My reading here seems to indicate that the members here seem to feel that professional house flippers should be treated with contempt, or at least disdain. Why?
I have seen houses in Seattle bought had minimal and substandard fixing up just so it looks nice but still needs a lot of work underneath the shiny exterior then resold for inflated profit.
I have also seen people who buy the house, take 2 or 3 years doing a major overhaul and do as much as possible themselves before selling and moving on to the next project.
The former can DIAF… The latter are just fine.
Okay, let’s run down the list, in order from least obnoxious to most obnoxious.
First, there’s the “reality TV” angle. That is, the whole idea of professional house flippers has been brought into the public consciousness by such TV shows as “Flip or Flop,” “Masters of Flip,” “Flip This House,” etc. If you’re not a fan of such shows, it’s easy to transfer the irritation at those shows to the flippers themselves. Even if you are a fan of those shows, a show without conflict is boring, so they tend to show a house flipper’s less personable attributes more often than not.
Second, the idea of gentrification. By flipping a house, you’re raising the price. That price increase is going to price people out of the neighbourhood.
Finally, it’s a rich person’s sport. Only people who can afford to buy a house can flip it, and most of them are subcontracting the work (or having employees do it). So, it’s basically a case of “rich people use their money to buy a thing, use more money to pay other people to fix the thing, and then sell the thing for more money than they’ve spent.” Basically, using their abundance of money to make themselves more money, without actually putting in any of the work themselves to earn it.
I have mixed feelings on this. I’ve lived in a couple cities where home flipping went hand-in-hand with gentrification. The idea being, fix up a house, sell for more than its worth, and drive up the cost of living in the neighborhood. Which has the regrettable side effect of making it too expensive for the people who already live there to stay.
At the same time, I don’t know what I think should be done about it. It’s not like you can really limit who is allowed to buy houses, and where.
I’ve flipped places I was living in and rehabbing. But that was more taking the worst place in the neighborhood and bringing in line with the rest of the places.
I have a strong sense for not over remodelling a house. My current abode is just about finished, but I didn’t go for over the top fixtures and finishes. Again, I’m not gentrifying this neighborhood, just fixing up the ugly house so when I do decide I’ve had enough of Illinois, I can likely make a few bucks.
The upside of having flipped places, I sure know what to look for when I’m looking at houses with DIY Homeowners
I know people who won’t even bother with the fixing up part. Just a new coat of paint, wait until the session when people are desperate to buy (June closing around here), and make a certain amount more for what they paid two Decembers ago.
I think you’ve pretty much covered all the points very succinctly.
I will admit, remodel shows including those about house flipping are kind of a guilty pleasure - a bit of fantasy. But I also am aware of the economics and risks. There’s nothing easy about the house flipping game despite what the shows portray, and you need to be a ruthless motherfucker to be successful. So you end up with a lot of type A big ego scumbags that dominate the field, and yes, they are generally profiting on others misery.
They aren’t buying and renovating houses to uplift a community. They are buying distressed properties - often those in foreclosure or short sales, slapping on a fresh coat of paint, some granite countertops, and tile floors, and trying to get it off their books as fast as possible. It’s all about the profit motive.
Thank you all for your inputs.
Like with anything else, someone trying to make money by fucking someone over is making the world worse. (i.e. slap a coat of paint on the crap and look for a sucker willing to overpay). But, someone trying to make money by creating actual value is neutral or making the world better, even if it’s small.
Every family who has owned our current home, originally built in 1904, has made major changes or renovations to it. Blessings to the people who added indoor plumbing in the 1950s, I don’t know how you managed before that. I don’t even know if I’d call that flipping, though, just home improvement.
My dad (definitely not “rich”) flipped two houses after he retired. It took probably 4.5 years all told. He did most of the work himself, with his dad helping a little, me helping for a few months while I was otherwise unemployed, and only subcontracted what he absolutely had to (electrician, roofing).
Both were definite cases of “fix the worst house on the block.” One of the houses had been rented out by the previous owner, and was literally 1/3 full of garbage (including dead rats and used diapers, which is kind of a frightening combination). He cleaned them up, did the repairs, didn’t “gentrify” them but made them livable. Both the houses went to immigrant families.
He figures between the money he made on the first house and lost on the second, he approximately broke even as long as he didn’t pay himself any salary… and decided there were better ways to spend his retirement.
On the other hand, I bought my house from a flipper, and was not really impressed with some of the slapdash things they did. But it was also not a case of gentrification… a house from the 40s that had some very basic repairs, new kitchen appliances and carpet. Meanwhile the neighbor’s house was built in the mid 80s and is worth 2.5x the second-most-expensive house on the block.
I wouldn’t define either of those as:
When I think of “professional house flippers,” I think of people who are flipping more than one house a year, and earning (after expenses) at least the high five figures doing so each year (more likely six or seven, given the risk involved).
I don’t think people who dislike house flippers are taking issue with the idea of people buying a house, living in it for a few years, improving it, and then selling it at a price which takes into account the value of the improvements that have been done in the interim. That’s just… basic home ownership.
Flipping, by the definition I’m using, does not include people who improve the house while living in it. That’s just home repair.
That does meet the definition I would use. Apparently in America right now, there are a yuge number of people who are trying to be professional flippers this same way. I blame it on the TV shows. As a former flipper back in the oughties (though in a very niche market) I can tell them it’s not quite as easy as the TV shows make it out to be.
My brother and I got out of that business when the real estate bubble inflated to the point we couldn’t afford to do meaningful buys, fix them properly, and still make a reasonable profit. I can’t imagine that it’s gotten any easier in the years since.
My wife is doing an article for an online 'zine and was asking me about it. (We did this before I met her, so she wasn’t part of it.) I’m helping with the research, hence the question.
Several of these replies vilifying “rich people/investors” make me wonder: what is your definition of “rich”? A tad off topic, but an interesting question nevertheless.
“Rich” is a relative term, as is “poor.” A six-foot-tall person is tall; a five-foot-tall person is short; I imagine I’d feel differently if I were taller than six feet or shorter than five.
In this case, I’m using it as a shorthand for “upper-class,” which I have a firmer definition for. My definition for upper-class is someone who has enough wealth that they could live comfortably without working (as opposed to upper-middle class, who is someone who gets income from what they own (investments, rentals, etc.), but not enough to live on).
I can’t imagine anyone who can, well, “afford to do meaningful buys, fix them properly, and still make a reasonable profit,” would, in my estimation, at least have a net worth in the upper six figures (excluding their principal residence), which, though I haven’t run the numbers, should be enough to qualify as upper-class.
In this context, I’d consider ‘rich’ anyone who can afford to buy an extra home that they don’t need and aren’t going to use and as the icing on the cake, afford to renovate it. Most people I know have a tough enough time paying their own housing costs. For some, housing is ~50% of their income, and for others, the dream of owning their own place is never going to happen unless some eccentric stranger or forgotten relative leaves it to them in a will.
I do know a few who can buy extra houses. One was a CEO who flew to work in Manhattan on a helicopter. One got a big insurance payout when her husband died. They do use their extra homes, primarily to have a place where they can go and spend time with family who live much closer to those homes than their primary homes. The third is an immigrant who uses his pay here to buy homes back in his home country, and uses the rent from those to buy more. He’s building a real estate empire back home, and plans to move back and retire there in one of them while being able to live on the rents of the others. None of them are buying to sell for profit, but to create the community they want to live in. I’d consider them rich, but not in the villainous sense.