Money Blue Book

For a while now I’ve had an obsession with watching house flipping reality programs on TV. That is, until the real estate market collapsed. Since then, the hype and fascination seems to have subsided a bit with the feeling that perhaps many of these shows did the public a great disservice by over glamorizing the flipping experience. By oversimplifying the renovating process and featuring only the greatly successful flips, some of these housing shows perhaps gave many the misleading impression that flipping is so easy, even a caveman can do it - prompting many to foolishly dive in without proper real estate education.

These popular house flipping shows should be regarded as entertainment only and not seen as a step by step blueprint guide to flipping projects. If you are looking to get inspired and want to become more involved in the real estate investing business, watching these shows will certainly give you a good introduction into the realm of flipping. But they won’t teach you how to properly finance your flip project or even address necessary aspects like how to obtain the appropriate construction loan or even how to properly budget for unexpected repairs. But entertaining they most certainly are.

Here Are A Few Of My Favorite Flipping and House Hunting Shows:

1) Flip This House (A&E Channel) - This show is probably the original house flipping program of recent years. Each episode tracks the purchase and renovation of a single home, listing the price of the home, renovation cost, and the expected profit from each flip. For newbie flippers, this show provides the least realistic portrayal of the amateur flipping process as the show only spotlights the trials and tribulations of experienced and professional real estate teams.

However I love the show and found it irresistibly entertaining due to the endless stream of scam and fakery controversies that have continuously plagued every season of the show. The Flip This House show and its television network are currently embroiled in at least one lawsuit involving allegations of fraud and breach of contract, as well as other well publicized rumors of flipping fabrication and scams.

The most notorious episode involved Atlanta “real estate developer” Sam Leccima and his season two housing flip scam debacle. His on the air house flipping prowesses were later exposed and discredited as shams by news investigators when it was revealed that he had duped many investors in an elaborate flipping cover up. Apparently not only did he fail to own a real estate license at the time of the show’s filming, he also never owned the houses he allegedly flipped. Much of the work shown on the show was revealed to be actually temporary and shoddy patch up jobs designed to look good on TV. Home staging presentations were faked with his own friends and family posing as potential buyers. Fake Sold signs were slapped in front of unsold homes to make his on the air flipping projects appear successful. How the A&E filming crew failed to realize what was happening as it occurred is beyond me. Very fishy indeed.

Other allegations of fakery involved the humorous and entertaining Montelongo brothers. After watching several of their episodes, I got the feeling much of the whipped up drama was being exaggerated and staged. At some point the episodes grew so ridiculously off the wall that they became asinine, such as when one of the Montelongo bros supposedly had a mental breakdown and had to visit a psychotherapist, or when the family had to sneak into a hotel with their pet dog and birds because their home was being worked on.

However, the show’s most popular real estate team was probably season one’s Trademark Properties, which featured folksy leader Richard Davis and his lovely fan favorite sidekick Ginger. However, due to contractual legal disputes, they’ve since moved over to another television network to start their own show.

2) The Real Estate Pros (TLC/Discovery Channel) - This show exclusively features Trademark Properties which left A&E after filing a lawsuit against the television network over allegations of breach of contract stemming from nonpayment claims. The characters are the same and the show revolves around the same flipping adventures of the Charleston based company.

3) Flip That House (TLC/Discovery Channel) - Unlike the other shows, Flip That House features mainly amateur singles and groups of house flippers as they work together through the process of purchasing, budgeting, renovating, and appraising. The conclusion of each show always ends with a final renovated home value estimate from a real estate agent, but the appraisal usually entails some ridiculously high projected profit that reeks of unrealistic expectations. Despite construction and budget obstacles, the flippers also always seem to come out on top.

Thankfully in the spirit of realism, some older episodes now showcase a Flip Forward feature where viewers can catch up with past flippers to see how their venture actually turned out. Oftentimes, it’s revealed that many flipper properties ultimately languished unsuccessfully on the market for months to years despite the original projected profit spin.

4) The Property Ladder (TLC/Discovery Channel) - This show is one of my best favorites, but only because I enjoy watching train wrecks of amateur flippers crashing and burning their way through the house renovation process. Most of the time I cannot believe some of the wacky approaches out there when it comes to flipping houses. The show features host Kirsten Kemp as the expert property developer who advises these bumbling fools as they strip, hammer, and spend their way into the financial hole. They never seem to listen to her but strangely frequently come out on top, to my viewing disappointment.

