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Transcripts For CNBC On The Money 20170204

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Now becky quick. We begin with house flipping, thats when investors buy a fixer upper and make improvements and try to quickly resell at the profit. It was a booming business until the bubble burst in the financial crisis but now believe it or not, flipping is back and its this weeks cover story. 30 inches off the toilet. Reporter last june, Real Estate Agent dana rice was deep in the throws of remodeling this 1938 home in bethesda maryland, bought it for 600,000, intending to flip it for an easy profit. Not as easy as it looks. 400,000 in Construction Costs later she put the house on the market in october for 1. 469 million. In this particular area, for this particular house, im very confident because i feel as though the product we delivered, we really sweated the details on it and im getting great response from people looking at fixtures, colors, textures and things like that. Its not what they see in a general renovation flip. Flipping is coming back with a vengance despite the fact there are far fewer Distressed Properties for investors to buy on the cheap. Getting in costs more today but the potential profit is bigger. Flipped homes which are defined as buying and selling a home in the same 12month period made up 6 of home sales last year, up from over 5 in 2015. The average return on investment is also rising, thanks to very tight supply in the housing market, which is pushing home prices higher, faster. Rising prices are key. Todays home buyers are already cash strapped and dont want any additional renovation costs when they move in. That means they are willing to pay a premium for a turn key property. Reporter this family was the first to arrive at rices open house. I think for us, having had somebody else do all of the work is great. There are a lot of houses old and ready to turn over, need an update. Reporter after two months on the market, the house did not sell so rice decided to rent it out which in this neighborhood is pretty easy and very lucrative. Thats her advice to other flippers always have a contingency plan. Diana olick thanks. According to trulia, flipping has become more common. Ralph, thanks for being here. Happy to be here. Why is flipping back . One reason, prices are on the rise. Price increases in 2016 were the quickest in about three or four years. And why do rising prices entice flippers . It gives them a buffer. If the flip doesnt go according to plan, theyve at least made a little bit up in price gains and equity in the house. Is flipping different now than it was before the financial crisis or is this the same sold story . This is the most important question. We see flipping reach tenyear highs and economists like us start to worry a little bit, we think its different this time because we think more flips are actual value added improvements investors are making rather than speculative, someone buying and sitting on the home waiting for prices to rise. If you look around the country, las vegas is seeing the most flipping activity. Why is las vegas seeing that type of activity and what other markets are seeing this bubble up . Las vegas leads the country in flips. We looked at the share of flips work done to them, using Building Permit records and that is near all time highs. Prices are starting to rise again in vegas pretty strongly, about 7, 8, 9 year over year gains, giving that much buffer and opportunity for flippers to come out ahead. Other areas include detroit. Detroit has been the poster child for blight and housing neglect but investors are starting to see opportunity for flips, even in places that have been down and out like detroit. A lot of times on television well see about these flipping projects and they tend to be luxury homes. Is this just a luxury business or is this something where you see starter homes that can be flipped too . Most of the inventory is in this upper tier, this premium tier. We think theres opportunities across all spectrums but because inventory of starter and tradeup homes is dropped the most, we dont think theres a lot of activity going on there. Ralph, we look at this as a potential pot of gold and people get excited when they see numbers where you buy a house for 500,000 and invest 100,000 and sell over 1 million. There were people who got stuck in the financial crisis when they were flipping home and the even in the story diana told us, she didnt find buyers in two months. What are the risks . And do you have any tips or warnings you would tell people before they get into this process . Flipping is a risky business. Thats why rewards are high. Its just like any other activity where potential returns are high, usually because theres a lot of risk. With flipping, theres risks that come from many different sources, one is risk of the home. If you buy a home that needs a lot of work or you didnt do a good of a Due Diligence and there may be big ticket items you didnt anticipate. Maybe things like a foundation that needs repair or new plumbing or roofing. Those things can take your Profit Margins off those flips. If you dont identify those you may get stung. Second is risks that come with timing. If youre planning to flip a property in one year, its not out of the question the market could change in that year amount of time. Third is just a logistical risk and challenges that come with a flip. When youre flipping a house, you know and having to do a lot of different things, you have to be like an or kes stra conductor, bring all of the instruments together at one time. If youre not good at that. If your drywall person is flipping over the floor person preventing plumbing from coming in, that can add delays and costs too. Anybody who has been through a renovation knows it well. Ralph, thank you very much. Great to see you. Great to see you too, becky, thank you. The super bowl is a big party for rich and famous, right . Not to mention expensive game ticket. Is see the game in person out of reach for the rest of us . The Premium Experience creates super bowl packages for mostly corporate clients and robert, its great