going to turn around and flip it and move to the next 1. that's a common 1 to do. And there's another 1 out there that I've seen too, which is a sale and lease back, which is an interesting as well.

[00:20:52] But no matter what. The price of money, it's going to be very expensive. So anytime that you're having to use something [00:21:00] other than your cash, that's not going to go as well for you. So it's really one of those things that I want you to really consider on the money side of things. Now, these are the things that I want you to look at.

[00:21:10] If you've said, okay, I got the money. I want to do this. Where do I go now? So I would start looking out there at the right homes that are good candidates. Maybe someone there had a hoarding disorder and there's so much junk there and people are selling it as is. Maybe someone passed away and it's a state sale or maybe it's a, uh, you know, a foreclosure or a bank loaned place.

[00:21:36] Maybe they were house flippers and didn't get the job done. Uh, or, or condemned homes that need to have work. Maybe there's a fire or something like that that you're going to go in. And, uh, rescue this place and get it back. And that's going to be a much more involved process when you're talking restorations and things like that.

[00:21:51] But those are really the good candidates because what you're trying to buy is a house that is the cheapest in the area with the [00:22:00] biggest upside, as well as. Where you can make those profits. So there's gotta be stuff that's easy to do and you have to have stuff. That's not super expensive. I mean, if you've got to go in there on a house flip and spend 70 grand on fixing a foundation and 40 grand on a roof, and you can get upside down where the work that you're going to pay it put out there versus the market price, isn't going to go and a great example.

[00:22:27] So my neighbors here just put their house up for sale, kind of close to my place here, a couple of houses away. And I thought that they were going to, when I looked at Zillow four months ago, that house was worth 1. 5 million. And our market has gone down enough here in my metro area, that that same house is now put on the market.

[00:22:49] And the, the, they remodeled the kitchen. They put a new roof on it. It's got new bathrooms. They did a ton of work on it and it's on the sale. It's on sale for [00:23:00] 1. 2. So they spent probably 20 grand on this 30 grand. If they did it themselves, And they've got a lot of money tied up in this thing and they're hoping to sell it quickly.

[00:23:15] Now, if this was a house flip that you had bought for, you looked at it and said, wow, it's worth 1. 5, I'm going to pick it up for 1. 1. I'm going to spend 200 grand on it and come out ahead. If that was your case, you'd be in the hole right now. So these are things that we should always consider when doing this stuff.

[00:23:37] So you got to get the right house at the right time in the market. Right now, it seems in my area, the prices are going down a little bit, which means that you need to project out that those prices could even be down farther later on. Which means you're losing profit on every day that you're working on it.

[00:23:53] So these are all things that you really got to take into consideration. And then let's talk about the disasters [00:24:00] here, right? These are the things that you see on the TV shows that are fabricated where they didn't know about it. I can't tell you how many times I've watched one of those flip shows and they walk in and.

[00:24:09] Oh, this bathroom's great. I'm like, oh, yeah, but what about all that black mold over there? Oh, they don't address it until later. They open it up and go. Oh my gosh, go to this black mold We didn't know about you knew about it, but these are the things that can really get you in trouble So I really want to forewarn you is that mold?

[00:24:26] asbestos abatement lead paint Foundation issues, septic tank issues, sewer line issues, go down the list are all things that can change that project from something that's obtainable to do to something that's not obtainable to do that you're going to lose money on every single time. And so really, this is where if you're a homeowner and you are going to do this as your first house, I will strongly recommend you have somebody come in that is a very [00:25:00] well known housing inspector.

[00:25:02] And they come in and check that place out and poke around and do some tests, see what they need to do and pay somebody to find the issues because that's where it's going to get you. So now let's talk about the problems that you might have if you're looking to buy a house that's flipped. And these are some of the things that I see.

[00:25:22] That I look at and go, okay, what were the issues many times? I will see super cheap, you know, LVT laminate flooring going down there. I would want to know what the brand is, what the make is. So you can go out and understand if that is stuff that you're paying a premium for, because sometimes you'll see people put in there that dollar 99 or dollar square foot clearance stuff.

[00:25:48] And it's not going to last. And I've seen that so many times where that flooring is going to be good enough for three months, but by six months, you're thinking about replacing the flooring again. You just [00:26:00] paid for that. So these are all things that I want you to really pay attention to. Now, if there is a way, and I've done this in the past with homes that I've been purchasing.

[00:26:10] Is that I can jump on online and take a look and see if there were other listings of what the house looked like beforehand, because when you see it beforehand, that will tell you and give you a little bit of a picture of what you're looking at down the road, because if you look at and go, wow, there was moldy in the basement and there's all these disclaimers saying that they're not responsible and you're finding out that that home was a, was a hot mess, Maybe it's something you should ask a few more questions on to make sure that things were done correctly.

[00:26:44] Like, if there was mold, was it abated? Was it a water leak? What happened? Where did this come from? And, uh, were there any foundation issues? All these different things that you can see sometimes, those will give you so much information because you're looking at it and going, Wow, there's the, there's the pictures [00:27:00] from 10 years ago.

