Reality TV shows like to focus on the fun and drama of the moment. Shows about house flipping are no different. Depending on the format of the show, participants typically get a chance to look at a pool of houses, agonize over their choices or construction needs, and then try to sell the final product for more than their purchase price.
While these series show a part of what’s going on, it’s not the full story by any stretch, no more than someone watching a forensics show would have a deep understanding on how to find or handle physical evidence. To help prevent misunderstandings of how things work, below, members from the Forbes Real Estate Council talk about some of the myths that come from house-flipping reality shows, and why those myths can leave you struggling. Here’s what they said.
1. It's Easy To Find Properties
Having worked with several "flipping" shows, the part I see that is nearly always glossed over is how difficult (and expensive) it is for investors to locate the properties they buy. Professional real estate investors spend $5,000 to $50,000-plus per month in advertising to find motivated home sellers who want to sell quickly, and that cost is rarely taken into account on these shows. - Jeremy Brandt, WeBuyHouses.com
2. Flipping Is Easy Money
That flipping is easy money. Many investors lose their shorts because they misjudged costs or the length of time they will have to hold prior to a sale. You make your money when you buy, and in today’s times, you can protect 5-6% of your profits by negotiating the agent’s fees way down. - Joshua Hunt, TRELORA
3. Projections Are Not Profits
Reality TV shows for flipping houses love to highlight the before and after pictures, and then discuss what sort of profit may be made on the home. However, in the real world, there are so many twists and turns between acquisition and resale that effect the bottom line. So many "laymen" seem to think all investors are making huge profits on every property, which is not a true reflection of the business. - Tracy Royce, Royce of Real Estate
4. A Pool Of Three Choices Is All You Need
Making a decision to purchase a fixer-upper from a pool of three opportunities is unrealistic and unwise. To truly understand local market dynamics and conditions, velocity of listed homes and renovation budgets, a new investor must look at a minimum of 75-100 properties. Education is the name of the game here: The more you know, the better your decision making, and the more money you make. - Abhi Golhar, Summit & Crowne
5. People Will ‘Get Rich Quick’
One of the biggest myths about house flipping is that you can "get rich quick." House flipping takes hard work, determination, self-education and due diligence. Big money is made by slowly increasing your expertise, tolerance for risk and comfort level. Don't go too fast and don't bite off more than you can chew. Invest diligently and make sure you are familiar with the area and market rates. - Alex Chieng, A & L Real Estate Team
6. Things Happen Fast
Reality flip shows make the purchase, transformation and sale of a home seem like it happens in a few weeks' time. I guess it would be boring to watch the permit approval process, engineer drawings, inspections, insurance, how they are financing the deal and the fact that many investors have to hold the property for 90 days due to the 90 day flip rule, but that is the reality. - Hillary Hobson, Highest Cash Offer
7. Any Work Will Add Value To A Home
Homeowners, please stop watching these "reality" shows that make you believe you are adding value to your home by tearing it down to the stubs and rebuilding it. I see this on a daily basis: Sellers thinking their home value increased because they remodeled their kitchen, or added a $20,000 closet, or enclosed a sunroom. Let a professional help you determine the true value of your home. - Angela Yaun, Day Realty Group
8. House-flipping Is All About Construction
House-flipping shows make it seem as though all the work lies in the construction, leaving out the building codes, zoning rules, permits and approvals governing what you're allowed to build. Understanding these complicated regulations can be time-consuming and expensive, and requires its own expertise. In many cities, regulations can be so restrictive making it difficult to build anything at all. - Ben Miller, Fundrise
9. There Are Only Two Parties Involved
These shows glamorize only two of the three parties involved in a home-flip: The happy buyer and a cash-hungry flipper. The original seller is absent from the narrative. By ignoring the home’s first owner, these shows hide the fact that someone is losing money on the flip. In a flip, the original homeowner is robbed of a model that provides them with a guaranteed sale at a fair-market price. - Sean Black, Knock
