Ed Compean/Arizona Daily Star file photo

House flipping is back, and the Tucson market is being touted as prime for the practice.

The stabilization of home prices last year piqued the interest of A&E TV's "Flip This House" producers, who will be in Tucson next week to recruit flippers.

Than Merrill, the show's star and co-founder of real estate investment company Fortune Builders, said Tucson is one of several markets with "potential for a big comeback."

"I believe very strongly in Arizona. People retire to Arizona," he said in a telephone interview.

"The 23 percent increase in housing prices last year is sizable," Merrill said of the increase in the median sale price in Tucson from December 2011 to December 2012. "It's the right time for investors."

Merrill said the free sessions will introduce the flipping process, how to identify flippable property and how to secure financing.

"We teach our students how to spot a good value," he said. "A lot of people make mistakes when they're flipping."

Among his tips is how to find distressed property in barrios or find landlords who have owned property for a long time but have not provided upkeep.

The introductory sessions are free, Merrill said, but for those who want to learn more, a three-day workshop will be offered for $200.

His seminars have received some criticism from participants.

The Better Business Bureau in different cities has recorded complaints about the seminars being advertised as free but the follow-up course costing $200.

The BBB in San Diego contacted Fortune Builders in July regarding claims in radio advertisements that people could earn "$10,000 to $40,0000 per deal in their spare time."

The company responded to the complaint, modified the language used in advertisements and remains accredited with the BBB.

One local economist said it is "positive" to have investors buying distressed property.

"The presence of investors in the market is beneficial at this point to help the market heal," said Marshall Vest, of the Eller College of Management Economic and Business Research Center at the University of Arizona.

"Too many people took on properties that are unmanageable," he said. "Somebody needs to own those assets, improve them and get them ready to market again."

Vest said he does not see a downside to encouraging flippers.

"Many of these investors are going to own the house for a short period of time, and that's fine," he said. "There's nothing wrong with that.

"More and more investors have become convinced that prices have really reached bottom and there's some frenzy," Vest said. "But prices are still very low, and we have some catching up to do."

About 36 percent of home purchases here last year were cash transactions, statistics from the Tucson Association of Realtors Multiple Listing Service show.

Merrill said he's aware that house flipping has its critics.

"First and foremost, we're targeting ugly houses in neighborhoods where the whole neighborhood is ugly or the property stands out," he said. "They end up being the nicest house on the block."

The seminars emphasize the importance of quality repairs on the homes, Merrill said.

"People are going to do it and there will be investors who cut corners and do shoddy work," he said. "You can educate them to do it the right way or let them go out blindly."

Merrill said the goal of the seminar is to identify people who want to build a business, not recreational flippers.

With bank lending tight, Fortune Builders finances joint ventures with some investors who go through the program and find properties in their cities.

Merrill does not shy away from the fact that investors could lose a lot of money.

"The main thing we tell people is 'There's risk. There's absolutely risk involved,' " he said. "We don't make any guarantees or make any promises."


See fortunebuilders.com or findandflipevent.com for more information.

Contact reporter Gabriela Rico at grico@azstarnet.com or 573-4232.