The Reality of Realty: Tempers Flare as Market Cools

Sept. 6, 2007 — -- It's his knack for the little things that scored Jeff Lewis his own reality show on Bravo called "Flipping Out," all about the reality of realty.

"I carry around a to-do list because I can't possibly remember every single detail," Lewis said.

And if every single detail isn't taken care?

"There is usually one to two flip outs a day," said Jenni Pulos-Elwood, Lewis' executive assistant. "We've all been fired or suspended. I've actually been suspended, but then was asked to come back the same day. There have been people who come through his houses and they look so clean and perfect that they've said … 'Does the American psycho live here?' [He's] so American psycho-esque where if the toilet paper is off he will obsess about it."

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He may sweat the small stuff, but instead of flipping out over the recent real estate downturn, Lewis is taking it in stride and doing something unusual.

"I'm actually going to have to increase production," he said. "I'm going to have to actually buy more homes to make the same kind of money I had been making in previous years. I think what's happening is that it's taking longer, but I think the right houses in the right locations that are done correctly will sell, but they aren't going to sell in four days — they are going to take 30, 60, 90 days."

'Do the Math'

In the last 8½ years Lewis says he's made money hand over fist. He has purchased 45 properties and sold 40 of them; he currently has one in escrow. When he was filming his reality show earlier this year, the market took a turn for the worse. With six properties on the market, the audience saw Jeff get in over his head.

"Last month I spent close to $700,000 to keep this company afloat," he said on the show. "It's just, like, check after check after check. I have $125,000 in the bank. Do the math. I've got a couple weeks and then I'm in trouble."

Lewis said that he risks his capital every day of the week. "At any given time I have millions of dollars out in a market that is a little uncertain right now so it can be stressful. And I get scared sometimes."

So, how does he deal with the pressure? Pulos-Elwood said it sometimes gets taken out on his assistants. On "Flipping Out," Lewis does just that after another assistant checked e-mail from his computer.

"I have so much to worry about right now. So much," he said on the show. "I have more on my plate right now that ever before. This I don't need right now. I'm moving in two weeks. I've dealt with the client from hell. I don't need this right now so this is very upsetting to me."

Seeking Advice

What you see is what you get with Lewis, but it's his family of assistants and pets that help him keep it together and keep him making money.

"I constantly ask Jenni her opinion and she has developed a sophisticated design aesthetic so I am constantly bouncing ideas off Jenni," Lewis said.

Lewis also consults with a psychic, not only for himself, but for his pets too. He considers his psychic a psychologist/life coach.

"I have moments of weakness and I have moments of fear and I just need to hear from someone that it's going to be OK even if they are totally lying to me. When I am done, I feel good," Lewis said.

The show has wrapped for this season, but even with with prices falling Lewis is starting to feel comfortable again in a slower housing market. Right now he is handling four properties.

"It's very comfortable. I have money in the bank. I'm liquid. We can buy something else if we need to and I'm actually a little bored with four," he said. "I have a lot of time on my hands. … With five houses, I'm keeping really busy. I'm staying out of trouble. I was doing six at the time of the show. I totally overextended myself. I was completely stressed."

Burst Ego, Not Burst Bubble

At the end of the day, Lewis says there is a strategy to making money in real estate.

"We make money by buying the houses," he said. "I mean, we don't pay retail — I never pay retail. We get great deals on the house. When we buy them, we do the right improvements that maximize the value and we sell them."

He's branding a product, he says. Buyers notice and appreciate the top-of-the-line fixtures and high-end elements that go into a Jeff Lewis home. However, there was a time when Lewis could choose who bought his beautifully decorated and designed homes — not so much anymore. It's a buyers' market, he says.

"Yes, I was very spoiled. Very spoiled," he said. "I mean, we put our house on the market and three days later we had four offers. … I'd interview people and I'd sell to whoever I liked, who was the nicest, most polite, who was going to appreciate my house the most. And of course, I had a huge ego then. What's burst is my ego, not the bubble."

These days, Lewis says there are fewer buyers so he has to do a lot more negotiating with them.

"We get into escrow and then they want to find 19 different reasons to renegotiate with me, and then they threaten me and say 'There are nine other houses on the street that I could go buy.' And you know what, they are right, so it's forcing me to work with the buyer to make them happy," he said, "And I still have to be in a situation where I make money when I sell these places."

In one instance, when an offer came in asking for $10,000 in repairs, Lewis accepted it, but also made the real estate agents chip in for half.

'The Market Will Come Back'

"I think in the last eight years, we've been riding the wave. And we've been making money hand over fist and it's changed," he said. "And I will have to tighten up the budgets and I will have to stick to my numbers and people are not going to be making the kind of money they were before. Because if I'm taking a pay cut … they will have to as well. And if they won't, I'm going to have to hire new people."

Lewis said that even in an uncertain market, it's still a great time to buy real estate. "So long as you are holding it long term, and I don't even mean 20 years. Three, five, seven years I think is fine. I think that the market will come back."

Once Lewis cleared some properties off his plate, there was a moment to reflect and thank his staff at an employee appreciation dinner.

"It was a really stressful, difficult month and it's never ever been this bad for me. Finances were really bad. I put myself in a really bad position, and fortunately I'm getting out of it," Lewis said.

And believe it or not, at the end of the day, there are some perks to dealing with a boss like Lewis who is constantly losing his temper, especially when he bought Paris Hilton's former home.

"I got some swag. Paris, I'm sorry, I stole your mail a few times. Some cute underwear, baby-doll T-shirts," said Pulos-Elwood. "So, thanks Paris."