[00:27:00] And wow, they took all these walls in the kitchen. I wonder if those were load bearing. I wonder if they did them correctly. These are things that you can now research. And find and see if that helped moves the ball for you, because really, I don't want to see you paying for stuff that wasn't done or, or, or perceiving that you have value within that home.

[00:27:19] So, if you're the purchaser, spend the time, go back and look in the internet way back machine there in that internet way back machine and see what you can find as old pictures of that house. And one of the secrets that I do, if it's like, you know, if it's a go take a look at every single. Major real estate company, usually the one that lists it still if that agent was lazy still has the pictures up there and, uh, even though the listing got taken down, the pictures were still populated.

[00:27:47] And so it will be on their page. So if it was. One brand of realtor guess what you could find it over there and there'll be a lot more pictures You'll know what was done to that house and what wasn't and that can be a saving grace because you can [00:28:00] look kind of go Oh, wow, it looks like they just put in some nice paint They got rid of the popcorn ceilings and they painted the cabinets and put down some new flooring and called it a day That's the best case scenario.

[00:28:10] The worst case scenario is you look at it going. Wow. I don't think they did that, right? There was asbestos flooring I don't think they took care of that. And now for you at purchasing a house, you need to start looking at and asking about, okay, um, I want air quality reports. I want to see if there's any other asbestos.

[00:28:25] Where was this removed? Was it abated? Was it done correctly? Lead paint, all those other things you need to start asking questions. And seeing paperwork that says it was properly disposed of and taken care of in the right manner. All right, when we come back, we'll wrap up talking about both sides of the House returns.

[00:28:41] It's the end of the[00:29:00]

[00:29:03] show. Now drinkin down people, it's time to go. It's that time again. It's last call. Welcome back to the Around the House show. This is where we help you get the most out of your home through information and education. Thanks for joining us. We've been talking about house flipping and whether you're on the buying or the selling side of things.

[00:29:20] Um, it can be a little sketchy now I found something here during the commercial break that I wanted to talk about just kind of a side note of previous stuff home flipping returns by state. I found this over at the Motley Fool. And, um, there is some states. This has gone really well in and some not. So this is really something in the USA here.

[00:29:39] You should think about is understand what's going on in your market. For instance, homes flipped in Delaware generated the largest return on investment in 2022, providing a 96. 1 percent return on average while significant. It's a sizable decline from 2021. Delaware had an average r o a of 156.7%. [00:30:00] So only two other states, Pennsylvania and Maryland had average returns on investment for house flipping of more than 60%.

[00:30:07] And this is where it gets interesting. So, um, flippers in Idaho had the worst house flipping. They're only knitted investors, 6.4% on average in 2022. Now, ROI, uh, your return on investment for House Flipping grew in just 5 states from 2021 to 2022, and our housing is much worse now, but you look back, Hawaii at 403, Mississippi 74%, Ohio 30.

[00:30:34] Iowa six and Louisiana point, you know, plus 0. 3 0. 3 actually. So yes, the states that saw the largest drop in ROI from 2021 to 2022 were Idaho, where they lost 59 percent Vermont 47, Oregon 42, Kansas 40 and Arizona 39. So that shows you that profits are running out the door quickly in certain areas. And [00:31:00] so you've really got to pay attention to that in your area.

[00:31:02] Is it worth it? Is that something that's going to make any sense, you know, and, and, and so just really take a look at that. That's a, that's a key number to take a look at is in your area. Can you even do this and expect to make money because it all comes down to it is, uh, your cost of buying things, your cost or renovating things.

[00:31:23] And what can you sell it for? And if you're upside down in the house to start with. There's no upside to that. So be very careful with that because that's a big one and, um, that's where I get really concerned about things. So let's go back here to what we were talking about before I went to break, which was the house when you're buying a house flip.

[00:31:42] Um, I want you if you look at it and go, okay, this was a flipper. I'll be honest. I want you to have 2 different home inspectors take a look at it. And make sure everything was done. I also want you to look and see if somebody pulled building permits, if they needed building permits in your area, which most states do [00:32:00] not all, but most states do.

[00:32:02] Did they pull it on the electrical? Did they pull it on that stuff? Did they did they do any asbestos testing? What did they find all these things? Or something that you want to know before you put the offer in on the house, so you fully understand what you're purchasing because I'd want to make sure that you knew that if there had been a house fire in that, or if it was a foreclosure, what was the story on the house before they got it?

[00:32:27] And you are trying to buy it. And that's a big one. So understanding the history of the home is a key. Now, I don't want to see you blowing money on this that you don't need to blow because Right now, I think you're going to see some desperate house flippers out there with the market because they're trying to get things sold quickly and in some areas, like I said, you've got 30, 60, 90 days before the house is even sold.

