Sam Leccima, the Atlanta, Georgia based host of the very popular real estate show on A&E Television, Flip The House, has some major serious fraud allegations on his hands today.
I have never been a fan of this show or the similarly titled program FLIP THAT HOUSE on TLC. Both tend to underestimate the genuine problems of property flippers face and grossly overexaggerate the profits that can be realized by such an investment approach. Sam Leccima's legal problems once again expose the soft white underbelly of get-rich-quick real estate programs.
Buying junker houses for rehab and flipping them is NOT NOT NOT the type of real estate venture any thinly capitalized or inexperienced real estate investor should be considering. I've been involved in what used to be called "Nickerson"Â properties (after William Nickerson's famous 1959 real estate book) since 1983 and it is a highly capital intensive investment model where Murphy's Law reigns supreme. If it can go wrong, it will. Put another way, you have no idea what is hiding behind a wall until you tear it down, everything from termites to dry rot to leaky pipes to yes, no load-bearing members. I've seen it all-and more is yet to come.
Property flipping is marketed by creative real estate gurus as a get-rich-quick program for the poor, unemployed, and the destitute. It's not. The successful property flippers I know have large staffs to find deals and manage multiple job sites at one time and access to large credit lines to buy and sell properties without obtaining mortgage financing.
Every successful flipper I know avoids subject-to GET THE DEED transactions like the plague, knowing they are quite stupid when you are putting tens, if not hundreds, of thousands of improvements into a home you really do not legitimately own and can lose in less than 30 days if a loan is accelerated. Subject-to buying is another common creative real estate guru ploy to encourage property flipping and they know they are dead wrong when they recommend it. But they sure do sell courses and seminars to the uniformed on the subject.
Flipping is one of the most complex and nerve wracking real estate investment strategies you can select. Why? Because every day you fall behind schedule, can't complete a flip, or otherwise miss a deadline costs you literally hundreds of dollars in debt service costs. It is an approach that works-but only for EXPERIENCED and WELL CAPITALIZED investors with instant access to capital reserves, repair crews, and contractor muscle.
It is NOT a strategy recommended for real estate newbies or cash and credit-poor investors. Property flipping is not an on-the-job training program for those new to real estate. Behind the lure of quick flipping profits lies the reality of being stuck with a junker house, half torn apart by unfinished renovations, and interest costs eating you alive. These days also factor in a declining property value and you have a lethal recipe for disaster too many people have tasted lately. By Robert J. Abalos, Esq.- www.investinginland.com
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