I bet you’ve been watching Flip this House, Flip or Flop, Flippping Boston, Flipping Miami, Flipping Vegas, Flipping Pancakes or Floop and Bloop on HGTV/DIY/A&E/Disney/Spike.
Wow! What a glamorous life flippers lead. Find a house in about 5 minutes, look at it for 5 minutes, get your offer accepted in about 3 minutes, renovate it in 37 minutes, fix all the calamities along the way (while whining about losing money) then you sell it for full asking price at the Open House. Woo Hoo!!!!!
I got a little taste of “reality tv” this year when one of our houses was used in a “show to be named later”. I can’t reveal it until it airs……
The only thing I’ve found real about those shows are the problems that old houses throw at you. Yes, there are termites/asbestos/rats/cats/lead pipes/framing missing/flood zones/foundation cracks/wacky neighbors/wacky buyers/wacky agents/frozen pipes/etc……..
I’m here today to help shed some light on the realities of what we do.
Drum Roll please…….
Number 5: “Make Millions working only 4 hours a week”. Sound familiar? The only Easy Money I’m aware of is winning the Lottery and if that were easy I would have won 20 years ago. I’m here to tell you that every facet of this industry takes time, energy and money in great quantities. Those 3 things are required in different ratios depending on which branch of flipping you go after. You want to be a Wholesaler? That takes time/energy if you are “Driving for Dollars” or time/energy/money if you are doing direct mail. You want to be a Rehabber? That takes time/energy/lots of money. If you don’t have lots of money and want to be a Rehabber, you better find someone that wants to take the money risk but they will only do that if you convince them that you have the knowledge and skill (which took a lot of time to acquire) to do the work with their money.
Whew! There are no shortcuts despite what the gurus at the seminars told you. Hmmmmm, if the gurus are at the hotel talking to you, how are they making their millions? I don’t think it’s from swinging a hammer…….Just sayin……
Number 4: “Just go out and find a project” says the guru.
You have several ways to find a house to flip/rehab
- MLS- (multiple listing service) Also known as the place where everyone and their brother/sister/cousin/niece/friend is looking and making offers. I looked at a house last year that had 28 offers on it. Yes, 28. Competition is NOT your friend in this environment. You have to be at the front of the line and grab it before anyone else. This takes a lot of time online and then a lot of skill to recognize the value, estimate the costs and act fast.
- Wholesalers-Less competition but still you are giving money away in trade for someone finding a deal for you. Most wholesalers I’ve met have yet to find a property despite how easy the guru said it would be. It’s not that glamorous, it’s hard grunt work.
- Your own searching-whether you are “Driving for dollars” (i.e. cruising the streets) looking for houses that need TLC or you are doing your own marketing, this takes time. Lots of it.
Number 3: Budgeting is tough. Unless you have a background in finance or small business, this is a brutal section of your work. Managing the numbers and being accurate is tough and takes time. There are a lot of zeros at the end of our estimates and costs. The rewards can have lots of zeros just like the mistakes…..
Number 2: The TV shows make scheduling a project look easy. It isn’t unless you have years of experience juggling complex projects. There are lots of moving parts to a renovation that require lots of communication along with the timing of the trades and inspections. Delays are expensive. My current projects have holding costs of $100/day minimum.
Number 1: The reality of selling a house is a confluence of several streams. The bottom line is someone needs to be looking for a house and you need to have a product worthy. Did you do a great job or an average job on your rehab? Is the timing on the market good? Is it a good location? Does the house have what people wan’t/don’t want? Natural gas vs. oil? Low vs. high ceilings? Busy vs. quiet road? Rural vs. urban? Antique vs. New?
Will your house sell fast? Only if it’s a good product and there is a buyer. I’ve sold houses 4 months BEFORE we finished and 11 months AFTER we finished and everywhere in between. I had one house sold 3 times before it finally stuck.
It can be frustrating at times and exhilarating at times. All I know is if you want to do this as a living, be prepared to work.