5) Flipping Out (Bravo TV Channel) - The show centers around the real estate flipping and personal life of Jeff Lewis, a colorful Los Angeles high-end real estate developer with an obsessive compulsive management streak. The fun part is not watching his team purchase homes and resell them for profit, but rather watching him multi-task his business deals and still keep tabs on his beloved cat “Monkey”, housekeeper, and former boyfriend and business partner Ryan. “Drama for sale” seems to be the theme of this interesting flipping show.

6) House Hunters (HGTV Channel) - With the implosion of the real estate market, there seems to be greater demand for home staging shows and programs that focus on the home buying experience. As a prospective home buyer one day, one of my favorite new shows is House Hunters, which tracks the house hunting experiences of families and couples as they visit prospective houses while verbalizing their likes and dislikes about every aspect of each home they visit. At the end of each episode, they have to decide which home they liked the best and which they would like to make a purchase offer for. It’s very educational and beneficial for me to see how others go through the home buying thought processes as they visit homes and scrutinize the pros and cons. The fun part is always trying to guess which one they’ll ultimately go for.

There’s no denying that we are in a major real estate funk right now. Housing prices have plummeted and the real estate housing successes enjoyed by many in years past are long gone, despite the blinded and self-motivated views of some. But yet, home sellers are still putting their homes up for sale and there are still buyers roaming the streets looking to snap up their future homes. If you are a seller, here are some reasons why your home may not be selling well, and some things you should look at to ensure you are truly maximizing your home’s value and chances. Some factors like broad housing conditions are beyond your control, but others you can personally change to improve your selling advantage.

1) Your Home Asking Price May Be Set Too High

As much as you’d like to think that you or your real agent determine the market value of your home, at the end of the day, it’s the market and the buyer that set the price. They determine how much your home is worth and how much they are willing to pay for it. Overpricing your home is the number one reason why homes don’t sell. Much of the interest in a home is generated within the first 30 days it is placed for sale. By overinflating your asking price, you price out many prospective buyers, particularly if they feel you have no intention of budging or negotiating lower.

Remember to price your house similarly enough with the other comparables in your market as you are competing with these other houses. You want to generate buzz - so pricing it slightly below market may help generate sufficient interest to encourage higher bids later on. Houses that sit too long on the market tend to turn off potential buyers and make them wonder if there are other hidden reasons why the house isn’t selling.

2) The Real Estate Market Is Very Slow And Conditions For Selling Are Bad

When the housing market is slow, there is usually an overabundance of housing supply with too many sellers and not enough serious prospective buyers. The real estate market tends to operate in local pockets, but frequently the national housing sentiment can put a drag on valuation and drag down prices. In such a slow bear housing market, the only way to sell your home fast is to price it at a slight discount and sell it at a lower asking price. Buyers during a slow market want bargains or seller concessions such as waived fees, upgrades, or freebies like plasma TV’s. However, if you are simply unwilling to drop prices, one ultimate solution is to wait it out, although that can last months or even years.

3) Your Home Is Located In a Poor Location

When it comes to selling your home, price and location go hand in hand. Homes located in low crime safe neighborhoods, with easy access to public transportation and highways, proximity to job abundant city hubs, and located near good schools will always be easier to sell. Particularly in a slow housing market, homes located in comparatively less convenient and attractive neighborhoods will find stiffer competition from better located houses. Your recourse is to try lowering the home price further to match the market perception, or to spend more money on additional home improvements to make it more attractive.

4) Your Home Isn’t Maximizing Its First Impression Through Curb Appeal and Home Staging

First impressions are important as buyers need to be wowed and be able to imagine themselves living in the house they are looking at. Try putting yourself in the perspective of a potential buyer and dress up your home accordingly. Repainting your home is the easiest, most cost efficient way to get the most bang for your buck. A new fresh coat of paint does wonders to improve the interior of any home. Putting out new carpet, cutting the grass, and trimming the hedges are also very impactful ways to maximize curb appeal.

