Reality About Fix and Flip Programs

I love getting up and turning on my TV to watch the Fix and Flip programs. It is great seeing how a house which was abandoned and torn up can be transformed into a masterpiece that is a welcome change to any neighborhood. I think it is good to have someone come in and do things that improve a community.
These shows have sprung up all over, I counted at least 8 fix and flip programs in my area. I know part of the reason for that is the popularity this concept has gotten given our past real estate climate. There is a lot that we can benefit from when we watch them.
As a Real Estate Investor, I look at the programs with a slightly different focus. I wonder how accurately these shows reveal the struggles a fix and flipper has in order to be profitable. I know the shows have to be edited for TV so you can only see a portion of what goes on to make a deal work. The portions they do show focus almost exclusively on the renovations. But there is a whole lot more involved in fixing and flipping than just renovating.
I am not criticizing the shows. I want to just bring up a few items I notice when I watch them.
1) The focus on these shows is never about the money – it would seem that the shows outline looking for a property, buying it, fixing it and selling it. If the process was that simple everyone could be a flipper. But the reality is the major problem in flipping is money.
If you watch a few of the shows you will find that many of the flippers purchase these properties with cash. Yet for the average person who is looking to flip there is not $500,000 sitting in a bank account. For many of the people on TV the reason they don’t talk much about money is they already have it.
If you want to enter into their world you will have to solve the money issue. You cannot flip properties broke.
2) The end profit shown when they sell is gross profit, not net profit – on average you can expect to earn $25,000-$30,000 per deal after all your expenses are paid. There are some average costs you can plug in but if you can hit the average, be grateful.
3) It’s not always easy to sell the finished home – contrary to popular flip programs, unless you can offer your property at or below market, it may sit for awhile. You don’t want to over improve the property but you need room in the price to unload.
Watch and learn. Then read, study and go flip that house!

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