Las Vegas Sun

November 19, 2018

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House-flipping TV star says risk, reward available in Las Vegas market



Than Merrill, star of the A&E show “Flip This House” and CEO of Fortune Builders

The radio advertisement sounded almost too good to be true. Than Merrill, star of the reality show “Flip This House” and CEO of Fortune Builders, offering a free, one-time-only, two-hour real estate investment workshop to teach you how to make riches.

The one-minute clip had been playing from countless car stereos across the Las Vegas Valley for a couple weeks, and before that in other states across the country. It sounds simple: Learn Merrill’s real estate tricks in the workshop, make millions of dollars. That idea certainly played at least some role in luring hundreds of people Saturday afternoon to the Renaissance Hotel ballroom for the seminar.

But nothing is ever that simple. A one-minute ad isn’t able to convey the amount of work and risk it requires to become a real estate investor, and the workshop didn’t hide from that fact.

The two-hour tutorial given by a graduate of Merrill’s program hammered home that investing in a house could mean the loss of large chunks of money. But using Merrill’s system and adhering to one of his core principals of real estate investing — education — can minimize the risk.

Merrill is confident that understanding the proper value of a home and using appropriate contractors to repair it can net a profit — maybe not millions, but a profit.

Moderators explained the workshop was just a SparkNotes version of what an investor needed to know and recommended people sign up for a three-day workshop in June for just under $200 to learn the basics to get started.

Some stayed for the entire presentation, some left. Some signed up for the program, and some remained unconvinced.

Real estate broker Olive Knaus was convinced. She had ridden the real estate roller coaster in Las Vegas for the past 10 years. She took in housing request after housing request as if she were a deli shop owner at lunchtime when times were good, then watched business slow to a trickle during the housing crash.

Meanwhile, she watched friends succeed in real estate investment. After a decade of working as a broker, she decided to learn the trade. The tutorial offered her that chance, and she left signed up for the three-day workshop.

Merrill said the tutorial was for people like Knaus. It offers a chance to give them a taste of what it takes to flip a house, he said, and to understand it isn’t as easy as it looks on television.

The Sun caught up with Merrill to discuss the two-hour tutorial, the real estate market in Las Vegas and flipping houses.

Where do you see value in the Las Vegas real estate market?

Las Vegas is a really unique market. A lot of markets around the country are starting to turn a little bit. I don’t have a crystal ball; I’m not going to claim there is going to be a boom in Las Vegas or any other city in the country, but it’s been significantly undervalued. One thing that’s unique about Las Vegas is it’s very easy in lower-priced markets. There are a lot of opportunities because there are homes you can buy that have two exit strategies. That is one of the safest places to start your business when you’re relatively new.

With housing prices going up, is it still profitable to flip houses here?

When prices are going up, there’s always possibility. As long as you buy a property under market value, if you’re redeveloping that property and the other homes in the area are nice, and you run it like a good business where you fix it up with contractors, the actual appreciation of the market will only help. If it’s going the other way, that’s where you have to be a lot more conservative. Inventory and the sheer number of deals will go down as far as the number of overall opportunities. There’s plenty of money to be made in Las Vegas, but it will be more competitive as the market rises.

What future trends do you see in the Las Vegas market?

Right now the market is more competitive. There are hedge funds coming in and buying in Las Vegas. … If you just take the time to understand the business and get educated, even if your market is flat or slightly declining, as long as you’re continually paying attention to what you pay for a property and you’re buying property at a discount, you’ll always do well.

Do you ever have any concern that your show, or other shows similar to yours, glorify the real estate investment industry and inspire uneducated investors?

On some level, yes. It’s really going to be based on their personality types. A lot come to me and say, "Hey, I watch your show and it’s created a tremendous amount of curiosity for me, but I still have a lot of fear." I think being fearful is good because you’ll spend the time to get educated. There are maybe 15-20 shows on home improvement or real estate investment. Even home makeover shows, it’s the same thing. People think it’s easy and say, "I just watched a whole house transform in less than an hour." That’s just not the reality. It takes a lot of time and years to really learn the business, and it’s just a continual process. I still study the market today; I still study what’s happening in certain areas and what’s happening with certain legislation. Every single day I try to improve what I’m doing. It’s so similar to any other business, you can learn well if you learn it the right way.

What’s the biggest risk someone faces if going into Las Vegas real estate?

The biggest risk across the board (for) investors is appraising properties incorrectly. I see it all the time where a new investor just doesn’t understand how to appraise property and ends up paying too much. Or the second biggest mistake is, a lot of times, if you’re going to be redeveloping the property, they underestimate their rehab budget.

Then playing the market dynamics, if you’re buying and holding any of the properties and you’re paying market value, then you’re gambling on appreciation. That’s definitely not the best way to invest. I really advise against that. You base it on the properties and the other comparables in the neighborhood, and what kind of discount you can get in that neighborhood.

Is there anything else you would like to add?

There are some mixed opinions about the word “flipping,” when in reality, I believe it’s a really good thing as long as it is regulated. If you have a lot of investors who are educated, who are doing it the right way, who are really trying to build a business, it is one of the best things you can do to turn around neighborhoods in a city. I think it’s a great thing for the economy; it’s creating jobs for builders and suppliers. All of that is based on whether investors are willing to take a risk in a city.

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