If you’ve been watching HGTV as long as we have, you have likely noticed that one minute the channel had a plethora of design shows, and then suddenly there were none. Frankly, we miss the design shows, but we’re also fascinated by the upswing in shows about construction, renovation, and fixing-up. Clearly, the current audience and advertisers (Home Depot and Loews, anyone?) are, uh, flipping out for property flipping.
And even though the shows we watch on HGTV or the DIY channel are called “reality shows,” they are edited down to their simplest and most digestible parts – like any sitcom or made-for-tv movie.
They’re meant to hit us in key soft spots: Americans love a good ‘ugly duckling’ beautification story; we’re entranced by the thought of starting at the studs and getting exactly what we want in the property (from the flooring to the countertops to the fixtures); and we go bananas for the idea of fast money.
That said, we still get excited about the idea of flipping for profit. If you do, too, then read on. We’ve assembled a few bits for you to digest as you begin to think realistically about the time, energy, patience, money, and business savvy it takes to flip property successfully.
In the flipping world, time is a big deal. When you sign on the purchase of a property, you’ve taken it on as a financial burden. Once you’ve done that, you’ll be aware of the ticking clock until you sign it over to a new buyer. You’ll want to spend as few days as possible making phone calls or getting your ideas in order. Best to have at least a loose plan for your timeline and a few contractors in mind before pulling the trigger.
You might want to think about establishing a meditation practice before jumping in on a flipper if you’ve never done it before. Flipping even just one house is the same as running a business. You have to think about buying, designing, budgeting, creating, managing, troubleshooting, marketing, and selling all at the same time. If you’ve never run a business before, it can be overwhelming.
It is our recommendation that if you’re new to flipping, you go in with the plan to start with just one. You might eventually be able to make a business of it, but get your feet wet first. If you think about it as just the one flip, you’ll be more likely to allow yourself to make mistakes. And quitting your day job before you’ve had the chance to feel your way through the process might pressure you into seeking perfection. Trust us, it’ll be a learning process, and you’ll make mistakes along the way. Start slow, Daniel-san. Wax on. Wax off.
You need cash to flip houses. Period. Problems could arise along the way that you won’t be able to finance your way out of. If you don’t have cash, you could find yourself in unexpected trouble. For every moment you spend stuck, you can watch the money you planned to make slowly disappear even before you’ve made it. Yes, you might be able to find an investor or a partner, but as a newbie, you might need to prove yourself before they’re willing to take any risks.
We’ve said it already, but we’ll say it again: As pretty as it may look on television, the business of flipping homes is still a business. You have to know the market in your target area. Has it leveled? Is it appreciating? And how are you at negotiating? Smart, savvy investors have inside connections and can sometimes sniff out deals even before they hit the market. Can you keep your creative heart in check to refrain from over-investing on glossy finishes that will break the budget? You get our point, right? Flipping requires strategy, planning, forward thinking, and sharp decision-making. It’s not just for sport.
If you’re still with us…
…and if your heart is thumping at the idea of the challenge. If you’re thinking “I can do this!” and you believe you’ve got the guts and the fortitude to see it through, then we say go for it. Take the next steps, do some more research, keep yourself informed on the market. And then who knows? Maybe one flip will become four will become ten.
But if it feels like we’re pooping on your party (so to speak)…
…then, please, sit back and enjoy the fantasies provided by your favorite flipping shows. We’ll make the popcorn.