Flip This House aka Empty Your Wallet

Posted by Mastura Zaini-Roberts on Monday, June 2nd, 2014 at 12:03pm.

Flipping Homes in Las Vegas NV

Over the past month, the Las Vegas real estate market has been literally flooded with would-be flippers,  making up to 30 bids each per week.  They are offering anywhere between 70 to 80 cents on the dollar on homes listed for sale around the Valley, hoping to get just one offer accepted so they can get started on their road to real estate riches.

Where are all these Donald Trump wanna-bees coming from? What fueled this sudden rush of real estate entrepreneurialism?

Massive radio campaigns have fanned the flipping fire in people all across the country. They are advertising get-rich real estate seminars, and the promos go something like "Sign up now to learn the secrets of house flipping, seats are limited!" But guess what: the seminars are free and I have yet to meet anyone that couldn't get in.

The seminars promise a complete fool proof system for house flipping, and offer members access to investors that will fund 100% of the purchase price for any house they can put under contract that meets their secret sauce formula.  Each member will be "mentored" through the process, which involves hiring three or more real estate agents and shot gunning offers right and left until one gets accepted within the proscribed criteria.

And the cost of mentorship? A mere $40k to start.

But the only ones really making any money are the promoters. Think about this: they are running ads and events in almost every major city across the country simultaneously. At $40k a pop, just 100 sign-ups will bring in $4M. They've managed to accomplish that in Las Vegas alone during the past month. Their total take across the country must be astronomical. (Did I mention that in addition to the mentoring fee, these promoters also get a cut of any future profits?)

Even normally intelligent people are getting caught up in the hype and allure of flipping. I had an email from a childhood friend of mine a few weeks ago. He is a controller at a major university, and he wanted to get my opinion about whether he ought to sign up and go for it!

Of course I told him to run far, far away, but it shook me when I realized the caliber of people these promoters were able to hustle.

Then, just a few days later, we had a new client come into the office that wanted to start making offers. He explained the program in great detail, and was totally sincere and enthusiastic and could not WAIT to get going. He was totally willing to go running around the city to look at all the houses we could push at him and do his homework, even if it took 12 hours each day - he was that committed. He knew there would be lots of rejections, he was prepared for that. But he was not prepared to be totally shot down on each and every offer because he was following the mentor's guidelines.

Over the next few weeks we were able to gently show this genuinely nice man that he would have been far better off to have kept his $40k in his pocket. (In the meantime, the promoters were after him to attend yet another seminar at the mere cost of $10k. When he said no, they even offered to pay for his airfare.)

This is not to say that there are not successful entrepreneurs that make a nice living in Las Vegas by flipping houses. There absolutely are! But like most successful businesses, it is not a quick buck. These guys are professionals that put their time in and do their homework and grind it out over the long run. On average they make about a 7% return, not 20% or 30%, on a very labor intensive, cash heavy business. Most people really don't want to work that hard and/or don't have the funds to put into it.

The bottom line is - buying homes for sale in Las Vegas can be great! But generally speaking, it is a long term investment that pays for itself along the way, and sometime in the future (appreciation) can provide generous returns.

Mastura Roberts
(702) 710-3330
offers@greatlasvegashomes.com

Team Leader, The Tonnesen Team
Berkshire Hathaway HomeServices, Nevada
3185 St Rose Pkwy #100 Henderson, NV 89052

With over 30 years of experience helping families call Las Vegas "home!"

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