Join The Conversation With Mishpacha's Weekly Newsletter

Money Trap: Too Good to Be True

Margie Pensak

Why not buy older houses, renovate them, and flip them for a quick windfall — especially with online webinar estimates of $200,000 profit on each house?

Tuesday, August 15, 2017

 Mishpacha image

SOUTHERN DISCOMFORT To some, passing a law to haul off a statue of Robert E. Lee and changing the name of the space it occupies from Lee Park to Emancipation Park is a capitulation to the politically correct and, worse, an assault on time-honored Southern values



Name: Shloimy and Ruchy Weiss Age: Mid-to-late 30s Number of Children: 4 Location: Not far from Lakewood


A get-rich-quick scheme that, although it has already been proven to make money for other people, nevertheless involves substantial risk.


Shloimy and Ruchy found themselves in a situation facing many young Orthodox families. Shloimy was a couple years out of kollel, and his income from his kiruv position was covering their costs — but just. There was no wiggle room in their monthly budget. With a growing family and no savings, Shloimy began to cast about for ways of earning some extra cash and building a nest egg.

The national media has devoted hours of coverage and gallons of ink over the past two years to the “house-flipping” rage. With plenty of foreclosed homes still for sale after the 2008 Great Recession, a market opened for the purchase and rehab of these houses by investors hoping to recoup their money by selling the refurbished properties when real-estate values rebound.

There’s no doubt about it — house flipping is hot right now. Real-estate analysts report that the practice reached a ten-year high in 2016, with the 193,000 flipped homes accounting for nearly six percent of all residential sales for the year. The trend shows no immediate signs of slowing: In the first quarter of this year, the average gross profit on a flipped house was $58,520.

House flipping is not the only scheme out there promising robust and rapid returns on investment. Established manufacturing concerns in China eager to draw foreign funds — especially dollars — put out lavish promotional materials extolling their financial health and confidently assuring eager but naive Americans that now is the time to climb aboard the bandwagon.

The problem with these schemes, of course, is that they inherently carry substantial risks. Experienced investors know how to weigh these risks — but perhaps more importantly, their balance sheets show the wherewithal to absorb losses as well. Someone lacking the smarts and the pocket change is likely to be overwhelmed by little unforeseen glitches — like a foreclosed house concealing a major structural flaw, or a company located in a faraway jurisdiction with a poorly regulated financial sector.

These problems can lay the perfect trap for an earnest young father looking to strike it rich and provide for his family in style. The siren of these enticements drowns out the little voice inside that cautions: If it sounds too good to be true… it probably is.

Ruchy’s Story

My husband was learning in kollel back when we purchased our home for $220,000. We renovated it and ended up with a really nice home for a great price. A couple of years later, as it became more of a struggle to support our growing family, my husband decided to flip houses as a way to supplement his income. After all, he already had the experience of successfully renovating our own home. An online webinar sweetened the pot by touting potential profits of $200,000. Why not buy older houses and renovate them and then turn them around for a quick windfall? We could even demolish a run-down house and build two new homes on that lot and earn twice the money.

The problem was that we didn’t have any savings at all, or any way to do this. That didn’t stop my husband, though — he was as excited as a kid to get underway. His job didn’t follow a nine-to-five work schedule so he could devote plenty of time to searching out the right opportunities.

I was very, very skeptical about all this, and was not shy about saying so. But my objections that we didn’t have this kind of money just lying around to play with fell on deaf ears. He can be a very impulsive person. I have no clue exactly how he did it, but he somehow borrowed the money for a down payment on a property. (Excerpted from Mishpacha, Issue 673)

Related Stories

The Money Trap: Mind Your Own Business

Libi Astaire

What separates the success stories from the failures? What can be done to increase your chances of s...

Normal Like Me: Chapter 5

Ruti Kepler

White people, she’d heard, almost never painted their faces. That was so stupid. Wasn’t it bad enoug...

Endnote: A Kindness Along the Way

Riki Goldstein

Sometimes it’s the unsung, uncelebrated deeds that boost a singer into the limelight. Who helped the...

Share this page with a friend. Fill in the information below, and we'll email your friend a link to this page on your behalf.

Your name
Your email address
You friend's name
Your friend's email address
Please type the characters you see in the image into the box provided.

Weekly Struggle
Shoshana Friedman Cover text: promise big and deliver what we promise
Only Through You
Rabbi Moshe Grylak A response to last week’s letter, “Waiting in Passaic”
Are You Making a Kiddush Hashem?
Yonoson Rosenblum In communal affairs, “one bad apple…” often applies
Chance of a Lifetime
Eytan Kobre I identify with the urge to shout, “No, don’t do it!”
Work / Life Solutions with Bunim Laskin
Moe Mernick "You only get every day once"
Seeking a Truly Meaningful Blessing
Dovid Zaidman We want to get married. Help us want to date
Shivah Meditations
Rabbi Emanuel Feldman Equivalence between two such polar opposites is puzzling
Magnet Moment
Jacob L. Freedman Everyone’s fighting a battle we know nothing about
Secrets and Surprises
Riki Goldstein Top-secret suits Eli Gerstner just fine
Blasts of Warmth
Riki Goldstein Keeping the chuppah music upbeat in low temperatures
Behind the Scenes
Faigy Peritzman The intrinsic value of each mitzvah
Good Vision
Sarah Chana Radcliffe Good or bad, nice or not? What you see is what you get
Day of Peace
Mrs. Elana Moskowitz On Shabbos we celebrate peace within and without