Your objective should be to make your house look like a model home - filled with pleasant furniture but not actually lived in. It’s best if you aren’t living in your home while it is being shown to the public if you can help it. But if you must, be sure to hide and clean up all trash containers, random boxers, and junk clutter. Keep your beds made and all dishes washed. Keep your lights on and stock your home with fresh cut flowers to enhance its appeal and impression.

5) Your Home Is Not Easily Accessible Or Convenient Enough For Agents And Buyers

To maximize the speed and price of your home sale, you want as many agents in the area to show the home off to their clients as possible. Thus you want to make it easy and convenient for them to do that. Make sure your home entrance is equipped with a real estate lock box that holds your house key for agents and prospective buyers to use. Try not to make agents have to call you for permission to enter as that only creates delays and hassles, and makes them turn elsewhere.

The best thing you can do is not to be around when your home is being shown. If you are home, let the prospective buyers and agents in but take yourself out of the picture by staying out of their way - I suggest staying in one room. Let them roam freely on their own but make it known you are available later on for questions. Your hovering presence in your own home only crowds it, making the home seem smaller to buyers. Being around will only make your prospective buyers feel like they are intruders - instead you want them to freely envision themselves one day living in the home. Besides, if you are tagging along with the buyer and the agent, they will feel uncomfortable and unable to talk freely among themselves. Even if they don’t exactly know their way around your house, let them wander on their own.

6) Your Real Estate Agent Isn’t Doing A Good Job Of Marketing Your Home For Sale

These days, selling a home goes beyond simply having your agent place your home in the local Multiple Listing Service (MLS). If your agent isn’t actively going out there promoting and marketing your home through networking with other agents, or posting advertisements in newspapers and on the web, then she or he isn’t doing a good particularly good job for you. Today the internet is a great source of marketing as many computer tech savvy agents use housing newsletters to promote their properties.

A real estate agent is essentially a sales job that requires an appearance that conveys a pleasant, honest, and responsible demeanor. Make sure your selected agent has these positive qualities and is attentive to your needs and isn’t abrasive or constantly feeding you with erroneous advice when it comes to pricing your home. If all your real estate agent does is stick a For Sale sign on your front lawn, while that might have worked years ago when the housing market was burning hot, that’s a clear indicator today that you might want to find a more pro-active real estate agent.

The housing and credit markets are a mess right now. Several major banks that engaged in questionable subprime mortgage lending are smoldering in ruins. The housing market that had been stellar until last year finally collapsed, leaving behind a wake of steadily depreciating homes. The number of home foreclosures continue to spike as many home owners who took advantage of interest only adjustable mortgages are now faced with the daunting task of dealing with mortgage rates that are resetting at higher levels. The U.S. economy has sputtered and is now possibly sinking into the initial stages of a recession, further sapping consumer confidence in the economy and the housing market. If you are a home owner, the situation certainly looks grim and valuation prospects don’t look good. But if you are a renter and aren’t looking to buy anytime soon, life is good. If you have been relishing the opportunity to take advantage of the current housing malaise as a renter, well now is as good of a time as any to reap the housing bonanza - through lower rental prices.

Failed Building Projects Result In More Apartment Conversions

During the height of the recent housing boom, it used to be that many apartments were being hastily and rapidly converted into condominium dwellings to take advantage of surging home prices. However, with the annihilation of the housing bubble, many housing projects stalled. With the housing downturn, there is now a significant glut of unsold homes being inundated with a continued influx of foreclosed houses into an already distressed marketplace. Many of the unsold residential buildings, condominium complexes in particular, are now being converted into apartment rentals as builders and developers have thrown up their collective hands and given up trying to sell in such a flat market.

I currently rent a one bedroom in a recently built condominium complex in Maryland near the adjacent Washington D.C. border. The condominium complex was a high flyer during the height of the real estate boom, but was not able to escape the market collapse. One bedrooms were previously priced at an astounding $330,000 upon construction completion a year and a half ago, but prices have since plummeted to $250,000 with no bottom in sight. Many of the units were originally snapped up by speculators looking for a quick pre-construction flip. Many of them are now left with dwindling selling prospects and have turned to renting units out as their only viable option. Unlike traditionally managed apartment complexes, home owners forced to become rental landlords are generally not as focussed on maximizing their rental value in my opinion. Many are in dire straights in need of immediate rental income assistance to fulfill mortgage payments or face foreclosure. If you are a vulture renter, you are in luck as sites like Craigslist are littered with plenty of desperate townhouse and condo owners looking for rental tenants. Their misfortune is helping to drive rental prices down in many hard hit markets, although a few stubborn markets continue to buck the trend.

