Member Insights by Core Developments
You sit down in front of the television and flip it on. Up pops the home and garden network. You watch, enthralled, as a pair of flippers take an old, run down house they bought for a bargain, and turn it into a masterpiece that nets them tens of thousands of dollars in profit. You think to yourself I could do that.
The truth is, the popularity of home flipping has soared in recent years. Reality television programs have made flipping accessible to the average Joe, but along with this “reality” comes a lot of misconceptions. Here are some important truths to know if you’re considering flipping a home.
TRUTH: Flipping takes time…and a lot of it
What can be summed up in a 1-hour television program was the result of months or even years of work. First, you need to research the market and actually purchase a home to flip. You need to find contractors and submit for permits which can take weeks before you even begin demolition. Renovations are ripe with constructions delays, missed delivery deadlines, weather delays, unexpected setbacks, and more. Then there’s the time it takes to sell the home. Flipping a home isn’t a fun weekend project; it’s a full commitment.
TRUTH: Most flippers do it full time
Ever notice how the couples flipping homes on HGTV are also interior designers, contractors, and real estate agents? This means flipping is their full-time job and they can devote the time that flipping a house truly requires. This means being on-site to perform the work, supervise others, make important decisions, and oversee work quality and budget. Being a full-time flipper with multiple talents and roles to play can also mean a lot of savings when it comes to profits.
TRUTH: Flipping on a budget isn’t easy
It’s generally recommended that you pay cash for a house you are flipping. If you take out a loan, you will be cutting into profits with the interest you pay. This can prompt you to rush the project resulting in mistakes or agree to a low price for a quick sale. Renovations are also costly. Unforeseen issues will always be popping up when least expected. The worst possible thing that can happen to a flipper is to run out of money during renovations, especially if that budget was based on debt, not cash.
TRUTH: Not every property requires major renovations to make a profit
Flipping doesn’t have to mean gutting an entire home and upgrading everything to granite countertops and crown molding. But it doesn’t make for good tv if viewers don’t see major changes and disasters along the way. Not every house needs to be turned into an open floor plan or have a bathroom added to sell for a profit. You can find homes in good condition at foreclosure sales, tax deed sales, and other off-market sales where you can still get a bargain.
TRUTH: TV profits aren’t what they seem
Remember how I mentioned TV flippers are also designers and contractors and realtors? That’s because they can profit even more by performing those roles themselves. For the average wannabe-flipper, the costs of financing, agent commission, seller concessions, carrying costs, and more will eat into your potential profits. These aren’t always subtracted from the profits you see on television, and experts suggest the real profits could be $10-20K less than shown.
TRUTH: There are other ways to profit from a flipped property
Most flippers think of the process as “catch and release.” You find a property and then renovate and sell it as fast as you can for as much profit as possible. But there are other ways to make profit from a flipped home. Holding these as investment properties means you can rent the home for short or long-term lease and have a constant stream of revenue. You can always sell the home later when property values have gone up.
John Buys Houses is your trusted expert when it comes to buying, renovating, and selling homes fast. If you’re looking to sell your home quickly, contact us today. We make fair offers for homes in any condition.