Most recent flip numbers compared to HGTV

[William Allen]

I wanted to take a minute to give  the honest truth behind flipping houses and how much money is ACTUALLY made doing this business. I promise not to hide any expenses to make it look like we make more money than we actually do. I occasionally watch the HGTV shows that glorify flipping and show these investors making $100k plus on every renovation project. However, I find that they never really show all the expenses and costs that we have when it comes to flipping. I’m going to break down one of our recent deals and show you all of the numbers the HGTV way and the ACTUAL way.

Quick Background on This Property

This house was one that we purchased at the foreclosure auction earlier this year. It was a 3/2 single family home, built in 1994, 1,625 sq ft with a pool in Navarre, FL. We didn't have access to the house before bidding but did know that the house was vacant. It's in a small subdivision with a couple of other foreclosures listed on the MLS and some decent comps. I did find that houses in that area with a pool sold well above those without and moved quickly.

Renovation Scope

This house was a relatively simple renovation and almost all cosmetic work. We demoed out the old flooring throughout the whole house, countertops in all bathrooms and kitchen, removed the old appliances, and did a lot of landscaping cleanup including the removal of a few dead palm trees out front and tossing the old fence. The whole house was repainted, laminate hardwood floors laid in the living areas, new baseboard trim, new carpet in the bedrooms, new tile flooring in the bathrooms and outside patio, granite countertops in kitchen and all bathrooms, stainless steel appliances, paint the cabinets, new toilets and plumbing fixtures, new lighting, and all tubs and surrounds were refinished. We added a new water heater, serviced the HVAC unit, and refinished the concrete in the garage because it was previously painted poorly. On the exterior we power washed the whole house and pool area, added a new privacy fence, and finish landscaping was done. The estimated renovation costs were $35k.

So now, let’s break down the HGTV numbers compared to the ACTUAL numbers.

HGTV Way

Purchase Price: $117,100
Renovation Costs: $38,766.07
Realtor Fees/Closing Costs (These are rarely included): $10,955.71
Sold Price: $201,000

Profit: $34,178.22 w/ closing costs and $45,133.93 w/o

ACTUAL Expenses

Purchase Price: $117,100
Purchase Closing Costs: $2,691.58
Utilities (water, electricity, pool care, lawn mowing): $590.38
Repair Costs: $38,766.07
Before and after photos: $150
Staging: $1,500
Cleaner: $320
Repairs before closing: $1,105
Closing Costs: $10,955.71
Sold Price: $201,000

ACTUAL Profit: $27,821.26

Conclusion

Now, don’t get me wrong. I am not complaining at all about an almost $28k profit on this project. I am both sharing our success story and trying to show all of you that what you see on TV is not really how this business goes. HGTV would have nearly doubled our profit margin when they show Sale Price – Purchase Price – Repairs (which is exactly what they showed on the one I watched most recently). I would love to say we made $45k profit on this flip but that just isn’t the case.

RISK – I am the one taking all the risk here. What would the profit margin be if this house sat on the market another 30 days and I had to lower the price $10k to get the house sold? What if I had to do that twice? If you are considering the possibility of getting into this business make sure you account for all of those soft costs that eat up your profit margin.

Here are a couple photos of the house when we got done: