The Flippers

You know what really grinds my gears?  Family Guy.  And other things, too.  One of the things that really gets my goat (Whatever the hell that means… actually the all-knowing Internet says that goat used to be a slang term for anger.  So, there you go.)  Yeah, so anyway… You know what really makes me angry?  Flippers.  Middlemen. Value-adders.  Brokers.  Leeches.

The most obvious case of this is in real estate.  HGTV should be ashamed at what they have wrought upon the world.  The glorification of gentrification.  And while the rest of the country is freaking the hell out about wage gap and the unaffordability of housing, these shows are the most popular AGAIN.  I mean it’s not like one “Flip or Flop” is enough, now there has to be regionalized versions so we can see how fucked up things are getting in multiple places.

I shouldn’t have to explain the problem but I will, because otherwise the post will be too short.  In brief, someone buys a house that is distressed (a polite term for shitty) and fixes it up so it can be purchased by people who could not do the repair work themselves or who could not afford to buy the house outright at all.

As a brief aside, let me explain a case where I tried buying a foreclosure.  I was in a bind in my personal life and wanted to get a separate residence.  I found a foreclosure for cheap and scoped it out.  The problem was, the house had no kitchen and no water heater.  It was gutted.  Because it was gutted, I was unable to secure a loan to buy the property.  Despite all my financial plans for affording the place easily, I just couldn’t get it because I didn’t have $50k in cash sitting around.  So I lost the property and everything worked out fine for me in the end, but it irks me that I missed out on that place to an investor.

So anyway, these investors/flippers/whatever.  It should be a noble thing they are doing – cleaning up a property and making it habitable for normal people.  But it isn’t.  Because, gotta get paid.  And there’s no money in selling to normal people.  You need to sell to richer people who can give you a bigger profit.  The problem is, richer people are fewer people.  And as more of these houses get improved on, the fewer the number of buyers are.

But I’m sure you know all of that.  I wanted to point out that this flipping situation is not exclusive to real estate.  On a forum I frequent for music collectors, there is a regular bitchfest about “Record Store Day”, which was supposed to be an event to drive customers to small-town record stores.  The incentive for this is that a collection of albums are released that are extremely limited edition or have been out of print for a long time.  For music lovers, that’s pretty cool.  But, the flippers smell a buck, here.

Inevitably, the flippers mob the store and buy up all the limited editions, then within the same day, resell them on EBay for huge profits.  So, regular people just avoid the crush and Record Store Day is just another disappointment.  Did the record store make any money?  Ironically, not as much as the flippers do.  One has price controls, for the other, the sky’s the limit.

Did you know this also happens with beer?  A co-worker of mine flips craft beers and makes decent money at it.  The investment for him is time – standing in line at small breweries, waiting to buy a single bottle of beer.  Sometimes he will bring the girlfriend along so he can get two.  And wouldn’t you know it?  He’s reported that sometimes a flipper will “hire” a bunch of homeless people to wait in line to buy a bottle of beer each.  It’s absolutely disgusting.

And at the root of all of these cases is the great American dream of “something for nothing”.  Inject yourself into the middle of a process and take a little off the top.  You add no value, you only add cost.  Some may argue that the value they add is the knowledge of the source and the skill at marketing it to a broader market.  That’s bullshit.  It’s one thing to market a product to a larger audience.  It’s quite another to scoop up everything of a limited quantity and sell it because you can’t get it anywhere else.  It’s a self-made monopoly.

And here’s something that I’m currently fighting with myself about.  I have two very valuable CDs that I was fortunate enough to find for very cheap.  I am sure there is a collector out there that would prize them for their rarity much more than I do.  I don’t need to make a 100x profit on my purchase if it would make someone happy.  But how would I be sure that the buyer wasn’t a flipper?

And that is the problem with everything.  Let’s go back to real estate.  Let’s say you were altruistic and rehabbed a house and sold it for a fair dollar.  Who’s to say the buyer isn’t a flipper who would add a single upgrade and sell it for a profit?  All you’ve done is made someone else’s job easier.

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