It’s Time For Me To Start Playing Homeowners Against Each Other To Get The Best Rent

I know it is terribly opportunistic of me as a renter, but I did not create the mortgage and housing mess. I am just reacting to current favorable and advantageous conditions in the housing rental market. Keep in mind, many of these same housing speculators were price gouging prospective buyers at the height of the real estate boom so it’s hard to have much sympathy for them when the tables are finally turned.

As my current rental lease expires in the next few months, I look forward to securing a very favorable rental agreement at the same place or at least in the same neighborhood. Next door to my current complex are two major apartment projects simultaneously under construction, but nearing completion. They were originally slated as condominiums but were later converted to apartments when selling homes no longer became attractive. Many area projects have also followed a similar shift. As a long time renter who has no active plans to buy a home in the next few years, this is great news being piled upon already good news. With desperate homeowners and apartment conversions flooding my area, my bargaining power as a rental tenant continues to grow. I plan on pitting all apartment rental prospects against each other to capture a great rental price. If my current landlord hopes to get me to sign the same lease agreement, rather than produce to me a substantial price drop, he’s in for a rude awakening in a few months.

Well it’s mid January and unless you live near the equator or in a southern hemisphere region where seasons are flipped upside down like say, Australia, then it should be getting very cold just about now. Although come to think of it, this year’s temperatures have been strangely and unseasonably warm. Global warming in action perhaps? Well mother nature must have finally heard the call because my area just got dumped today with the season’s first significant snowfall. Temperatures are projected to plunge into the 20’s this weekend. Brrrrr!

If you plan on staying indoors, it’s likely the freezing drop will follow you inside. To combat the frigid winter temperatures, there are four ways to deal with the situation:

1. Turn up the thermostat and pay more in heating costs;
2. Maintain the thermostat at a very low temperature setting and compensate by wearing winter clothing indoors;
3. Turn the master thermostat way down, but use personal space heaters in rooms you’ll be spending most of your time in;
4. Or ameliorate the drafty air problem by installing energy efficient windows to retain more heat, and retrofitting your walls and ceiling with better insulating material.

If You Can’t Upgrade The Insulation, Beat The Cost By Putting On A Sweater and Using A Space Heater

Unless you are extremely well off and money is not an issue, most ordinary folks are concerned with the rising cost of home heating bills. With surging oil and gasoline prices, the cost of heating houses and apartments has become more expensive than in years past. It’s in our own financial interest to find a way to minimize and reign in this seasonal winter expense. But at the same time there has to be a reasonable compromise between cost and comfort. Sure, one way is to shut off all heating devices but then you’ll basically be living in an icy igloo during the winter months. Not a pleasant experience to come home to. Thus, I prefer to use a combination of all four options - keep the thermostat setting low but at the same time place personal space heaters in commonly occupied rooms that need them the most. If you own your own home, I recommend refitting your doors and windows with more energy efficient models, but if you rent, you probably don’t have the luxury of making significant alterations. Since a lot of heat is lost through window cracks, one cheap and simple way to help them retain heat is to place towels along the window sills, thereby sealing off cracks where drafty air can seep through.

I generally try to keep the heating thermostat set at around 68 degrees during the winter. Luckily, I live in a new apartment complex that was built with energy cost and efficient insulation in mind. Despite the recent frigid temperatures in the last few days, my primary heater’s only kicked on a handful of times. My storm windows are impressively well insulated and able to keep the natural warm air in, while efficiently blocking out the arctic chill.

It might feel great to run your central heater non-stop but you’ll end up paying for the cost. I recommend using a little common sense - exchange some of that expensive warm air for a simple sweater. To stay warm on a budget, simply put on extra layers and bundle up your exposed extremities - your feet in particular. Wearing sandals, scarves, socks, and bunny slippers can help keep your body warm as well. Remember, it is winter after all - so you really shouldn’t be setting the meter so high to the point where you’re walking around the house in your shorts.