to see you today. Thanks for having me on today. Whats the answer . Is the super bowl out of reach for anybody who is not super rich or famous . You know, you could say its out of reach but do find fans that their team wins and they get into the game and like your last guest, i guess, they mortgage their house and they find a way to pay for it, you know. Theres two ways to do super bowl, theres the value package, where really its the individuals, the people who roolroo really want to go and experience it. Those could run, 5,000 to 6,000 and thats an all inclusive package. Then you have corporate spenders who add on meet and greets with players and passes to parties and golf and those can go in excess of 10,000 a person. Wow. When youre talking all exclusive, when you get all of these things wharks does that include for somebody, picking them up at the airport . They get picked up at the airport and taken to their hotel. Most of the hotels in town sit three and fournight minimums so youre in town from thursday or friday until monday morning. And you have obviously your hotel accommodations, theres breakfast, theres gift bags, theres little parties that we do with some of our players for meet and greets and then of course you get transportation to the big game and you get to go to the super bowl. Yeah, the super bowl prices are actually falling this year. If you wanted to get a ticket, could you still get one and why are they down . You know what, you still can. This is a great year to do it. The reason being is that a lot of the pricing and demand is driven by the teams in the game. If the Dallas Cowboys had gotten into the super bowl this year because they have such a huge fan base and very close to houston, the price of the ticket would have been probably twice as much right now for what they are going for. Right now and this will sound expensive but right now a ticket is about 2500 to get in the door. And usually though, that price lets say for last year in San Francisco is about 4500. If youre not already in at this point, odds are youll have to wait until another year. What kind of tips would you tell somebody if youre spending your own money, how much are we talking about . If youre spending your own money, you want to do it right and do it well in advance. Next year the super bowl is in minneapolis. So not a i Love Minneapolis but not a destination you really want to go to for a super bowl and not miami or new orleans. In any case, the great thing about minneapolis and i think theyll put on a great game if you buy your package now, i dont think the demand will be as big. They are going to wait and see which teams get into the game and that again is two weeks before. You have a lot of time to plan ahead of that. He just showed the average in minneapolis, high of 21, low ever 6 degrees. Mall of america is inside. Thank you, great to see you. Thanks for having me. Were on the money. Looking for work . The industry on a hiring spree. And the average Interest Rate for credit cards is on the rise. Tips how to manage your debt. This is a look how the stock market ended the week. Now heres a look at whats making news as we head into a new week on the money. American businesses were busy hiring in january. 227,000 jobs last month created, well above expectations. The Unemployment Rate which is calculate the by a Different Survey rose to 4. 8 . There was strength in the retail and construction sectors while the government sector lost jobs. That set the markets up after starting off the week with the worst day of the year. And stocks closed higher on friday. The Federal Reserve did nothing at its meeting this week but thats still news. They kept Interest Rates steady at historically low rates. The fed has said three rate hikes are likely this year. The smoke hasnt settled from the vp emission scandal but that didnt stop the german automaker from becoming the biggest selling ougautomaker, 1 million vehicles worldwide. The Construction Industry is booming, 1. 3 million jobs were added in the last six years and demand for workers is likely to continue especially if an Infrastructure Spending bill is passed. Theres one problem. Finding skills workers. Reporter the Construction Industrys optimism is at a record high, according to a recent survey, 73 of general contractors plan to add workers in 2017. But thats only if they can find skilled labor. There are no longer a lot of experienced workers sitting on the sidelines. Theyve all retired or gone on to other industries, now contractors just cant find the kind of workers that they would like to have. Reporter come 2019, this gas facility and 36mile pipe line through the gulf coast of louisiana will import natural gas to japan. Chicago bridge and iron is continuing to expand its workforce, planning to add 15,000 new workers this year in the gulf coast alone. This wave of demand for workforce should continue well beyond 2020 into 2025. Reporter Theresa Horner was a stayathome mom 15 months ago. Now shes a structural welding for cbi thanks to a Training Program she completed at the community college. She says the industry provides plenty of opportunities for those who want them. There are plenty of job prospects for several years to come. Theres work, you have to want to go out and get it. Reporter workers like horner are excited about trumps promises to rebuild the infrastructure but curious to see how his plans are put into action. Back over to you. How much of the skilled workers, people like theresa actually getting paid. Reporter these are definitely not minimum wage jobs, someone could make 30 to 40 an hour. But construction workers do have the ability to move up in careers and even some of them make six figure salaries. Definitely high paying work. Hard work if youre willing to go for it. But worth while future for sure. Up next, rising rates, how to keep credit cards in check if Interest Rates goes up. No soil, no sun light but plenty of greens with urban farming. This past december the Federal Reserve raised Interest Rates for the second time in over a decade. Although the rate was left unchanged this past week, people may see credit card Interest Rates going up. What should consumers do when rates rise . Joining us is stacey tisdale. Rates are still low and Feds Fund Rate is below 1 and prime 3. 