Flip This House Scandal: Reality TV Becomes a Flop (Part II)

by Maricel Ferrer-Custodio on June 15th, 2007

Sam Leccima’s "Flip this House" scandal had not only deceived his investors, but also the thousands of viewers of his show. Scams like this gives some unknowing amateur real estate investors false hope on how to make a quick buck in real estate. In fact, a lot of people are interested in these type of shows not only because of the renovation ideas, but mainly because of the profitability factor. Let’s face it, anything that talks about earning money sells. Simply because majority of us wanted to earn a lot of money. They are preying on other people’s weaknesses.

Thus, it is important to expose scams like this. It is a reality check that not everything you see on TV is always true. If you need to make a judgment on your real estate investments, base it in your own criteria and not from what you saw on TV.

Other similar shows maybe genuine. It could be a good source of ideas. However, if you need to make a life changing decision, I recommend you investigate further. Remember, a lot of people already lost their money based on flashy advertisements, promises of huge returns and other various get rich quick schemes.

Flipping a property could possibly generate you a good return, but it’s not always that easy to do. Renovation is just part of the process of flipping a property. You have to take into account other important factors such as:

Location
Selling Price of the Property
Statistics of Sold Prices in the Area
Your Budget
Your Timetable for Renovation
Your Overall Plan for the Property
Any Contingency Plans in Case the Selling Price Did Not Meet Your Expectations
Cost of Money Involved
and More

One good and equally infamous example of a flipping failure is Casey Serin; the would be real estate mogul behind "I am Facing Foreclosure". He originally planned to flip the properties he bought for a profit. However, things did not go as planned. The cost of renovating came out more than his estimates, interest payments ate most of his funds away and his properties did not sell for a profit. In fact even the bank lost $130,000 from one of the properties he bought.

To conclude, I’m not saying that flipping a property cannot give you a generous profit, but it’s not always a guarantee. All investments have risks involved. At the end of the day, it comes down to minimizing the risk to maximize profit.

Learn to be an educated investor. Don’t just trust anyone to manage your money for you. Learn the tricks of the trade so you can have a better judgment of where to invest your money. The more knowledgeable you are about investing in real estate, the less likely you will be fooled by scam artists.

Here are a list of other blogs which discussed the Sam Leccima: Flip This House Scandal,

Dale Russel’s Blog: Flip This House (He is the reporter that exposed Sam Leccima as a scam artist)

The Real Life Real Estate Blog

EKDay - Orlando Real Estate Blog

The Real Estate Bloggers

Inman Blog

Active Rain Blog