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Fix and Flip: A Bad Word? How to Be a Credible House Flipper

by Michael LaCava on March 3, 2013 · 15 comments

  
Fix Flip

If you want to become a legitimate house flipping “fix and flip” specialist, be prepared for an onslaught of criticism when you declare to the world what you do.

When I first started my house flipping website, I have to admit that I wasn’t completely confident in promoting myself to the world as a “house flipper”. Although house flipping is what primarily generates income for my business, I do a lot of other kinds of real estate investing as well. But when I chose the name for my website, I was very reluctant to lump myself in with all the negative connotations associated with the phrase “house flipping”.

I think most of us real estate investors are aware that banks and the government are not particularly fond of people who flip houses. The sad part is because house flipping has received so much criticism, it makes being a house flipper a bit of a challenge.

So what can you do about it if you’re a legitimate house flipper?

The Negatives of House Flipping

To take the complete opposite side of the argument, I do believe that house flipping does indeed warrant some justifiable negative criticism. As with any industry, there are always going to be a few rotten apples in the bushel – so to speak. In the real estate investing world, we certainly have our fair share of scoundrels. There are far too many gurus have made boatloads of money using predatory tactics to both build scammy real estate investing businesses as well as lure new real estate investment students to purchase expensive empty coaching programs.

We all know who many of these people are. Just Google “real estate investing scams” and you’ll see nearly 3 million results.

The house flippers who particularly give the house flipping name a black eye are those who buy a distressed property, barely do anything to improve the value of the property, then turn around and “flip” it to a buyer. That buyer invariably needs to put in tens of thousands of dollars of work to make the house livable. This is more like brokering junk than flipping houses.

In other cases, some house flippers buy a distressed property, do some cosmetic fix ups to “put lipstick on a pig”, don’t divulge all the known issues with the house and then sell that house for a quick profit. However lucrative this kind of “flipping” might be, I can’t imagine that those guys sleep all that soundly at night.

Fix and Flip, Rehabber, House Flipper?

So when I named my House Flipping School, the name came with some risks associated with it. In fact, many house flippers have transitioned away from the house flipping moniker by referring to themselves as “rehabbers”, “fix and flip specialists” and “residential real estate developers” – so I felt like I was swimming against the current.

In retrospect, I suppose I could’ve done the same thing as they did – although “Residential Real Estate Developers School” doesn’t exactly flow off the tongue very easily…nor would anyone be able to type in the URL correctly…

So when I sat down with my partners, we had a tough choice to make. We could either give into the pressure from the media, other real estate investors, many of our peers, local banks…you name it – and completely ignore the “house flipping” word altogether.

Or we could take a stand and do our best to repair the reputation of the word itself.

We chose the latter because its simple: house flipping is what I do. If you want to get really technical, I guess I am a “fix and flip specialist”…but that just doesn’t sound right. But it is what I do as a business.

We debated this topic endlessly and I believe we made the right, albeit unpopular choice. At that time I was particularly concerned about being grouped in with all those unethical flippers. I really struggled as to whether or not this was a smart branding decision. But after nine months – I realized that there is a serious re-branding opportunity here – not just for me, but also for all those legitimate house flipping professionals who do good and ethical work.

What the Legitimate Fix and Flip House Flipping Specialist Does

Because house flipping has a negative connotation to begin with, anything with the house flipping term attached to it seems to instantly gain some level of attention. There is some self-serving purpose to this as well, though. If you tweet something that includes the keyword “house flipping”, we have noticed that you get more eyeballs on your content than just “real estate investing”.

As anyone from Lady Gaga to Donald Trump knows, stirring up a little bit of controversy isn’t too bad for your personal brand. And especially now, in the age of social media. So in the spirit of full disclosure, we made the decision to brand ourselves as house flippers with that aspect factoring into the decision.

But aside from the self-serving “controversial” aspects of the word itself, I honestly felt that with many other house flipping pros that do good and legitimate work on their flips, we could collectively change the perception.

And there are many reasons to be very proud to be a house flipper. There is just such a huge opportunity here for honest house flippers to change the public’s perception of people who flip houses and make money at the same time. In reality when I “flip” house, I will help to improve the neighborhood, as well as the local community. This makes me feel really good about what I do.

If you can find something that you’re passionate about, love doing, help people and make money doing it – and a lot of it in many cases, isn’t that what life is all about?

Sure, friends, family, on the other parts of life are important – and I’m not trying to discount those at all. I’m talking about your professional life. If you’re proud of what you do, can help people and run a profitable business doing it, it’s the best feeling in the world.

