Just turn on the TV today and you will see home flippers on virtually every station. The idea of flipping homes for money has become all the rage lately, and it has inspired many people to think they could take a swing and fixing and flipping homes of their own. However, while it may seem easy and glamorous on TV, there is actually a lot more that goes into flipping homes than many people think.
Remember, while those home flipping shows may be dubbed “reality TV” they don’t always depict actual reality. Here are just a few of the many things that you may think you know about flipping houses, but really don’t.
You Think… That everyone makes hundreds of thousands of dollars on their flips.
The Reality is… If you start thinking this, it is time to turn off HGTV. Many of these shows are staged, and those who are actually making a lot of money are the top one percent of the top one percent—you aren’t going to be making those returns your first time around.
You Think… You can do this on your own to keep your overhead low.
The Reality is… You need to work with someone who knows what they are doing. You need to work with experienced realtors, contractors and industry experts who not only know about flipping but know about the area you are investing in. Yes, you will have to pay them, but they are going to be worth every penny.
You Think… There are going to be lots of great deals just ready to be flipped.
The Reality is… In a lot of the “hot” areas for fixing and flipping the people who own these properties know that investors are going to be coming in to buy them up and try to make some money. If you really want a deal, you are going to need to go with a home that needs a lot of work and be willing to deal with the risks that come with it. Essentially, if you want those really good deals that have really good profit margins, you are going to need to buy the houses most people won’t even touch. You aren’t going to make a lot of money off a house that just needs some new tile and paint for a steal.
You Think… You will just make money you can put right in the bank.
The Reality is… Even if you do make a lot of money on a flip, you will still need to pay back a lot of people. (On a side note, if you are planning on doing this long-term, you may want to consider becoming a real estate agent to help you save on fees). You will also need to pay a big tax bill on these profits which means you will need to keep track of everything for tax purposes.
Remember, there is a lot to learn about flipping houses before you just jump in and start investing in properties. Keep these realities of home flipping in mind so you can really decide if this is the right venture for you.
