Let’s admit it: at some point, we’ve been hooked to TV flipping shows. Those quick renovations and selling of properties seem to be a rose-colored world for wannabe real estate investors.
However, there’s harm to using these shows as educational resources for aspiring real estate investors. Most of these shows hide the real truth about the actual numbers and issues regarding the property.
The fact is that these flipping shows grind the gears of veteran investors. Here are the truths behind those too-good-to-be-true flips.
The Truth About Reality TV Flipping Shows
1. It’s not as quick as you see it is
If there’s one thing that flipping shows don’t reveal is that the renovation process doesn’t happen overnight. It takes weeks or even months of planning.
Flipping shows give the impression that the homes are purchased, renovated, and sold without waiting periods. But if we are going to factor in the process of acquiring permits, designing, planning, and sourcing materials, a week is barely enough. In fact, some homeowners of the properties showcased in these programs claim that the renovated homes have structural problems.
2. The homes are purchased prior to the show
After the renovation, flipping shows will then proceed to tour potential buyers to the property. It feels like a make-or-break part, but the truth is that the purchase is already inked prior to the show.
Also, the part where the buyers tour other houses are staged. Some of the homes in shows like Fixer Upper and House Hunters aren’t really in the market. A few are friends’ homes.
3. The costs are usually undervalued
When it comes to the cost of the renovation, flipping shows will undervalue everything. They hide other costs to make it appear that the elegant renovation is very affordable.
Flipping shows don’t factor in holding costs, closing costs, commissions, marketing, and other overhead expenses. The numbers don’t always add up if you compare it to the market prices.
Sometimes, even the end sale price is manipulated just for show.
4. It’s scripted
You don’t need to be a television junkie just to notice that everything in flipping shows is scripted. The investor will proudly announce that he or she is going to make a profit out of it. The declaration is made without calculating costs, researching, and taking an intensive inspection of the property.
In real life, investors would have to hire inspectors and contractors first to assess the possible income. You simply can’t guess the value by simply glancing on the property. That’s not how it works.
5. The investors pretend to be a know-it-all
Have you ever noticed? The investors on these flipping shows tend to know everything right away without performing a single minute of research.
Some of them would spit out prices right away. It’s as if all the market data are stored and updated inside their head. In real life, even seasoned investors would research first. Why? Because real estate is an ever-changing industry.
6. There are no long buyer queues
Flipping shows always have a long line of potential buyers. They don’t show the waiting time for these properties before buyers come in. In real life, even the best-looking property will have to wait for weeks or months before having a potential buyer.
Real life investors would have to work hard to find a buyer for the property. Most of the houses sold in flipping shows have been in the market for months.
7. The “investors” are barely involved in the renovation
It’s great to see a superstar investor wearing a hard hat and swinging a hammer on set. But once the cameras are out, these investors aren’t really involved in the manual labor.
In real life, investors don’t really work on site. They are busy processing paperwork, looking for potential buyers, and overseeing their business. Real life investors wouldn’t stop their work just to hop into the construction.
8. They only work on most appealing projects.
Flipping shows only choose appealing projects to work on; otherwise, it wouldn’t be TV-worthy. Most of the houses these show worked on don’t really make it on TV. However, this makes aspiring real estate investors have the wrong notion about finding a property and investing in it.
Besides, haven’t you ever wondered where’s the “flop” in the show ‘Flip or Flop’?
The next time you turned the TV on and a flipping show is in tune, take everything with a grain of salt. These shows aren’t the best references for learning real estate investing. You might as well look for a real-life mentor who will surely debunk all the flipping show gimmicks.