75 . Thats not necessarily reflective of what people see on credit card statements. Youre not seeing anything like that, apr is at 15. 42 . That seems like highway robbery. Its the highest rate since credit cards. Com started tracking it in 2007. You have the federal funds rate which affects the prime rate and thats what credit card rates play off. 12point spread. They put fees and just the cost of borrowing and Everything Else is in there but most of what we pay on credit cards is about our own risk. My credit score maybe what i can control versus this other rate i cant. How do you break that down. People want to look at how they pay their debt. They want to allocate for money to pay more than the minimum payment because once if you have that, when rates rise you might be able to absorb it by the extra amount youre saving. Also, you want to do things like talk to creditors. If you talk to your creditor, this might be able to move your balance into some kind of refinanced account to give you a lower minimum payment. If you talk to creditors and say, you know, when i signed up for this card i had bad credit. Its improved. They might lower your rate. There are all sorts of alternatives. People should be proactive how they prepare for the operate increase. There was one shocking statistic, the average credit card balance that people are carrying is like 16,000. That seems insanely high. Its been tough. All sorts of circumstances, job loss, life changes, people turn to their credit cards but you really can get trapped in the spiral. None of the rate increase stuff affects if you dont carry a balance. I hear services to come in and get your credit cards and negotiate for you on this. How do you know when its a good deal or scam sometimes it sounds too good to be true . I looked into this for years, what always comes up is the nfcc, the National Foundation for credit counseling, they are free. When you look at these offers, theres usually fees and charges and things they are not always up front about. Its a nonprofit, nfcc. Org. Theyll call your creditors and put you on a budget but people we have so much stigma around Credit Card Debt and it can happen to people for different reasons, dont be afraid to share and ask for help. Thats great advice, thank you. Thank you, always a pleasure. Up next on the money, a look at the news for the week ahead. New green revolution with a taste for profit. This is literally the cleanest healthiest food youre ever going to eat. Shes got that gorgeous 20something skin. Is it dna or olay . New olay total effects fights seven signs of aging to help take years off of your skin age. Who needs dna when you have olay . New total effects. For more on our show and guests, go to our website, otm. Cnbc. Com. And follow us on twitter on the money. Here are stories that may impact your money. On monday well see how much americans spent with the Consumer Spending report for january. It also marks the day Queen Elizabeth inherited the throne at the age of 25. She was officially crowned in june of 1953. On tuesday, the Consumer Credit report for december will be released and fashionistas listen up, thursday fashion week kicks off. You wouldnt know it from looking at them but ten shipping containers in new york city in a parking lot could be the next revolution in farming. A new startup is growing greens and herbs without soil or sun light. Andrea day got a look at the new urban farms called square roots. Were literally in a parking lot in the middle of brooklyn. This is a farm. Urban farming, instead of roof tops the food is grown inside shipping containers. Inside each shipping container is the equivalent of a two acre outdoor field. His business is square roots grow, according to pegs, designed to help entrepreneurs capitalize on what he predicts will be a real food revolution. People have lost trust in the industrial food system and those people will want real food and we think that that opportunity that presents itself today is bigger than the internet was when we both started our careers 20 years ago. The food is grown vertically on these white towers that contain the crops without soil. Probably growing 18 head of lettuce on every single tower and 256 towers in his farm. The environment inside is totally controlled from the length of daylight to the nutrients mixed in with water that feeds the roots. We dont use pesticides, we dont spray. The entire system is engineered to use the fewest resources possible, like these pink l. E. D. S with just the right spectrum of light for growth. Waterkres and salad mix kale. Former banker turned farmer. Square roots works directly with farmers to help make that happen. Coaching them how to grow and sell. Then takes a percentage of the revenue. The kale ill be selling is three hours since its been cut. I have no old the kale i usually buy is. How big does he think this will be . Hes planning urban farms in big cities by 2020. The farmers sell their produce to local restaurants and farmers market, startup costs can be upwards of 100,000, square roots covers that and takes a cut of the revenue. Im becky quick, thank you so much for joining us. Next week spend time teaching your kids about money. Well have money lessons you can start at any age. Each week keep it here. Were on the money. Have a great one and well see you next weekend. Because im a woman, do you think im going to crack under pressure or conquer the field . Defy expectations any day with always infinity. Made with flexfoam, absorbs 10x its weight. Rewrite the rules. Always. Hey there, on this friday afternoon, following a busy day for the markets, the guys are getting ready behind me and heres whats coming up on the show. Thats what traders were saying about snapchats ipo, but the offering has traders looking at the another social media stock. Well tell you. The bond market is doing something very strange. It could signal the next contrarian trade. Well explain. And missed a run at disney. Darn, darn. Relax, we have a way to buy shares of the mouse house for

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