[00:32:52] That could be really expensive to carry that stuff. So everybody gets into a little bit of a panic with that. So this is where I really want you to be careful. [00:33:00] House flipping makes a lot of sense for people. In when they're trying to, uh, you know, turn houses quickly and the real estate market is hot when it's not, or it's contracting.

[00:33:12] That's where it gets much worse. So now let's talk about the bad side of house flipping in that from the person that is trying to buy an affordable housing house. And so what you're seeing is, for instance, if someone was buying a inexpensive home. And I'll just use some generic numbers here so you can do it.

[00:33:38] So let's say somebody had to make 74, 000 a year to be able to afford the house sale pre flip. So, so if your income had to be 74, 000 to afford that house pre flip. Now, to do it post flip, after a flipper's been there. [00:34:00] You're seeing now that that would be up to 95, 000. And so you're seeing a lot of these kinds of things where people like, wow, I know it's good that you're upgrading this house, but if it was already livable to start with, you are now taking that off for the most people that need it.

[00:34:17] As far as something that's affordable now, what the other thing you're seeing though, too, is that sometimes these homes were the blights of the neighborhood. And so maybe that was just going to, you know, let it continue to be a blight because people were just getting into it and I couldn't afford to fix anything up to it.

[00:34:34] But with the house flip, maybe the neighborhood feels better because, well, they've got more value out of the house and more expensive homeowners are coming in. And it could be the way to push that, that up. But the problem is that if you look at that from the socioeconomic side of it, that that now is making the homes more expensive, which means in that neighborhood, more low income people can't afford to buy that.

[00:34:58] And so there's really kind of a [00:35:00] double edged sword with house flipping that if you have too much of it going on. That you're now are pricing people out of entry level homes that maybe one day they hope to fix up. And that's the challenge, right? Is that are we taking homes away from homeowners that just want to get in there and they don't care that, uh, it needs some coats of paint or the cabinets are oak and nobody cares about that.

[00:35:21] And, you know, at what point are we taking homes off the market? That are affordable. Now, as a homeowner, if you want to buy a house and flip it and sell it, that's, that's your prerogative. But I think that there's also, um, some other issues there where we're taking affordable homes. And making them non existent for those new homeowners.

[00:35:43] And so, no, I don't think we need to have more regulation. We don't need to have more stuff because that just makes things more expensive. But I think though that we do need to have some balance with house flippers up there as well. Is that, um, you know, by taking that and artificially marking that [00:36:00] house up even more.

[00:36:01] You know, there's just no way around it that by making that house nicer and fixing it up. And making more of a profit. Yeah. Unfortunately, the cost of that is that, uh, people in lower incomes could maybe squeeze into that house and maybe now they can't. And so those are issues that we've got to work out and that's going to come into, um, some of these things where you're seeing, um, cities like New York City.

[00:36:26] is trying to, uh, create, um, or limit house flipping. So, um, they're talking about doing an anti speculation tax that would create a disincentive for property flipping. Uh, and then of course, being a tax, that means that they can spend the money on something else. So they might spend that money on like foreclosure prevention, house repair, energy efficiency, those kinds of things.

[00:36:54] So, um, those are things that I get concerned about is when they start deciding to get involved or put special [00:37:00] tax rates for people that are out there trying to do it. Um, I think we just need to have balance and I think we need to self police that make sure that we have affordable houses out there. And then really, I think we need to do a better job of building affordable housing for people out there.

[00:37:13] And some of that is we've talked about in future and past episodes. We'll talk about it again at some point, but really trying to create something that is affordable for most people can be tough out there. And it's even worse when the government gets involved and decides that they're going to be house builders because they are not house builders.

[00:37:29] And when they do, you pay an exorbitant high rate for those, for those rental units or, uh, any of those kinds of things. So you're better off letting charities and nonprofits do that because the cities know how to spend money and they do it really well. And unfortunately, that makes for inflated houses because their version of low income, when it comes to rentals and things like that, that they're building, they're paying two and three times the money sometimes to do what a private sector person can do because of how they're operating.

[00:37:59] So. [00:38:00] Let's make sure that we are doing some balance here. And I know house flippers out there that are listening to the show right now are going Nope, I want to do my thing and I totally get it. But I also think we need to have some some some places there where we we leave homes that can be purchased for lower income people and That that need it so they're not in the apartment or something like this.

[00:38:26] This is not something that'll ever Fix a housing issue that we have out there, which is really more our homeless population issue is, is a majority of people that are either addicted to drugs or fighting mental illness. Or both because they're medicating themselves over the mental illness that they're trying to tackle, but this is not going to fix that situation.

[00:38:48] However, I'm trying to make sure that we have balance for those families that are trying to move into their 1st host house that they bought and that they can do something with. And have that American dream where they could actually [00:39:00] buy a place and, uh, benefit from it appreciating in value. All right guys, we're out of time.

[00:39:05] I hope this answered a few of your questions about house flipping. We'll talk more about it in a future episode. Thanks for tuning in to Around the House.