By Noah Brocious – President/RI/Mortgage Loan Originator – Fix and flip TV shows are incredibly popular and it’s no surprise why — there’s something very satisfying about seeing a home transformed. However, a lot is going on behind the scenes. What we see in that hour-long window isn’t the whole picture, which can be a real problem if you’re interested in actually getting into property investment.

Where is the line between fact and fiction? Here are some of the biggest differences between what it takes to be a successful investor and what we see on TV.

How Easy It Is To Sell the Property

One of the biggest risks with flipping houses is that you don’t make a profit unless you sell. Once you’ve completed renovations, it’s time to hustle with open houses and advertisements.

These approaches are usually quite successful on television shows, but is that realistic? It turns out there are several factors that make it easier for celebrity house flippers to find buyers.

  • TV

    • TV celebrities have a big ace up their sleeves when selling houses: their brand. People already know who they are, and some fans may be eager to buy from them. They also have a big industry behind them that benefits from a sale. As a result, celebrities have an easier time finding buyers than the typical investor.

  • Reality

    • In reality, you may have to seek out buyers rather than letting them come to you. Hiring a real estate agent is a great way to do this, as agents usually have networks of buyers, sellers, brokers, and other agents they can contact.
    • There’s also the reality that your property may not sell for months. This can be frustrating, as you lose more money the longer a house sits on the market. However, the most successful investors are aware of this possibility and plan for it.

How Common It Is To Find Big Surprises

Everyone knows that renovations are bound to come with some surprises — after all, you never know what’s under those floorboards. But how likely is it that you’ll be blindsided by a huge surprise, such as animals nesting in the attic or mold in the walls?

These major issues make for engaging television, but they’re not reflective of the actual investor experience. In fact, if you discover a giant hole in the basement only after buying the house, you probably missed some red flags along the way.

  • TV

    • If big surprises aren’t a typical part of flipping a house, why show it on TV? These programs are all about keeping viewers guessing and ratcheting up the tension, and what better way to do that than to introduce a surprise obstacle?
    • The celebrities on these shows are more than likely aware of these “surprises” before closing on the house — what we see on the screen is just their acting. It’s a carefully calculated performance to give the audience a good time, which is their primary job.

  • Reality

    • In reality, investors carefully look over houses before purchasing and even pay for inspections. If they have contractors they work with regularly, they may invite them along to check out the property’s condition. Surprise repairs cut into the profit margin, so real-life investors are very careful to look for any signs of significant issues:
      • Faulty wiring
      • Foundational problems
      • Mold and water damage
      • Pest damage

How Quickly You Can Flip a House

In every episode, the show’s stars can renovate their property by the end of the hour, no matter what shape the house was in at the start. This is a product of editing, which is useful for telling a story to eager viewers. Still, it doesn’t give a realistic depiction of the time it takes to rehab a home, especially if it was in derelict condition before.

  • TV

    • To further complicate matters, some television shows make fast renovations a part of their gimmick — for example, some programs have a time limit of a week or even a few hours to get the job done. While this makes for interesting television, these feats are nearly impossible in the real world. For example, these huge projects have teams of workers, far more than an individual investor could afford.

  • Reality

    • In the real world, renovations can take anywhere between a few weeks and a few months, depending on the extent of the work. This is also affected by how much work you do yourself; while it’s more convenient to hire a contractor, some investors save money by doing demolition or small renovations on their own.

How Easy It Is To Find the Right Property

Finding the right property is a crucial part of fixing and flipping — in fact, it can make or break the endeavor. However, on TV shows, the time dedicated to researching property is usually limited since it’s not particularly interesting to watch.

  • TV

    • On a fix and flip show, the stars may spend some time looking at listings, talking to fellow investors, and going to auctions. While these are all valid ways of learning more about a property, there’s a lot that gets left on the cutting room floor. The tedious process of researching crime rates, property taxes, job opportunities, and other factors is still being done, but it’s not shown due to its low entertainment value.

  • Reality

    • Successful property investors know that it may take some time to find the right property. It’s better to be cautious and have a well-planned budget than to jump into a project, only to find you bit off more than you can chew. There’s also a lot to be said about the market — if the market isn’t favorable for fixing and flipping, investors may decide to buy and hold a property instead, using it as income until they can find a seller.

What Kind of Funding Options Investors Use

There isn’t usually much of a discussion about finances on fix and flip TV shows. Either the cash magically appears, or it’s implied that the stars are using profits from their sales to fund their new endeavors. In reality, getting the right funding for purchase and renovation is a big part of the flipping process.

  • TV

    • Celebrities may actually be using their own funds to buy houses — after all, not only are they making money from property sales, but networks are also paying them. All told, this can be a hefty sum. For many stars, it makes more sense to use their own cash rather than apply for investment loans.

  • Reality

    • Even if you’re a veteran in the property investment game, you probably don’t have the funds to bankroll an entire fix and flip endeavor on your own. Honestly, even if you have the cash, it’s not in your best interest to spend it.
    • Instead, you can benefit from fix and flip loans that allow you to access capital, then make monthly payments. If you’re able to sell the property, you can pay off the loan and start again. If you have trouble finding buyers, you’re not out of savings and have time to pay back the debt.

Contact Capital Fund 1 Today For Your Fix and Flip

Are you interested in fixing and flipping houses? Then you’ll need a reliable source of financing. Fortunately, the team at Capital Fund 1 can help.

We offer loans specifically designed to meet property investors’ needs, including fast approvals and competitive interest rates. To find out more or to start your application, visit us online or give us a call at (480) 889-6100.

_____

Image Credit: Shutterstock/ hanohiki

On February 1, 2021   /   Fix and Flip Loans