Beth Potter's recent article in the Denver Post is a wakeup call to the professional flippers who are doing more harm than good to the neighborhoods they "invest" in. Unfortunately, Potter's article is more fluff than analysis; sure, some flippers need to work to resell houses, but what of the character of the neighborhoods destroyed by flipping? Where I live, self-proclaimed "real estate professionals" have bought up old Craftsman and Mission Revival bungalows, sunk a few thousand dollars into them, and then - while waiting for a seller - rented them out. Of course, the rents price out the working people who used to fill the neighborhood, moving them into clusters of poverty that are a huge spiritual, social and economic drain on them and all other taxpayers.
Some folks decide not to rent out at all, and just wait for the sale - and a large proportion of them end up in foreclosure, with dead lawns and broken windows. Thus prices go up and then down artificially, at the whim of outsiders who have no interest in the culture of the city or our neighborhood and no interest in contributing to it at all. It's simply an extension of the "me first" attitude that has shaped the national character in the last decade.
Nine years ago, downtown Denver resident Barbara Baker was up late with insomnia when she saw a "Buy property, no money down" infomercial on TV.
Her job as a gang prevention coordinator at Jefferson County public schools was ending, and Baker was trying to figure out what to do next in her life. She decided to use the family house as collateral for a "no money down" loan on an investment home....
Late night TV shows like "Flip this House" on A&E are drawing first-time investors with visions of quick riches dancing in their heads. On the show, Realtors and others make mostly cosmetic changes to distressed homes in the Atlanta metro area and sell them just months later for huge profits.
"A lot of people watch (that show). It's good for the market because it's getting some fresh blood into (it)," said Wilhelm Estes, a Broomfield Realtor who specializes in finding such properties to sell investors.
Such TV shows can also be misleading, Baker said, because they emphasize homes that need simple changes rather than costly infrastructure overhauls.
"I think it's tough," she said, which is why she consults with people just starting in the business. Said Baker, "Most of them don't know what they're getting into."
Read the full article here.