Here are some examples of what I’m alluding to:

  • Legitimate house flipping brings taxes back to the community by improving home values and expanding the tax base.
  • Legitimate house flipping puts people to work – plumbers, electricians, general contractors, subcontractors, interior designers…the list goes on and on. We employ dozens of these people to give them gainful employment.
  • Legitimate house flipping generates income for local lumber yards, supply shops, local businesses – I can’t even fathom the amount of money I’ve invested in materials for my house flips over the years. It must be in the several millions of dollars.
  • Legitimate house flipping increases the home values of entire neighborhoods. If you completely renovate a totally rundown house in a neighborhood, what neighbor wouldn’t be happy with that? They know that the value of their home has now improved because of your work.
  • Legitimate house flipping creates beautiful homes at affordable prices and improve the lives of the people who inhabit the homes we fix and flip.

Here at BiggerPockets, there was a study done on the value of real estate investing in its overall impact on the economy of the United States. I highly recommend you check that out. Although house flipping is not the only type of real estate investing which adds to those numbers, it certainly plays a significant role.

What Legitimate House Flipping Is Not

The biggest misperception people have about house flipping is that it’s all about a “get rich quick” scheme to scam unsuspecting home buyers. Sadly, many of the guru programs that are out there sell courses based upon this premise. And many of these people have sold millions of dollars of courses based upon this idea.

I’ll be the first to tell you though that making money flipping houses is anything but a get rich quick scheme. If it were, then everyone would be doing it. Trust me, it’s not. It’s taken me nearly five to perfect the system and formula I routinely use to fix and flip the houses I work on.

Yes, there are simple steps to house flipping – but it’s like a calculus textbook wrapped in a comic book cover. To get people interested in house flipping, you definitely need to teach them through simple means. The steps are simple, but all the work behind the “simple” steps are anything but.

The difference is that I tell everyone who gets it that although the name is simple, the process itself is not simple – but you have to start somewhere in your education. After that, experience is your greatest teacher – as long as you keep learning while you’re doing.

House Flipping Conclusions

So the next time you overhear someone bashing house flipping or read about another real estate investment scam, try to keep in mind the benefits of house flipping listed above. Because if you are serious about becoming a house flipping professional, you can certainly do it through legitimate and ethical means while helping your family and improving the community in which you do business.

If you’ve read this far, please leave a comment below! What do you think – is house flipping a bad word? Is it a good word? Have the scammers ruined it all for us? Please leave a comment, I’d love to hear what you think!

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{ 15 comments… read them below or add one }

Caroline Bogart March 3, 2013 at 3:42 pm

Hi Mike – thanks for this article. We only just started telling people about our new house flipping venture. I was surprised when people didn’t react as favorably as I would have. I see house flipping as rehab – an honorable profession that improves the neighborhood for everyone’s benefit. Besides one friend who said “That’s a great idea!” I got a lot of silent “don’t say anything if you don’t have anything nice to say” responses.

Thanks for helping me understand why I didn’t get the response I expected!

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Michael March 4, 2013 at 7:02 am

Your welcome Carole. Don’t take it personally & be proud of what you do. It use to bother me but I am over it and love what I do hope to inspire you as well.

Thanks for your comments and please share your success as I would love to hear how your flipping business progresses.

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danny abalos March 3, 2013 at 3:59 pm

hi michael
i got into house flipping just about a year ago. my first house is now under contract and it took me almost 10 months to get there. it was in dire need of rehabbing and i did a great job of it. the neighbors all thanked me and said it looked great. anyway…house flipping does seem to have a bad rep, i even thought long and hard about describing myself as a house flipper, i prefer rehabber personally. i know the work i did on the house made it better and more profitable for the next owner and i know the taxes will increase on it and i know that it makes the neighborhood look a lot better. i consider myself one of the honest ones because i made an eyesore go away and improved the value of the house by doing good work. i will lose money on this deal but i still feel good about the project and the results. i won’t do pig on a lipstick unless that’s all that’s needed. i want people who buy from me to remember me in a good way and call me when they need something in the future or have friends who need something. this is not a get rich quick by any stretch of the imagination. i busted my butt and spent a lot of money but i’m just beginning so hopefully in a few years i will have a nice chunk of change to call my own
thanks for the article, i enjoyed it very much.
danny abalos

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Michael March 4, 2013 at 7:06 am

That is a great attitude Danny. The fact that you lost money on your first deal and did not give up is what is going to help you succeed. I lost money on my very first deal in 2006 and then spent 2 years learning the business to run it like a business. I would suggest you look hard at your #’s to see where yo went wrong as to not repeat. Learn from your mistakes as much as learn from your winner’s. Best of luck on your next flip and wold love to hear how it goes.

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Glenn Espinosa March 3, 2013 at 7:37 pm

Mike,

Great post. I’ve also struggled with the term house flipping and I’ve found myself using different terms for the different type of people I network with. For example, with potential lenders I use “real estate redeveloper” and when in a casual situation I simply introduce myself as a “house flipper”.

