TLCs show Flip that House and A&Es Flip This House have become national hits, and as a result, many people sitting on their couches now think that they have everything they need to start investing in real estate. On television, flipping houses looks pretty simple – but the reality is actually something else entirely:
1) TV starts after the buying is over. In doing so, many of these shows miss the most important element of the deal – selecting the right property! Knowing how to choose the right house to renovate and resell is an important part of making flipping work for you. Plus, financing that house creatively can mean the difference between a deal and a dud.
2) TV’s version of flipping houses involves home buying cowboys. In these shows, a single person or a very small team come in and transform a house very quickly. Often, the camera focuses on one host or real estate professional, making it appear that the one person is single-handedly completing the entire project – and making all the money. True real estate professionals know that any real estate transaction is a team effort and they spend time building a power team and working with that team for the best results.
3) TV shows put the emphasis on appearance. These shows are all about taking a dingy house and making it look great so that a new seller is willing to pay more. In fact, look closely, and these shows about flipping are really not very different from the home renovation shows – such as Extreme Makeover: Home Edition – which have become so popular in recent years. Real estate professionals know that while looks are important, they are not the only thing. Besides appearance, there are many other reasons why a house would suddenly rise in value, making it ripe for resell. In some cases, inflation, a change in the housing market, or changes in the immediate neighborhood can affect the value of a property. Ignore these other elements and you could face some problems when you try to resell – no matter how prettied up the house is. Keep in mind, too, that some savvy real estate investors can flip a property without ever cleaning up a spec of dirt or opening a can of paint. This real estate deal is not all about home decor.
4) TV shows do not focus on the selling. TV makes it appear that the value of a home intrinsically rises and suddenly anyone would be willing to pay more for a property that has been renovated. However, a great deal depends on how the home is sold. Learning to sell a property correctly is essential to making a good profit. Staging the home, offering financing, and even offering leasing to the right tenants and home buyers can all add money value to a deal. Profits are not just automatic after you have cleaned a home up.
