When investing in housing becomes anything other than providing basic shelter, trouble is usually right around the corner – a concept that is no longer what I would call investment. Unfortunately, we’ve just been through another round of this speculative fever that has disrupted all of our markets and turned our economic system on its head. I plead here for a return to sanity, knowing full well that this last round of insanity will make real estate investment even harder than it used to be.

In the past few years, investing in real estate has been all about the quick flip using the greater fool theory – it’s ok to bid the price of houses up defying gravity because there will always be a greater fool that will come along to bid it even higher and insure your road to riches. I’ve seen this so many times before, when the house ceases to become a secure place to live and becomes instead an inflatable toy to play games with. We never seem to learn the folly of this because “flipping it” seems to reoccur with regularity every decade or so. You can call it anything you like, but in the end, it’s speculative gambling and everybody seems to get caught up in it. When everybody’s doing it, it’s a fool’s paradise because when the music inevitably stops, many people get caught with no chair to sit down on, and they wind up “crashing and burning,” to use a popular expression.

Flipping is not real estate investment as I understand and practice it. It is not real; it is not sustainable; and not sustainable is what I call FLIPPED OUT — the title of the book I wrote. Flipping is not a business as I understand real estate investment to be. What else can you say about it except that it gives the kind of real estate investment I practice a bad name and makes it harder for guys like me to be in business, because when the crash comes, as it always does, the consequences mess everything up for the real investors.

What consequences? Well how about the new irreversible, permanent regulations which came down like a hammer making it harder to build, harder to get capital, and harder to purchase a place to live for individuals and families that have to live somewhere; or how about property tax assessments that rise when everyone is flipping houses and driving the value of homes sky-high, increasing the annual cost of owning homes dramatically, sometimes to the point of creating unfortunate foreclosures for those who can least afford it; or how about the rising cost of higher risk mortgages that increase monthly expenses and the risk of foreclosure.

Mike Sanderson is the author of the new book “Flipped Out? – Want to Achieve Sustainable Real Estate Success?” Available now at www.sandersoninc.com He is the CEO of a family business that owns, manages and maintains over 100 revenue producing rental units–a majority being single-family residences that were purchased in disrepair. Mike has actively participated at all levels of the purchase, construction and remodeling of over 100 homes and 20+ multiple unit buildings. He has numerous years in the construction of roads, new homes and remodeling that give him the distinct advantage of having a vast amount experience.