I have noticed that some people are turned off by this but for the most part a lot of people are simply intrigued and can somehow relate to me because of what they’ve seen on TV. People who show negative reactions to me being a house flipper usually warm up to me after I explain a few of the same positives that you listed in your article.

Besides, how can you argue with someone who can legitimately say they’ve provided over three dozen jobs, have provided over a dozen or so homes for local families, revitalized communities and not to mention poured in hundreds of thousands of dollars into the local economy.

Again, thanks for the post Mike – and, mort importantly, thanks for being a great example of what house flipping should be about!

Glenn

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Michael March 4, 2013 at 7:09 am

Thank Glenn. Same to you & I am happy to be in company with you here at BP. Keep spreading the good news of what you do. Don’t let anyone tell you different.
Thank you for your comments

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Dawn Garner March 4, 2013 at 10:20 am

This is an interesting article. I find the aspect of employing local trades and suppliers awesome in the process of beautifying a local neighborhood. Not only in rehabbing a property do these trickle down effects happen, but the excitement of upgrading a sad little shack in a neighborhood and giving a new family a great place to live is and should be the final reason why one is in rehabbing. I hope that made sense! We look forward to being reputable “flippers” and look forward to making some fun projects here in Colorado. Thanks for the article.

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mike March 4, 2013 at 12:27 pm

Thanks Dawn. Love to hear how thing’s go for you in Colorado.

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Peter Kraft March 4, 2013 at 10:37 am

Great article! Thanks for explaining what the legitimate “flippers” do and reminding me why I am passionate about that side of the business. When you can finish a project and stand back and look at it from the street and remember what it looked like at the start, it is definitely a good feeling (in addition to the increase in my checking account).

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mike March 4, 2013 at 12:29 pm

No problem Peter. I have to remind myself often.
I aways take time on the final day before closing when
I remove the lock box and just take it all in.

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Miles Gibson March 7, 2013 at 2:14 am

Hey Michael, this article was a good read for me. I’m just searching for any great info that I can grasp on real estate before getting out there and this was helpful for you to break the “house flipping” aspect down other than the term itself.

Thanks.

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Michael March 10, 2013 at 11:59 am

Your welcome Miles. You will get so much information on BP from some of the best investors around. Good luck.

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Dan January 31, 2014 at 7:14 pm

Great article! I too have always stayed away from calling myself a “house flipper” due to the negative connotation. I have called myself a real estate professional instead, but agree with everything you said. I have many times stated the value of improving a property, neighborhood and someone’s life. When I’m done, the house is in great condition and shouldn’t have any problems for years for the new owner all while providing employment for contractors and keeping the economy going. Proud to be a flipper!

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Matt Rodak June 16, 2014 at 10:19 pm

Michael,

Great post! I was just about to write a post about the negative connotations associated with the term “flipping” and what we can do here on the BP community to start turning that perception around. Realizing I likely wasn’t the first one with this idea I did some research and came across this perfectly written analysis of the business.

It’s been more than a year since you’ve posted this and the negative perception continues to persist, and will likely go on so long as there are folks out there doing things to perpetuate it.

So what can we do to reclaim the term as one of: value-added community builders; job creators: affordable housing inventors? How do we separate the good from the bad?

I too struggled when naming my business and agree with you that we should not run from the term, but instead embrace it and influence a more positive perception of it.

I propose we rally the BP community and get the word out about all the value Flippers provide to local neighborhoods and communities, while at the same time educating the masses on how to identify the “posers” and call them out for what they are – scammers and crooks – not Flippers.

I’ll get us started by sharing this post with my network on Twitter. May I suggest anyone else reading this do the same! I’d also love to share this on my website; with your permission of course.

Thanks for the thoughtful blog!

Matt

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wendy July 18, 2014 at 10:11 am

Hi Michael,
I would like your thoughts on my very challenging problem. My husband and I have been running a very successful real estate flipping business..all foreclosures for the last 15 years. After a 40 year marriage, my husband filed for divorce. He is claiming we split the properties (the value) and he believes the business has no intrinsic value. I feel the business must have a value because we built up long standing relationships with our subcontractors, investors, etc. We learned the neighborhoods and trends. We have a well oiled machine. My husband is the one that looks at the properties and bids for the foreclosures so he feels “he” is the business and it cannot be “sold” as a business. Meanwhile, I am the one who helps him price the buys, deals with the renovations, tenants on the homes we rent etc etc. Do you know of any real estate investment businesses that have been for sale? What are your thoughts? Will this mean, after a divorce, my husband winds up with the business which will be a “windfall” for him while I’m left with alimony and no way to make a living? Somehow I feel this to be very unfair.

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