House Flipping: What You Don’t see on TV

The cleaned up, edited down version of house flipping that you see on all those television shows has convinced a lot of people that they can make fast, easy money flipping houses. This simply isn’t the case.

While there is certainly a lot of money to be made flipping houses, the work involved is a full-time commitment that takes patience, dedication, and impeccable decision-making skills. House flipping seems glamorous and simple on TV, but there are many aspects of flipping houses that those shows gloss over or leave out altogether.

On TV…

Finding a property to flip is a matter of visiting three houses that your realtor picked out for you and choosing the one you think has the most potential.

In reality…

Finding an ideal investment property takes countless hours of research, marketing, relationship building, and calculations. You may need to set up a direct mailer campaign, attend dozens of government auctions, or build a trusted network of real estate contacts in order to find a potential investment property.

And then you shouldn’t expect to simply get your pick. House flipping is incredibly popular and inventory is currently very limited. That means that you will be in direct competition with numerous other house flippers for every investment.

On TV…

One big thing goes wrong and threatens the flip for a few days, but the trusty contractor always figures out an innovative solution and gets the job done.

In reality…

Dozens of things go wrong. On your first flip, no matter how much you plan, numerous hold-ups and unexpected problems will arise that will affect your bottom line. As you do more flips and refine your team, things will get easier and you’ll get better at anticipating problems. But on that first flip, if you don’t expect multiple major problems, you’re kidding yourself.

On TV…

Money is never an issue.

In reality…

Funding a house flip is no simple matter. If you’re new to flipping, you probably have all sorts of questions about how much of your own financing to put toward the project, whether to take out house flipping loans, or whether to look for joint venture partners. There’s no single path for funding a house flipping project, but rehab loans are becoming increasingly popular because they help mitigate your risk and let you better leverage your personal capital.

Whatever you do, make sure you have wiggle room in your budget for delays and unexpected renovation costs, find a way to ensure cash flow, and don’t put your entire livelihood on the line. The risks of house flipping are real, especially your first time out. Don’t bet your life savings on one passion project.

On TV…

Buyers are falling over themselves to buy renovated homes.

In reality…

Finding the right buyer for your flip at the right price point takes a combination of luck, market stability, and skill. You’ll likely want to work with a realtor to post professional photos of your renovated home, set an asking price that will draw multiple bids, and hopefully sell your flipped house as quickly as possible. But if that doesn’t happen, it’s vital to have a back-up plan. Be prepared to rent out your property for a few months or even a few years if you need to.